Taking out a life insurance policy means that if you should die unexpectedly, you can ensure that your loved ones are provided for financially. The payout from a life insurance policy will either be made as a lump sum or in a series of instalments, depending on the policy. There are several different kinds of policies available in the UK market. In general however, most policies can either be defined as ‘term policies’ or ‘whole life policies’, with the remainders being linked to your pension (‘Pension Term Assurance’). You may also wish to include critical illness cover, to help you with the everyday living costs that come with treating and dealing with a serious illness.
Term policies will provide protection against the policyholder dying within a pre-agreed time period (the term), although if you die after this period, you get nothing. If you take out term life insurance as a couple, the insurance company would pay out if either of you were to die over this period. As the name would suggest, whole life policies ensure that when you die, your dependents receive an agreed sum of money. Your lifestyle will affect the cost of your premium, since if you live longer the insurer needs to pay less overall as you have contributed more to the policy.