Who could use it?
When someone dies too soon, life insurance pays out either a lump sum or a steady income. So, anyone whose death would leave someone else with a financial loss needs life insurance. The following could/should be part of this: -
Parties to a loan or a mortgage (mortgage life insurance cover)
Anyone with a family (whilst a parent may not work, surely there would be a financial loss if anything were to happen whilst there are young children to be cared for)
Important People. Where a business would lose money because of the death of a key worker.
In essence, life insurance cover could be needed in any situation where money would be lost.
This year, 630,000 people will die in the UK. Source: National Statistics, Winter 2002
Different Covers
Life Insurance for a Term
As the name suggests, term life insurance is bought for a set number of years at the start. With this kind of policy, you just pay for the coverage based on your age, health, and the length of the policy. So, it's important to get a quote for term life insurance that gives you the most coverage for the least amount of money. You can get term life insurance that pays out lump sums that stay the same, lump sums that go down (mortgage life insurance cover), or regular payments (income).
Life as a Whole
As the name suggests, this type of policy could cover a person for the rest of his or her life. But when getting a quote for whole-life insurance, you need to think about more than just the amount of the premium. For example, you need to think about the performance of your investments, the effect of fees, and the financial strength of the company.
Who is it?
There are good reasons to support both policies. We think the following could be the most important things to think about:
Cost: As a general rule, whole life insurance costs more than other types of insurance.
Period for which coverage is needed: If coverage is needed for a certain amount of time, like for a mortgage, term insurance might be a better choice.
Plans for the future: If you want to start a family, for example, whole life insurance gives you the freedom to increase coverage for this and other similar events.
Note
Critical Illness (CI) now has a benefit that is just as important, and we strongly suggest that you look at the CI Factsheet.
Conclusion
This article is just a general overview of what Life Assurance is and what you can do with it. It is by no means a complete list of everything anyone might need. So, it would be smart to use this as a guide and talk to a professional Independent Financial Adviser for more in-depth advice. The Financial Services Authority (FSA) regulates and authorises all advisers, and they now have to tell you what that means (either independent and fee charging, independent but paid by commission only, or tied)
