Whilst it won't help your family get over your loss, life insurance can mean they don't have to worry about money too. Read about the different types of life insurance; life (term) insurance, whole of life, endowment policies

Check to see what life cover you already have through other sources such as your employer or mortgage provider, before you take out new policies.

Life (term) insurance
Term insurance is the cheapest, most basic and popular form of life insurance. It covers you for a fixed period and pays out a one-off tax-free lump sum if you die during the policy term. With some policies you can add on additional options, like critical illness cover. If you do add on critical illness cover, the plan will pay out EITHER on diagnosis of a specified critical illness OR if you die during the period of the policy.

Key pros and cons of life (term) insurance

Pros

• If you want to leave a cash sum to your family/loved ones or to pay off a mortgage after you've gone, term insurance may be right for you
• It's the most affordable type of life insurance

Cons

• The policy only pays out if you die (or are diagnosed with a specified critical illness if you add on critical illness cover) during the term of the plan. If you survive beyond the end of the plan you don't get anything back

Although term insurance always covers you for a set time there are different types, like:

• Flat-rate (or level) cover. This offers a set amount of cover for the term of the policy. The amount of cover is fixed when you take the policy out
• Decreasing (or mortgage protection insurance) cover. The amount of cover decreases over the term of the policy and is usually designed to tie in with the outstanding amount on your repayment mortgage and the time over which you have taken your mortgage out for
• Family income benefit. This type of cover, gives your loved ones a regular income not a lump sum. But the income is only paid for the term of the policy, so the nearer the end of the policy you die (if you do), the fewer years it pays out for
• Increasing term assurance. Your premiums and benefits increase each year, usually in line with inflation. If you want to protect your family's lifestyle if the worst was to happen to you, not just pay off any debts, you may want to look at this type of policy
• Convertible term assurance. This gives you the option to convert to a whole-of-life policy with the same insurer at the end of your policy. You'll be able to transfer without giving new information about your health, but you will have to pay the going rates for cover for your age

Making a claim
For information on making a claim visit our making a claim section.

Whole-of-life insurance
This covers you for the whole of your life. Unlike term insurance, which only pays out if you die during the policy term, whole-of-life insurance always pays out in the end. It is guaranteed that the policy will pay out upon your death.

Key pros and cons of whole-of-life insurance

Pros

• Whole-of-life insurance always pays out in the end, so you'll always get some money
• It could be worth thinking about if you want to leave your loved ones a nest egg
• You can combine it with term insurance if you want to cover any specific debts

Cons

• It's more expensive than term insurance.

Making a claim
For information on making a claim visit our making a claim section.

Endowment policies
An endowment policy is often used to pay off an interest-only mortgage. There's two parts to it - an investment part and a life cover part - and it lasts for a set time. If you die during the policy, it covers your mortgage debt.

If you live until the policy ends, the investment part should give you enough to repay your mortgage, but this is not guaranteed.

Key pros and cons of endowment policies

Pros

• If the endowment policy performs well, it could give you enough to pay off your mortgage and give you a nest egg

Cons

• If the endowment policy does not perform well it could leave you with insufficient money to repay your mortgage at the end of the term

If you do have an endowment policy, remember it only repays the sum assured if you die (which is usually the mortgage amount), so you may want to buy extra life cover to provide for other debts. Also remember that, when the endowment policy finishes, so does your life insurance cover. In recent years endowment policies have received a bad press, as some people have found their policies are not on track to make enough to pay off their full mortgage debt.