There usually comes a point in most people's lives where life insurance becomes an important consideration.

Certain lifestyle changes which most people encounter such as getting married, having children or buying a house tend to make people think about protecting the people closest to them if they are no longer around. That's exactly what Life Insurance does.

A Life Insurance policy pays a tax free lump sum cash payment 'the Death Benefit', if you where to die within a certain timeframe 'the Term'.

Typically, if you were to die, it's used to...

• Pay off your mortgage
• Pay off any signififcant loans or credit cards
• Provide your family with an income for as long as they need it
• Pay for education costs
• Cover funeral expenses

So, if you've had these thoughts you're certainly not the first! But how much cover should you have and what for? How long should you have the cover for? In order to get your free quote, just have the following basic information to hand...

• How much do you owe on your mortgage?
• Is it a repayment mortgage?
• How long has your mortgage left to run?
• How much income would your family need if you were no longer around?
• When do you expect your children will become financially indpendent?

It is quite common for someone to have more than one policy...

• One to pay off the mortgage
• Another to prodive an income or capital for the family

Life Insurance policies provide financial protection to you and/or your dependants should the worst happen. Term Assurance typically pays a one off lump sum if you were to die within the term of the contract. If you lived beyond the term, the policy would be worth nothing and you would get nothing back. The two most common types are Level Term Assurance and Decreasing Term Assurance. Level term Assurance offers a level amount of cover in return for a level premium throughout the term of the contract. So, if you started £100,000 of cover for 20 years and then died anytime in the next 20 years, the payment to your dependants would be £100,000. Decreasing Term Assurance, often referred to as Mortgage Life Insurance or Mortgage Protection offers a decreasing amount of cover in return for a level premium. It's designed to meet the needs of individuals with a decreasing liability such as a repayment mortgage. Family Income Benefit pays your dependants a regular income if you were to die within the term of the plan. It's usually taken out to cover living expenses or replace the breadwinner's income until your dependants become financially independant. If a sucessful claim is made, the income will continue until the end of the term. Critical Illness Cover pays a one off lump sum on the diagnosis of a specified illness, regardless of whether you're able to work or not. Typically, they also pay the lump sum if you become permanently totally disabled. This can be added to most Life Insurance policies when you apply.

Under 18s If you're under 18 your parents probably look after you, so you don't really need protection.

Late teens to mid-20s As you become an adult you might start to provide for yourself, so protection needs tend to start then.

Mid-20s to early-40s You are likely to face your greatest protection needs at this stage...

Mid-40s As you reach your mid-40s, your children might be approaching financial independence and protection needs may shift away from them and towards yourself and your spouse or partner.

50's As you move into you 50s, your needs tend to move away from protection. That said, we're all living longer so you may still need cover!

The number and age of dependants is one of the most important factors governing your Life Insurance needs. Clearly, the more dependants you have and the greater their need on you, the more important it is to protect them.

If you have children, your Life Insurance needs may vary...

• It may be dificult to estimate when your children will cease to be dependent on you. They may leave school at 16 or 18, they may or may not go to university, they may stay at home longer than you expected (or wanted)!
• You may become a single parent due to death or divorce, you would then be solely resonsible for your dependant
• You may marry again and become responsible for 2 familes and 2 sets of children
• Couples may have children at relatively low, or advanced, ages.

Income will usually determine how much you can afford to spend on insurance...

• You might have substantial protection needs but no spare income to pay for it
• A judgement might have to be made as to the desirability of paying for protection rather than your current items of expenditure
• If money's tight and paying for all your protection needs is difficult, you may have to prioritise which protection needs are more important than others

Existing debts and future liabilities need to be taken into account when assessing your needs. These might consist of the following...

Some examples of how you might cover yourself against certain debts and future liabilities...

If you had a repayment mortgage where you owe £150,000 over the next 21 years, then a decreasing term assurance plan for 21 years would ensure your mortgage is paid off in full, if you were to die within the term

If you wanted to ensure your dependents, upon your death, receive an income until they become indepenedent, then a Family Income Benefit policy may be the right choice of cover

If you wanted to send your new-born child to private school from the age of 13 and university and wanted to insure against your premature death or serious illness, you could choose a policy that pays out the cost of school fees x 5 plus the expected cost of a year at university x 3 for the next 21 years. In this instance it may be prudent to link the plan to inflation.

To see average costs of private school and universities in the UK click on the below links...

www.schoolfeesadvice.org

www.ucas.com/students/studentfinance

Income will usually determine how much you can afford to spend on insurance...

• You might have substantial protection needs but no spare income to pay for it
• A judgement might have to be made as to the desirability of paying for protection rather than your current items of expenditure
• If money's tight and paying for all your protection needs is difficult, you may have to prioritise which protection needs are more important than others.

Existing cover needs to be taken into account when assessing your protection needs. You wouldn't want to pay for cover that you already have! Nor would you want to overpay for the cover you have in place. Some examples of existing cover might be...

• Existing private insurance policies
• Cover you receive as part of your employment contract
• Benefits payable from private pensions
• State benefits, such as bereavement pay or widow's pension

It is prudent to review your existing policies on a regular basis for the following reasons...

• Your financial circumstances may change such as increased pay, decreased mortgage debt, inheritance etc
• You marital status may change
• You may have your first child/more children
• Your employment status may change
• Your existing policies may be more expensive than new replacement policies.

Nb. You should never cancel an existing policy until you have the replacement plan in force

A good way of showing the types of cover you need is to use the concept of Life Cycles. These are described as the Vunerable Years, the Relaxed Years and the Anxious Years...