Most life insurance policies are designed to pay a cash sum to your loved ones if you die while covered by the policy. This can help them cope with everyday money worries such as mortgage payments, household bills and childcare costs. It may also cover funeral costs. You can take out life insurance under joint or single names, and you can pay your premiums monthly or annually.

There are two main types of life insurance: term life insurance and whole of life insurance.

Term life insurance policies run for a fixed period such as 10, 20 or 25 years. These types of policy only pay out if you die during the term of the policy. A whole-of-life policy, on the other hand, pays out no matter when you die (as long as you keep up with your premium payments, of course).

There are three different types of term life insurance. With decreasing term insurance, the amount payable on death reduces over time. This type of policy is often taken out in conjunction with a mortgage as the payout reduces over time in line with the amount needed to clear the outstanding debt.

You can also get increasing term insurance, where the payout rises each year (typically to take account of inflation) and level term insurance, where it remains the same throughout. Not surprisingly, level term and (especially) increasing term policies are more expensive than decreasing term.

What Doesn’t It Cover?

Life insurance normally pays out only on death. If you become unable to work due to an accident or illness, you won’t generally be covered.

Some life insurance policies will pay out if you receive a terminal diagnosis. This is by no means always the case, though, so it’s important to check the wording of your policy carefully.

Most life insurance policies also have some exclusions, e.g. they might not pay out if you die from alcohol or drug abuse. In addition, if you take part in risky sports, you may have to pay a higher premium. If you have a serious health problem when you take out a policy, any cause of death related to that illness may be excluded.

For the above reasons, you may also want to consider taking out critical illness cover. This covers you if you get one of the medical conditions or injuries specified in the policy. Some examples of critical illnesses that might be covered include heart attack, stroke, cancer, and chronic, life-limiting conditions such as multiple sclerosis and MND. Most policies will also consider permanent disabilities as a result of injury or illness. These policies only pay out once and then the policy ends. Some policies will make a smaller payment for less severe conditions, or if one of your children contracts one of the specified conditions. Health conditions you knew you had before you took out the insurance won’t generally be covered.

What Does It Cost?

Life insurance can be surprisingly good value. Premiums start at just a few pounds a month. Prices vary a lot, however, so it’s important to shop around and take advice as appropriate.

A variety of factors may affect the price you are quoted. They include the following:

• your age
• your health
• your weight
• your occupation
• your lifestyle
• whether you smoke
• your medical history
• your family’s medical history
• the length of the policy
• the amount of money you want to cover
• whether you want decreasing, level or increasing term cover

Other things being equal, the younger and healthier you are, the cheaper your policy is likely to be. But as the list above indicates, many other factors can affect the price you are quoted. In addition, women are typically charged a little less than men, as on average they live a few years longer.

The Bespoke Option

As you can see, while life insurance is a simple concept, in practice there are many variations. It is therefore important to establish what is the most appropriate option for you and your family, and shop around to get the best price for this.

A company that can help with both these things is Bespoke Financial. They are independent insurance and mortgage brokers, and will take the time to establish your exact requirements and design a ‘bespoke’ package to suit you and your family’s needs. Their trained advisers will visit you in your home (with all necessary Covid precautions) or you can speak on the phone to them. They can arrange all types of life insurance, critical illness cover, cover for long-term illness or disability, and so on.

To get an initial personalized quote, click through to the Life Insurance page of their website and answer six quick questions. You can then discuss this with an adviser to ensure you will be getting exactly the right type and level of cover for your needs.

• And as an added bonus for readers of my blog, you can get a free will just by asking for a quotation. You can’t say fairer than that, now can you?

As always, if you have any comments or questions on this post, please do leave them below.

Disclosure: This is a sponsored post on behalf of Bespoke Financial. If you click through one of the links and end up making a purchase, i will receive a commission for introducing you. This will not affect in any way the product or service you receive.