Life assurance—a buyer's guide

What is life assurance?

Life assurance is an insurance policy that pays out on the death of the person insured.

Life assurance offers financial protection to replace earnings, pay the mortgage and household bills.

How much life assurance cover do I need?

Work out how much money your family would need to carry on, pay outstanding debts and have a reasonable standard of living in the future.

Include your household's income and outgoings. If you have young children then you'll need to cover the cost of childcare in the event of the death of a non-working partner.

Work out whether dependants would need a lump sum and/or income, and if so how much and for how long.

Are there different types of life assurance?

Term insurance is the cheapest. It pays out a fixed amount if you die within a specified period. If you don't die within the term no payment is made.

Whole life insurance carries on indefinitely paying out either a minimum guaranteed sum or the investment value that has built up when you die. It also has a cash value that you can get back if you cancel the policy.

Premiums are more expensive with whole life assurance because the policy is certain to pay out.

Can my partner and I take out joint life assurance?

Life assurance can be taken out on a single or joint life basis. A joint life assurance policy will pay out on the death of the first person. It may be cheaper, but is only really suitable if you would both need the same amount of cover.

Do I already have life assurance cover?

If you have an endowment mortgage then life assurance is automatically included as part of the package.

Where can I buy life assurance?

The best way to find the life assurance cover to suit your circumstances is to get quotes through an insurance broker. You can buy online but it's best to take expert advice first.