I know life insurance isn't necessarily something you want to give to much thought, after all as long as you're still feeling fit and healthy it might seem like an uncomfortably morbid idea to be considering. Maybe so and, hey, no one wants to be too pessimistic but really, get it sorted and it'll be a huge wait off your mind. Leaving your loved ones in a state of financial difficulty isn't something anyone wants I'm sure.



To be blunt, for anyone with a family depending on their income life insurance is a must. What life insurance buys you is piece of mind, the certainty that if your contribution was removed your family would at least be able to continue there lives in comfort.

If you are the main breadwinner it should at least be a priority to have enough life cover to pay off your mortgage and other significant debts, leaving your family with the burden of debts they can't afford to pay off isn't something anyone would want as a legacy. Yet somewhat surprisingly as many as a quarter of homeowners don't have enough cover to pay off the mortgage, a fact which serves to point towards a gaping disparity in the UK between the cover we should have and that which we currently do have ? reports suggest we're a staggering ?2,000,000,000,000 short!

So if you haven't already it really is time to give life insurance some though, here's a brief guide to the options:

? There are three basic types of life insurance policy ? term insurance, whole life insurance and endowment insurance.

? Of these term insurance is the most affordable option. This is a policy that will run for a specific period of time as chosen by you at the time of application. There are a few possibilities here ? level term insurance where the sum insured will remain level, decreasing term or mortgage protection insurance which will see the sum decreasing in line with the reducing balance of a capital repayment mortgage or increasing term where the sum will increase according to RPI or a fixed percentage. It is worth bearing in mind that the policy will only pay out if you expire before it does.

? As the name suggests whole life insurance provides cover throughout your life and will only end at the point of your death, regardless of how old you live to be. In many cases they will be associated with an investment and thus prone fluctuating premiums. Because a payout is pretty much guaranteed Whole life insurance can be pricey.

? Endowment policies are often taken out with decreasing term insurance to hopefully counterbalance diminishing payout based on a decreasing mortgage debt. Their accumulation does however depend on investment markets so nothing is guaranteed.

Copyright (c) 2007 Jay Smith