There are different types of products available to provide you and your family financial protection.
It is important that you have a professional review your circumstances in order to help identify the areas where additional protection is needed.

Life Assurance
Pays out a lump sum if you die.
Life insurance is about providing some financial security for people who depend on you if you died. (So if you don't have a partner, spouse or civil partner, children, or other dependants, you may not need life cover.)

To make sure you buy the right amount of cover, with the right terms and conditions, you should consider getting some advice. The adviser assesses what your family would need, and shops around for the cover that suits you best.
Always answer questions as best you can and disclose any existing medical conditions when asked. If you don't give the full facts, you could invalidate your policy and the insurance company won't pay out.

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

Term assurance pays out only if you die within a certain term, and whole of life insurance pays out whenever you die. Some whole of life policies also contain an investment element to them, but such investment-type policies cost a lot more than protection-only insurance.

Term Assurance
This is the simplest and cheapest type of life insurance, and is known as term insurance because you choose how long you're covered for, say, 10, 15, or 20 years (the term). Term insurance only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out if either of you die during the term.

Things to look out for

• What type of policy do you want? For example,
  - family income benefit (a policy which pays out income rather than a lump sum),
  - increasing policy (where cover and premium rise over the years),
  - decreasing policy (where cover and premium fall over the years),
  - renewable policies (which let you extend the original term).
   
• Check for exclusions - in other words, when the policy won't pay out. For example, most do not cover death due to alcohol or drug abuse. You might not be covered while taking part in risky sports. If your health is poor when the policy starts, some causes of death might be excluded or you might be refused cover altogether.
• Premiums shown are usually fixed for the whole term. There are also contracts where premiums are reviewable, after a certain period, usually five years.
• How flexible is the contract? Can you reduce or increase cover easily as your circumstances change? Are there extra charges for doing this? Does cover stop immediately if you miss a payment or is there a period of grace?
• By paying extra, you can usually include a waiver of premium. It pays the premiums if you can't work because of a long-term illness so that your cover is not interrupted.
• If you want to change insurer, check the level of premiums for the new contract before switching (premiums may have gone up because of older age or because you have developed medical conditions). Also check the new level of cover compared to the previous one. Different benefits may be available, and different exclusions may be applied – for example you may not be covered for medical conditions that have developed before the switch even if these were covered under the previous contract. If you do decide to change, make sure you do not cancel your original cover until you are fully covered by the new contract.
• The policy can be set up under trust. This means that in the event of death, proceeds of the policy are paid directly to dependants of your choice. Provided a trust is set up properly, there may be benefits to doing this. However, using a trust may not be suitable for everyone and because of the complexities we recommend you seek financial and legal advice.

What does it cost? This depends on several factors, such as the amount of cover you want and the length of the term. Naturally, it's also based on the likelihood of your insurer having to pay out: if you're a smoker and do a dangerous job, you'll pay more than a non-smoking office worker. Term life cover also costs more for men because, on average, they don't live as long. Always compare what's covered by a policy, not just the price. Some might be cheaper than others, but they may not offer the same level of protection.

Mortgage protection life cover (a type of term insurance)
Pays off the mortgage loan if you die.

Endowment mortgages automatically include life cover.

If you have a repayment mortgage (so the amount you owe gets smaller over the years), you can buy cover that reduces as the debt reduces.

Whole of Life Cover
Whole of life insurance pays out an agreed sum when you die, whenever that is.

What does it cost?
These policies will cost you more, partly because they will pay out whenever the event (death) happens, but also because of the various charges that come with them. The cost also depends on your lifestyle: if you're a smoker and do a dangerous job, you'll pay more than a non-smoking office worker. Life cover also costs more for men because, on average, they don't live as long as women. Always compare what's covered by a policy, not just the price. Some might be cheaper than others, but they may not offer the same level of protection.

Critical Illness Cover (CIC)
Pays out a lump sum if you're diagnosed with a critical illness, such as cancer, a stroke, MS, a major organ transplant, coronary artery bypass, heart attack and kidney failure. You can use the payout to pay for medical treatment, pay off your mortgage or anything else.

You need to read your insurer's terms carefully, not just for the range of illnesses they cover but also their type. For example, while a heart attack may be covered, a cardiac condition such as angina may not, also not all types and stages of cancer are covered.

For a claim to be successful, you normally have to survive a month following the diagnosis.

Mortgage Payment Protection
(Also called Accident, Sickness and Unemployment (ASU) Insurance)
If you have a mortgage, you may want to consider this. A typical policy will start to pay your mortgage one month after your income stops due to redundancy, accident or illness, and continue to pay for 12 months.

You don't have to have this type of cover at all (unless it's a condition of your loan) and you certainly don't have to buy it from your own lender, so shop around for the best deal for you.

Check if any medical problems you may have had in the past would be excluded if they cropped up again.

Payment Protection Insurance (PPI)
(Also called Accident, Sickness and Unemployment (ASU) Insurance)
To help you keep up your payments, for example on a loan or credit card, in the event you can't work because of redundancy, accident or illness. A typical policy will start to pay an agreed amount one month after your income stops due to redundancy, accident or illness, and continue to pay for a set time – usually 12 or 24 months.

Look at the conditions carefully. For example, what if you wanted to cancel the cover after a few months?

And if a medical problem you've had before crops up again, will they still pay out?

Also check whether you'll have to pay interest on your single premium. This happens where the single premium is added to your loan which means you will be charged interest on it as well.
 

Income Protection (or Permanent Health Insurance – PHI)
Replaces a substantial part of your income if you are unable to work for a long period of time because of illness or disability.
It continues to pay out until you can return to some kind of paid work or reach retirement, whichever is sooner.

PHI products have a waiting period before they will start to pay out. The longer you agree you'll wait, the lower your premiums, so it is important you find out what income you can get from your employer, or other insurance (such as mortgage payment protection).

This cover might not be available to you if you have existing health problems or a dangerous job.