Life Assurance

What is life assurance?

Life assurance is a policy that offers a one off payment or an income after the death of the person named in the policy. Policyholders can choose to pay either a single lump sum or a regular monthly premium. There are currently more than 100 companies offering life assurance policies, all with different products, costs and investment performance, and all with plenty of small print. Sourcing the right company and product involves a huge amount of work for the individual. For this reason, it is wise to seek independent advice.

People generally take out life assurance policies to cover three areas: family protection, critical illness and mortgage protection.

Family protection

Whilst some life assurance policies are designed to run for a fixed number of years - perhaps until the youngest child reaches the age of 18 - a family protection scheme is often set up to run for a longer period after the death of the policy holder on what is referred to as a Whole of Life basis. Whole of Life policies vary considerably in terms of flexibility. For this reason, it is sensible to discuss with your financial adviser whether a single lump sum payment into the policy suits you best, or whether you would be better of with a policy into which you could pay increasing amounts during your lifetime.