What exactly is Life Insurance?

Life Insurance is insurance on your life, so if you die whilst the policy is in force - a lump sum will be paid out. This lump sum is free of income tax and capital gains tax. People get this type of insurance to cover debts and mortgage, and to leave an inheritance. Please note that in some circumstances, the proceeds could be subject to Inheritance Tax but this tax liability can be avoided by having the policy "Written in Trust".

Life Insurance is not expensive, and the younger you are, the cheaper it is. You will still be able to get life insurance up to the age of 68, but after 70 it gets difficult and expensive to find.

If the Life Insurance is not related to a mortgage, you can insure for as much or as little as you want - and the premium will be calculated accordingly.

If you are insuring to cover an Interest Only Mortgage you need to make sure that you cover the entire mortgage, and keep the insurance up for the term of the mortgage.

If you are insuring to cover a Repayment Mortgage then you can get a specific type of insurance called Mortgage Life Insurance - this decreases in value in line with the decreasing value of the mortgage.

Many Life Insurance policies also include Terminal Illness insurance at no extra cost - so if you contract an illness which a doctor expects you to die from within 12 months, then the life insurance will pay out immediately.