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What is it?

Life insurance pays out a cash lump sum if you die during the term of your policy.

You can apply for most policies when you turn 18, but some have different age restrictions.

°Â³ó±ð²ÔÌýcomparing life insurance policies, you can choose:

• How much a policy will pay out

• How long the policy lasts for

• Who the payout goes to if you die, e.g. your spouse

What is a life insurance term?

It is the length of time a policy lasts, for example, a life insurance policy for 20 years has a 20 year term.

How does it work?

Before you take out a life insurance policy, you need to get quotes from insurers.

Most insurers let you choose your policy based on the payout amount you want, or the amount you can afford to pay each month, for example:

• If you choose a payout amount, your monthly premium will be affected. The higher the payout, the more you pay monthly.

• If you choose your monthly premium, your payout amount will be affected. The lower your monthly premium, the less you get as a payout.

Find out how much cover you can get here

What types are there?

There are three main types of life insurance you could apply for:

• Term life insurance: You choose a term and an amount of cover, then pay a premium until the policy ends. There are two types of term insurance, level term and decreasing term.

• Whole of life insurance: You choose an amount of cover, and the policy will pay out whenever you die. You have to pay your premiums until you die, or you could invalidate your policy and get no payout.

• Over 50s life insurance: You can only apply if you are over the age of 50. You choose an amount of cover and pay a set premium each month. Some policies have age limitation for claims, but most do not.

Here is how to work out which life insurance policy is right for you

Is it worth it?

It can be, some policies start from £5 a month. However, whether it is worth it will depend on your personal circumstances:

• If you have a mortgage: A life insurance policy could offer a lump sum of money to clear your mortgage, taking the financial stress off the ones you leave behind.

• If you have children: You may want to leave your children a sum of money to help them with their finances, or to go towards their education, e.g. university fees.

There are many things to consider when weighing up the true value of a life insurance policy though:

• The higher the amount of cover, the more you will need to pay each month

• The older you are, the more expensive your policy is likely to be

• If you smoke, you may struggle to find a policy, and the ones you find will cost more

If you are unsure if you should take out life insurance, speak to an independent financial adviser.

Here is how to cut the cost of life insurance