Quite simply, life insurance is an agreement between you and the insurer whereby the insurer will be pay out a cash sum should you pass away during the term of the policy.
Life insurance, also known as life assurance or term assurance, aims to help protect your family financially in the event of your death. The lump sum can be used at their discretion for payments such as mortgage, child-care costs, household bills and even university fees.
There are various types of life insurance Categories, such as,
Mortgage Term Assurance- designed specially to pay off the mortgage amount
Level Term Assurance – designed to help protect the family from financially turmoil.
Critical Illness cover- More of a life insurance add- on, Critical illness cover pays out if you are diagnosed with a specified critical illness during the term of the policy.
The types of life insurance, the level of cover, the term of the policy and the extra add-ons have to be decided by yourself and your situation. For example, if you would like cover to take care of your loved ones mortgage and university fees then think about the term of the mortgage, university and the level of premium that will be implicated. As you might expect, the lower the cover amount, the lower the premium will be, so affordability should be taken into account. To add, life insurance is not like a savings/investment plan and hence has no cash value should you live past the length of the policy.