What Is Life Insurance?
Life insurance is a contract made with an insurance company, in which they agree to pay money to your survivors in the event of your death or diagnosis with a terminal illness. You make payments to your insurance provider to guarantee this cover.
Life insurance is designed to financially protect your loved ones in case you die. Coping with the grief of losing a family member is never easy, but knowing that you have protected your loved ones from unnecessary financial burdens can give you peace of mind that they will be cared for should the worst happen. If you have no family as such, you may wish for your life insurance pay-out to help a dependent business partner or close friend instead. Life insurance is not compulsory, but it can help your dependents to cope when you are gone.

What Are Term Insurance and Life Assurance?
There are, broadly speaking, two types of life insurance: Term Insurance and Whole-of-Life Insurance. Whole-of-Life Insurance is sometimes referred to as 'Life Assurance' as it is guaranteed to pay-out. Having said that, some insurers also call Term Insurance 'Term Assurance' so be aware that the terms 'insurance' and 'assurance' may be used interchangeably. Term Insurance covers you in the event of your death if you die within a set period of time, but will not pay out if you die after this agreed period. Life Asurance covers you until death and is therefore assured to pay out eventually. It is thus the most expensive type of life insurance. There is also a further, arguably more complicated form of life insurance, called Endowment Insurance, which includes insurance in a savings plan.

How to Know How Much Total Payout Is for Life Insurance?
The amount of cover, referred to as the 'sum assured', that your family receive if you die is up to you: how much money will your dependents need if you die? This amount is usually paid as a lump sum or as a series of monthly sums, known as Family Income Benefit. It is a good idea to seek advice when deciding on the correct amount of cover for you: you do not want your family to be left with too little, nor do you want to pay excessive premiums for unnecessary cover.

How Much Is The Cost for My Life Insurance?
The cost of a life insurance policy is different based on the type of insurance and the level of cover received as well as your age, sex, state of health, lifestyle and occupation. The terms and conditions surrounding life insurance are variable and you should shop around and get advice from different providers. Ensuring that you know exactly what cover you are receiving will prevent any surprises later on when a claim is made.

What Is Endowment Insurance?
Endowment Life Insurance is the equivalent of a savings scheme which includes life insurance. Essentially, either you or your insurance provider will specify a time period for the insurance policy, usually a minimum of ten years. If you should die or become terminally ill during this period, the policy will pay out like a life insurance. Should you live beyond the end of the set period, you receive a lump sum known as the 'maturity value' of the policy instead. Some of the money that you pay in premiums will be invested, and any investment returns that this money earns will be added to the fund by your insurer: usually on an annual basis. If your money earns good investment returns, the sum assured (the money paid to your survivors in the event of your death) or the maturity value of the policy will also increase at a good rate.
Compared with term insurance, endowment insurance usually requires you to pay higher monthly premiums because it is guaranteed to pay you money back. Despite these higher premiums, the level of life insurance cover is generally the same as that of term insurance or a whole-of-life policy. The benefit of endowment life insurance is that you are guaranteed to get some money back whatever happens, whereas term insurance will not pay out unless you die within a set period.

What Is Single or Joint Life Insurance?
Life insurance can be purchased to cover you, or you and your partner in the event of either of your deaths. Commonly, joint insurance is available as a joint life 'first death' insurance plan: this means that the policy pays out for the first death in the partnership, but thereafter the plan ceases and the surviving partner is no longer covered.
Depending on the current insurance policies on offer, it is sometimes more logical to opt for two individual life insurance plans for you and your partner. Some issues that arise with a joint insurance policy are eradicated if you have two individual policies. In the majority of cases, having two single policies will double the pay-out, as both deaths will be covered, rather than just the first. Additionally, reports suggest that there is little extra cost to taking out two separate policies rather than one joint policy.

What Is Critical Illness Cover?
It is important not to confuse terminal illness cover with critical illness cover. A terminal illness is an illness from which medical practitioners expect you to die, usually within a relatively short period of time such as twelve months. A chronic illness is a serious illness but one which you can recover from and one without a set life expectancy.
If you are diagnosed with a terminal illness, your life insurance will usually pay out. If you are diagnosed with a critical illness, your life insurance will not usually pay out unless you have chronic illness cover. If you wish to protect yourself in the event of a chronic illness, you should discuss your insurer's conventional response to chronic illness diagnosis with your provider. You may be advised to take out separate critical illness cover or be able to add this cover into your basic policy by agreeing to pay higher premiums.
When you are diagnosed with a critical illness you will need to contact your insurer, who will guide you or your relative through the claims procedure. Usually the insurer will simply need confirmation from your doctor or medical specialist to prove that you are suffering from a critical illness. Sometimes claims will take up to a month to be processed after your initial enquiry, whilst other claims will only be processed when the insurance company has proof that you are suffering from a long-term illness. Even if you subsequently fully recover from the illness, you are entitled to keep the money that you have received. Once a claim has been made, your critical illness cover policy will usually be void.
Each insurance provider will have their own definition of which diseases are covered by the term 'critical illness', and these should be detailed in their 'Key Facts' document. You should read this carefully so that you are aware of exactly what your policy covers you for, and purchase extra cover as appropriate. Critical illnesses may include: Alzheimer's Disease, Aorta Graft Surgery, Benign Brain Tumors ,Blindness, Cancer, Coronary Artery By-pass Surgery, Coma, Deafness , Heart Attack ,Heart Valve Replacement, HIV/AIDS (Certain requirements exist) ,Kidney Failure, Loss of Limbs / Loss of Speech ,Major Organ Transplant ,Motor Neurons Disease ,Multiple Sclerosis ,Paralysis/Paraplegia, Parkinson’s Disease, Heart Attack, Stroke ,Third Degree Burns, Permanent Total Disability.

What are the Normal Exceptions for Critical Illness Cover?
Normally, if you contract a serious illness as a result of one of the following activities, you will not be covered:
Aviation
Living Abroad
Criminal Acts
Pre-existing conditions
Drug Abuse
Self-inflicted injury
Failure to follow medical advice
War and civil commotion
Hazardous sports

How Do I Save Money on My Premium?
Shop around
Obtain different quotes. Use price comparison guides on the internet to get you started.
Work it out
Work out the level of coverage you get, say, per £1,000 investment, and compare all the quotes carefully.
Find specialist insurers
You may find insurers who offer competitive benefits and will assess you as an individual rather than asking a few stock questions, particular if you have a health problem.
Quit smoking and keep fit
You can make massive savings if you lose weight or pack in smoking. The healthier you are the cheaper your premium will be.
Pay up front
A one off payment could save you lots of money if you can afford it. Compare the total cost of monthly payments with a one off fee. It may be cheaper to arrange a loan with better conditions and pay up front than pay a monthly payment.
Buy sooner rather than later
The younger you are when you purchase life insurance the cheaper your premium will be.
Avoid agent/brokers
Buy direct from the insurer and avoid commission.

How to Make a Claim by My Family in The Event of My Death or Terminal Illness?
If you have life insurance and you die or are diagnosed with a terminal illness, your insurance provider will need to be informed in order for your survivors to receive a pay-out. It is a good idea to inform a close relative or friend that you have taken out life insurance, and ask them to contact your insurance provider when the time comes. They will need to provide the insurance company with proof that you are a policyholder, details of the policy and your death certificate or confirmation of the terminal illness diagnosis.
To speed up the claims process ensure that any required forms are filled out correctly, and any relevant information has been included. It is recommended that these documents are sent by recorded or registered delivery, because you will need to send original copies and will not be able to claim if these are lost in the post. The insurance company will be able to advise your survivors how long the process should take and when they will receive their money, see also claims time frame. The current Intestacy Rules in England and Wales determine the chain of inheritance after you die: if you have not written a Last Will and Testament these rules will dictate who is entitled to receive your life insurance benefit.

What Should My Beloved Ones Do to Get the Pay-out Quickly without Paying Inheritance Tax Out?
There is a way to reduce the tax bill and ensure that the payment is straightforward. Writing a life insurance policy 'in trust' means that the pay-out is omitted from the total estate calculation. Firstly, the inheritance tax bill may be greatly reduced, or even eliminated when the value of the estate is reduced. Additionally, writing your policy 'in trust' ensures that the money is paid promptly and to a person you nominate, without any need to refer to your Last Will and Testament. You may specify exactly who will receive the pay-out and, if it should be made to more than one person, how much each beneficiary should receive. Most insurance providers will offer the choice of writing your policy in trust. It is very easy to arrange, usually requiring only a few extra forms, and typically it will be at no extra cost.

In Which Situation Pay-out Is Likely to Be Refused?
There are certain scenarios which would render a life insurance policy invalid and result in a pay-out being refused. Unfortunately, there is no comprehensive list of invalidating circumstances, but the most frequent grounds for refusal include fraud, misrepresentation and suicide.
If you fill in your application for life insurance in a fraudulent way your survivors may be refused a pay-out.
Misrepresentation in your application, or 'material misrepresentation' as it is sometimes known, has much the same effect on your policy as fraudulent claims: it will usually result in a refusal to pay out to your survivors.
Failure to mention something that would be of interest to your insurance company, or lying about the state of your health or your personal circumstances on an application for life insurance counts as misrepresentation and will usually result in the policy being void.
An insurance provider may refuse to pay out if you commit suicide shortly after purchasing the policy. This is to ensure that you do not purchase an insurance policy with the intention of committing suicide the following day, forcing the insurance company to pay out a large sum of money when you have made few or no premium payments. Often life insurance policies will include a clause which states that you will not be covered if you commit suicide within one or two years of purchasing the insurance.