Benefits are paid only in the event of death during insurance cover period and the sum defined in the insurance policy is awarded to a Beneficiary, a person designated in the insurance policy. A Beneficiary may be an unemployed wife, dependent parents or someone important in your life who you do not want to leave without financial security. The insurance, as clearly stated above, provides financial protection for persons you choose.
Insurance may be enhanced by additional insurance contracts such as:

• Critical Illness Insurance
• Income Protection
• Unemployment Protection
• Child Protection

Life insurance falls into two categories:

• Term Life Insurance
• Permanent Life Insurance

What can you gain by insuring your life?
The fundamental purpose of life insurance is to provide financial security to persons you are close to and at the same time to gain sense of security. Securing psychological comfort for ourselves in the time of increasingly rapid pace of life is quite important. This can be achieved by buying out life insurance policy which will constitute only a small expenditure in your budget.

What are the benefits of life insurance?
This is the cheapest form of protecting your family. Life insurance is most of all:

• for persons close to you:
  • a form of financial protection,
  • security that they will receive a recompense for the loss of earnings which will give them time to change their employment for a more profitable one or to find a new source of income,
  • security that they will repay your mortgage loan,
  • security of your children’s lives,
  • security that they will be able to repay inheritance liabilities or/and liabilities owed to the taxman without the need to sell their assets.
• for you:
  • psychological comfort and sense of security. Needless to say, nothing and nobody will replace you when you pass away, but life insurance will protect persons who are important to you from a situation when apart from bereavement and pain they will be going through they may also suffer financial hardship.

In what circumstances life insurance may be essential?
Life insurance may turn out to be essential when:

• you are the only breadwinner in the family,
• you have dependent disabled person,
• you have financial liabilities, eg. mortgage
• you cannot afford to save and loss of your income will constitute a significant gap in the family budget.

Under Critical Illness Insurance a non-taxable sum will be paid out in the event of being diagnosed with one of the illnesses defined in your insurance policy.

All policies insure against:

• cancer
• heart attack
• stroke
• renal failure
• multiple sclerosis
• rheumatoid arthritis

Number of illnesses covered by such insurance policy varies depending on the insurer (from 3 to 164).

Insurance policy may be bought separately or as an addition to other policy, most often to life insurance.

Income protection provides non-taxable monthly income in the event of policyholder’s incapacity for work due to an accident or an illness.

A huge benefit of this type of insurance is that it is permanent (the insurance may be paid up to the age of 60/65), eg. when due to an accident/illness you will be incapable to work (eg. stroke, paralysis, loss of sight). The benefit will be paid until you will be able to come back to work or you will reach the age of 60/65.

There are other products available designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk