Life assurance (or life insurance) aims to protect your dependents from the financial consequences of your death by paying out a lump sum or by providing a fixed regular income. There are two basic types of life assurance:

Term assurance.
This provides cover should you die within a specified period (the term), for example the next 10, 15 or 20 years. If you live longer than the specified period, you get nothing. Couples can also take out a term policy in both their names, with the cover only paying out once if one of them dies during the term.

There are different types of term policy:

• Family income benefit: These are specifically designed to meet the needs of parents and in the event of death provide an income until a fixed time in the future (e.g. the 21st birthday of your youngest child). They come with various options such as adjusting the level of income to protect against the effect of inflation.
• Increasing term policy: The amount these pay out in the event of your death rises the closer you get to the end of the term and they are often used to protect your dependents from the effects of inflation. The rate at which the benefit rises is often linked to the Retail Price Index, and as the benefits go up, so do the premiums.
• Decreasing term policy: The amount these pay out in the event of your death reduces the closer you get to the end of the term, and they are often used to protect your dependents if you have a mortgage or other large debt. As the loan is repaid, the amount your family would have to pay in the event of your death reduces so the amount of cover you require decreases over time. 
• Endowment policy: These are similar to decreasing term cover but include an element of investment. They were once commonly arranged in association with a mortgage where the aim was to provide life cover for the period of the loan, while the investment element was meant to generate sufficient growth to pay of the loan at the end of the period. 
• Convertible term: These give you the choice at the end of the term to convert the cover to a different type of contract (e.g. whole of life) or to extend the term.

Term cover is the simplest and cheapest type of life insurance, and other than for increasing term policies, the premiums you pay are usually fixed for the whole period.

Whole-of-life insurance.
This pays out an agreed sum when you die, whenever that is, as long as you are still paying the premiums. Such policies cost more than term cover, partly because they will pay out whenever you die, but also because of the various charges that come with them. Some whole-of-life policies also contain an investment element but these tend to cost a lot more than protection-only cover.

The cost of either term or whole-of-life depends mainly of the likelihood of the insurer having to pay out so factors such as your age, sex, state of health, whether you smoke and what job you do will all have an impact.

There is a lot to consider when arranging life assurance:

• What type of cover is most appropriate? This will vary according to who are the dependents you are trying to protect (e.g. your spouse, your partner, your children etc) and whether there is a specific requirement for the cover (e.g. to cover a mortgage, to provide a regular income etc).
• Which is the right policy for you? The cover provided be different companies varies and different policies have different exclusions (e.g. some do not cover you if you do risky sports or if you have suffered certain ailments in the past).
• How much flexibility do you need? Will you need to reduce or increase cover as your circumstances change and if so what are the charges involved?
• Should you opt for a waiver of premium? You can often ‘protect your protection’ by paying an additional premium so that if you can't work because of a long-term illness, the premiums for your life cover will still get paid.
• Does the policy need to be set up under trust? This means that in the event of your death the proceeds of the policy are paid directly to the dependant(s) of your choice.

As you can see, there is a lot to think about when arranging life cover so it is worth having a chat with your Independent Financial Advisor who can talk you through the options and help you find the cover which is right for you.