When it comes to buying life insurance, the choices that face you can be overwhelming. Firstly, it is natural to contemplate whether or not you really require life insurance. But as you get older, the need for life insurance becomes increasingly important, particularly if you have a family who is partly or wholly dependent on you. Many people may delay the decision to buy life insurance; but, no matter when you choose to invest in life insurance cover, it is important to be aware of the options that face you.

 

First of all, there are two types of life insurance: the first is "protection-only" life insurance, which is also called "term insurance." This type of life insurance pays out if you die within a specified amount of time; however, if you die once this period has passed, your family will receive nothing. This is usually the cheapest type of life insurance, and is most commonly bought in the event of sudden illness. The second type of life insurance is "investment-type life insurance"; this includes "endowment policies" and "whole of life policies." This type of life insurance, as well as paying out in the event of your death, generally builds up in investment value which you can cash in on before you die; hence, the earlier you buy life insurance, the greater the value which will accumulate during your lifetime. Many personal pension schemes, including stakeholder schemes, also count as investment-type life insurance.

When choosing life insurance, make sure your provider is authorised by the Financial Services Authority (FSA); the FSA provides the stamp of approval which tells you that the insurance provider is solvent and operated sensibly. Furthermore, financial advisers handing out advice about investment-type life insurance or personal pensions should also be authorised by the FSA; you can check this by consulting the FSA Firm Check Service. Financial advisers must either be tied - for example, selling products of a single provider - or independent, meaning they can select life insurance for you from the full range of products on the market.

The most important piece of advice to consider when buying life insurance, however, is to shop around and ensure that the insurance you eventually buy is the most suitable for your particular circumstances. It is crucial to think carefully about what you really want from an insurance policy before you take one out, as well as how much you can actually afford to pay. A variety of life insurance comparison sites, like Moneynet, exist to help consumers come to these decisions. Many consumers may also find that high street banks, such as Barclays offer excellent insurance quotes, so the importance of gaining a comprehensive overview of the life insurance market before you make your choice is paramount.