We insure our homes and cars without a second thought. But, for obvious reasons, thinking about family life insurance can be an emotional business.
Life insurance provides a financial cushion for those who depend on your income if you die within the policy term.
It can be tricky knowing which policy best suits you and your situation. For example, if you are in a couple, is a joint policy preferable to two single policies?
We've put together a simple guide that explains the different types available.
Life insurance, an overview...
Does life insurance cover you until death? Not always.
Most people take out life insurance for a set period of time - 20 years, say, or for the duration of a mortgage, or maybe until an expected retirement age - after which the policy ends.
You can choose the length of your policy when you apply, and you can also choose between decreasing term and level term cover.
With decreasing term life insurance, the payout reduces over time, so it tends to be a little cheaper than level term life insurance, where the payout remains the same.
Decreasing term life insurance is usually taken out to cover a repayment mortgage (as the mortgage debt shrinks, the life insurance payout does too).
It is possible to take out life insurance which lasts your entire life. This is helpfully called whole of life insurance. It tends to cost a little more, but then a payout is guaranteed when the policyholder dies (as long as the policy terms are met).
Whichever type of family life insurance you choose, the monthly cost will depend on factors like your age, health, lifestyle, and level of cover. You will be asked about these during underwriting.
What is single life insurance?
Single life insurance pays a lump sum if the policyholder dies during the policy term.
So if there are two of you, each with single life insurance, each policy would pay out separately on the death of the policyholder.
You set the amount when you take out the policy, so it's important to take into account what your dependents may need the money for.
If you are in a couple and wish to buy single policies, you can select different amounts on each policy as appropriate.
Single policies are also simpler in the case of a separation as you can both continue with your individual policies.
What is joint life insurance?
If you want life insurance for couples, whether married or not, you may prefer a joint policy. It involves one application and one regular payment per couple.
The cost is usually cheaper than two single policies, for one main reason: it'll pay out only once, usually after the first partner dies (or, as mentioned, is diagnosed with a terminal illness and given fewer than 12 months to live).
There's another reason joint life insurance policies tend to be cheaper than two single policies: statistics suggest married and co-habiting couples live longer than single people, so insurers are able to offer cheaper cover.
Once the policy has paid out, it automatically ends, leaving the surviving partner uninsured. If you're older, it may be costly to get a new policy - particularly if you've developed any medical conditions.
With joint life insurance, partners must be insured for the same amount, so the payout is the same whoever dies.
And what happens if your relationship ends?
Some policies now offer a separation option, meaning the policy can be split and continue without either policyholder having to go through underwriting.
You may also come across dual life insurance, which will pay twice if both partners die during the term, but it's less common.
Find out more about Zurich life insurance.