Life insurance is a type of insurance that pays out when you die. Sometimes it only pays out if you die during a certain period of time. This is called the policy term.
Life insurance is helpful for two main reasons:
- It can pay off debts left behind, such as a mortgage.
- It can provide money for your family after you die.
Many life insurance policies include terminal illness cover. This means the insurer will pay out the full amount of the cover straight away if you are expected to live for less than 12 months. You can keep the payout even if you live longer. You can use the money for any purpose. You should check with your insurer to see whether this is included in your policy.
Some life insurance policies will also pay out if you are diagnosed with a critical illness.
Employers may offer life insurance to employees. This is sometimes known as death in service benefit. It is usually available to every employee, whatever their state of health. It normally covers up to a set amount. Speak to your human resources (HR) department at work to find out more.