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When working out how much life insurance cover you need, you should think about what level of cover feels right for you and how long you want it for. You can use our life insurance calculator for a quick and easy way of getting a better idea.

There’s no set financial rule about when you need to take out life insurance, but it’s something you should consider as soon as you have dependents. Many financial experts recommend taking out a life cover policy before the age of 35, as this is when premiums begin to rise more steeply as you get older. The older you are, the more expensive it usually is to take out life insurance - but other factors also affect your policy premium, including your health, medical conditions and occupation.

Life insurance works in essentially the same way as home or car insurance. You pay an insurance company a premium, usually monthly, to provide cover in the unfortunate instance of your death. It’ll only pay out if you make a claim during the policy term and there’s no payout at the end. If you did die whilst the policy was in place your insurance provider would pay out a lump sum which can be used by your loved ones. This money is often used to pay off the remainder of your mortgage, but can also be used for other purposes, like paying off other debt or to cover loss of income.

Term life insurance simply means that your policy will cover you for a specific period or term, whether that’s ten, twenty or twenty-five years. After that period, you’ll have to take out a new policy. Whole life cover, on the other hand,means you just need to take out one policy, which will be in place until your death, provided you keep up the payments.

The terms life insurance, life cover and life assurance are often used interchangeably. Life cover can either refer to insurance or assurance - and there is, technically, a difference between the two. Life insurance usually has a fixed term, whereas life assurance lasts indefinitely, as long as the policyholder keeps making their monthly payments (like whole life insurance).

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Life insurance is paid out as a lump sum, which your loved ones can spend however they see fit. The money is often used to pay off the remaining capital on a mortgage, but it can also be used in other ways - including paying for your funeral. However, you can also choose to take out separate funeral cover, which is specifically designed to cover these costs.