If you've ever wondered how your family would cope if the main wage earner passed away then the answer is likely to be life insurance.
Life insurance pays out a sum of money when the person who is covered by the plan dies. The money provided is intended to pay off any outstanding debts and support your dependants financially by providing them with a further lump sum or a regular income if you die.
The correct name for this type of protection plan is life 'assurance' instead of life 'insurance' because death is at some point guaranteed - so you are 'assured' that the plan will definitely pay out one day as long as you have paid all the premiums and you die whilst the plan is in force. In return for paying the premiums, the insurance company will pay out the agreed amount - known as the 'sum assured' - if you die during the term of the policy.
Premiums are normally paid to the life insurance company on either a monthly or annual basis for a fixed period of time or in some cases, until death eventually occurs. The cost of these plans vary according to your personal circumstances such as age, previous medical history and the amount of cover you require.