How products can vary between products and providers

As the term progresses, the cash sum payable decreases, roughly in line with the amount of debt remaining, while premiums typically remain the same once cover has been bought. And sometimes the premium can be paid as a lump sum at the outset of the policy.

“Cover can also be bought on either a single or joint life basis, although single life policies often represent better value for money overall,” says Kevin Carr, managing director of Kevin Carr Consulting.

“While some types of insurance policies vary greatly from one insurer to the next, life insurance plans are relatively similar,” he says. “The main details to choose are the type of cover, the length of the policy, and the amount of cover.”

Different companies will include different features, notes Peter Hamilton, head of Zurich UK Life’s protection proposition.

“Some providers will offer guaranteed insurability options which enable customers to increase their cover, without further underwriting, on the occurrence of certain events, such as birth or adoption or moving home. Some will also give customers access to support and counselling services.”

Michael Owen, director of Brooks Macdonald Financial Consulting, adds: “There are many different types of life insurance and sometimes it is appropriate to have more than one policy to cover different eventualities.”

He suggests common types include:

• Level term assurance, which is often used to protect an interest-only mortgage that has to be paid off by a known date in the future.

• Inter vivos protection, to cover the potential inheritance tax liabilities when someone gives away an asset or a sum of money away.

• Family income benefit, relatively inexpensive policies which provide a regular income until a fixed date in the future.

• Term assurance, which pays a lump sum for a fixed term, but at the end of the term you have the option to renew the policy, and versions of this, including convertible term and renewable term assurance, where there is the option to swap into a different type of policy at a certain date or at the end of the term.

Mr Owen advises that it is wise to consider how best to protect the policy proceeds from tax as the application of tax can differ between policy types.

But he says the key aspect with all insurance is that the age of the policyholder and their health is taken into account when the policy is recommended.

“Insurance companies don’t all offer the same type of policy,” he adds, “and the costs can vary considerably from one company to the next, depending upon each insurer’s view of the risk of the life assured.”