Insurance is really a way of betting against particular things happening. So that if that particular thing happens, you or your family will get money to help cover the costs. If you insure your possessions and lose one, the insurance company will pay to cover the cost of what you have lost (in theory!). So life insurance will pay money out to your family if you die. For many of us, life insurance is relevant because we need to have it to get a mortgage. Although many lenders do not insist that you have a life insurance policy to get a mortgage, they do still strongly recommend it. The point of having the life insurance is that it pays out if you die to cover the mortgage. Your financial adviser will guide you on whether it is the right thing for you to do.

The insurance money paid out comes from a fund of money made up of the premiums all those insured have paid. Some companies will also re-insure. This means that they take out insurance against having to pay out to you.

The cost of insurance depends on a number of factors. The most important of these is how likely it is that the event (insured against) will happen. And particularly whether the policyholder is above or below average in risk. So, if you are terminally ill, no company will give you life insurance.

Insurance companies cannot discriminate against one group of policyholders unfairly by charging too high a premium in order to subsidise the cost of insurance to another group.

It is very important to realise, and to take into account that each case of insurance varies from person to person and from company to company. You must make your own enquiries and check carefully what companies offer against your own particular circumstances and requirements. A good financial advisor will check the rates of all insurance companies on your behalf and then recommend the best deals for your circumstances.

The Cancer Research UK group has information on life insurance for cancer patients.

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