In this, the second part of my series explaining the different types of insurance policy, I’m talking about life insurance.

Again, as the name indicates, this insurance protects your loved ones financially if you die.

A frightening, staggering, number of people don’t have life insurance, even though it is really quite cheap – about the cost of a few of your favourite coffees each week, and you can also guarantee the monthly premiums, meaning they will never increase in price.

If you are young, free and single, then you probably don’t need life insurance, but as soon as you have someone who depends on you, like children or a partner, then you will.

The simplest type of life insurance is level term insurance, where you can insure yourself and/or your partner for a set amount which will only be paid out if you die within an agreed period – the higher the amount of cover and longer the term, the more the policy costs. The amount of cover you choose will stay the same throughout the term of the policy.

There are other types, like whole of life insurance, which pays out when you die, rather than for just a fixed period and decreasing term life insurance, which is there to primarily protect your mortgage. As your mortgage amount decreases then the decreasing term life policy reduces in line with the mortgage amount.