Life assurance is an unpopular topic of conversation, which is not surprising as no one likes to dwell on his or her own mortality. Although most of us do realise that life assurance is crucial, it is a worrying fact that 32% of British adults have no life cover and a further 27% believe they are making inadequate provision. (Source: Association of British Insurers).

There is a wide range of life insurance policies on offer, but they are basically designed to do one of two things: replace lost income and provide a capital sum when it is probably needed most - that is, in the event of death. So what are some of your options?

Level term assurance guarantees an agreed amount of cover over a fixed term. A lump sum is paid out if death occurs before the policy ends. Level term assurance has no value when the policy ends, or if it is surrendered before the end of the term.

Here again, decreasing term assurance pays out only if death occurs before the policy ends. This type of cover is popular with people taking out repayment mortgages, as the sum assured reduces roughly in line with the reducing amount of capital owed on the mortgage. If death does occur before the mortgage period ends, the policy will pay out a proportion of the sum originally assured.

This allows you to extend the original policy once it has come to an end. Renewable term assurance enables your insurer to review your premiums at regular intervals, usually every five years, and then adjust them where necessary to reflect changes in costs.

The monthly premium remains the same throughout the whole term, and the policy pays out only if death occurs before the end of the term. The payout comes in the form of a chosen amount of regular income, which is paid until the end of the term. Some companies allow the benefit to be commuted into a lump sum.

This gives you the option to convert your protection-only policy into an investment-linked insurance policy at a later date without any further medical underwriting. On specified dates, agreed at the outset, you can have your policy converted. The revised premium is based on your health at the time you took out the original term insurance, the type of policy that you are converting to and your age at the date of conversion.

Whole of life cover pays out a lump sum in the event of death, no matter when it happens. Whole of life policies are generally used to provide security for a family or in relation to Inheritance Tax Planning (IHT).

When a life assurance policy is written in trust, on death proceeds would normally be paid outside of the estate and free of tax, so avoiding having to pay Inheritance Tax (IHT). So to make sure that your dependants receive their money quickly and avoid having to pay IHT on the proceeds that the insurance policy pays out, let us discuss putting your policies in trust - please e-mail or contact us.