Insurance products have been around for more than 600 years.
The primary role of insurance is to protect against the financial consequences arising from the occurrence of the insured event.
Many types of insurance products are available and they all have slightly different uses – it is important to pay for the most appropriate cover to meet your objectives and financial situation (it can be a bit of a minefield)!
In the case of life insurance, this means ensuring financial security for dependants on the death of the insured person(s) by providing a lump sum, a regular income, or both. It is mainly designed to meet the following aims:
- Paying off outstanding debts (for example, mortgage, loans)
- Providing income to maintain the dependant(s) lifestyle
It is sometimes used in estate planning to ensure that children have the necessary funds to pay an inheritance tax (IHT) liability when both parents have died.
It is often used to ensure that a business can survive the death of someone who may be key to its success, or that the business share owned by the deceased can remain in the right hands.