Life insurance is often referred to as 'term' or 'death' cover. A lump sum is paid to the estate of the owner of the insurance policy (or directly to their beneficiary) in the event of the insured persons death. Some life insurance policies will pay a lump sum if the insured is diagnosed with a terminal illness where they less than 12 months to live.

Life insurance benefits once paid, are generally used in the following ways:

• Pay off mortgage liabilities
• Reduce other debts (personal / car / credit card loans)
• Pay funeral expenses
• Provide a lump sum to support spouse and children - especially where the insured was the major breadwinner

Finally life insurance is a great tool to help equalise the assets within the deceased's estate to ensure beneficiaries are paid equally (assuming that is the wishes of the deceased).