Commercial feature

It’s not the most pleasant thought, but what will happen to those around you when you die?

Life insurance – you pay your premiums and if you die during the term of the policy, it pays out a lump sum. It’s as easy as that.

Of course, not everyone needs life insurance. If you have no dependants or a large pot of savings and no debts, this may be one product you may wish not to take out.

Often, people take out life insurance when they buy their first home, and normally they cover themselves for the value of the mortgage. This means that if they die within the life of the policy, their dependants have the funds to repay the home loan and stay in the property.

But it doesn’t just have to cover that. The amount of cover you take out is entirely up to you. Of course, the more you want, the higher the premium, but you can choose to get a policy that will pay off other debts, not just the mortgage, and even leave some left over. Some policyholders with children in private education, for example, make sure their cover will leave enough to pay the school fees, for example. You can even add a bit to leave to your favourite charity.

The most common life insurance policy is known as a term policy. This sets a specific start and end date for your insurance. If you die within that term, then it will pay out. As most policyholders take out their first life insurance when they buy their first home, the term is usually set at the length of the mortgage (usually 25 years). But again, you can choose the term you want – it may be for when your children are due to finish university, or your retirement date, for example.

Within term insurance, there are two distinct products: level term and decreasing term insurance. Level term means that the amount you have insured stays the same throughout the life of the policy – if you insured £100,000 on the day you started cover, it will still be £100,000 on the day it ends.

Decreasing term insurance is a cheaper option that means the amount you have insured reduces during the life of the policy. It’s often used by people who take insurance to make sure their repayment mortgage is paid off if they die – as more of the debt is paid off, the amount of insurance required reduces.

The cover you need

Barclays understands how important it is to protect the life you and your family have and has a range of life insurance options provided via Aviva, that will cover your loved ones if the worst should happen.

Your home may be repossessed if you do not keep up repayments on your mortgage

The information given in this article was correct as at June 24, 2010. It does not, however, take account of any changes in regulations, the law or interest rates since that time.

This article is not a substitute for obtaining professional advice from a qualified person or firm.

Examples given of products and services are not exclusive. Other companies may provide the same products and services, and inclusion of a product or service should not be taken to indicate that Barclays recommends it over any similar product or service.

Barclays Bank PLC is not liable for any third party opinions expressed. While every effort has been made to ensure that the information contained is accurate at the time of publication, no liability for damages is accepted by Barclays, the publishers or any other organisation or person providing information, arising from any errors or omissions that may appear, however caused – or from any editorial alterations to submitted information. This is not intended and will not affect any liability of Barclays under the provisions of the Financial Services and Markets Act (2000.)

Barclays is a major global financial services provider engaged in retail banking (current accounts and savings accounts), credit cards, corporate banking, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 140,000 people. Barclays moves, invests and protects money and provides home insurance, personal loans, Aviva™ Life Insurance from Barclays and other services for over 49 million customers and clients worldwide. For further information about Barclays, please visit our website www.barclays.co.uk.