Life insurance is often known by a number of different names – life insurance, life assurance, term insurance, term assurance, term life insurance. Life insurance is designed to pay out in the event of the death of the person insured. Its principal purpose it to mitigate a financial loss, either ensuring a mortgage or loan can be repaid or ensuring the remaining members of a family have adequate money to live on.
That very much depends on what it is for and how it was structured.
A decreasing life insurance, most commonly used with a repayment mortgage will normally pay out enough to repay the mortgage balance at any point in its term.
A level life insurance policy will pay out a fixed amount, sum assures (set at the start of the policy), at any point during the term of the policy
An increasing policy usually has the sum assured linked to inflation (Retail Price Index) to ensure the value of the sum assured is maintained
A family income benefit policy will pay out a set amount each month or each year until the end of the policy term, possibly replacing an income lost in the event of death.
Guaranteed Whole of Life policy, this type of policy has no end date, it will pay out at whatever point death occurs. This is most frequently used in connection with funeral expenses or inheritance tax liability – or where another fixed liability it to be met on death.
That depends on what you need to protect. When thinking about the amount of cover you could consider the following (not an exhausted list):