You buy life insurance because you want to protect your dependents when you die. That means looking carefully at what expenses you expect on death, and what monthly sum will be required to enble them to manage without your income. A rule of thumb is to buy a policy valued between five and seven years of your gross income.

By getting comparative online quotes from this site, you give yourself the widest choice between different insurance companies. Then it's up to you to pick the best value.

If you both earn, you should both be insured to allow the remaining family members to maintain the same standard of living following the death of one. Even if one stays at home to look after the children, you should still insure to cover the costs of child care and the other expenses to look after the home.

The first priority is to protect the family against the risk of one of the main earners dying. If your children are earning significant amounts, insuring them may be desirable. If you have disposable income, you can also consider taking out a permanent policy. The younger the life, the lower the premium that will be locked in over the lifetime of the policy. This can produce very real savings when your children reach adulthood.

This gives you protection for a fixed period of time. If you die, the policy pays out. If you live, there is no payment. You should always consider buying a convertible policy that allows you to change over to a permanent policy later on. The advantage of this type of policy is that you buy quite high death benefits for quite low premiums when you are young. The amount payable is usually fixed, but some policies increase or decease the amount payable as the term passes.

This gives you cover for so long as you pay the premium or for life if the policy allows you to stop paying the premium as you get older. Policies of this type have a cash value that accumulates as the years pass. This cash may be invested. You can also surrender the policy in whole or part, or use the cash to buy an annuity. The main types are whole, universal and variable life policies.

The premiums are usually fixed for the duration of the policy which means they will be high when you start out but, as inflation takes effect, they become more affordable as you age.

A universal or adjustable policy allows you to vary the amount you pay as premiums between set minimum and maximum limits. You may also be allowed to change the amount payable on death. If you want to increase the amount, you will usually be asked to provide evidence that your health has not changed.

You are allowed to direct how the cash component of the premium shall be invested between stocks, bonds and other investments. The cash amount and death benefits vary depending on how this portfolio of investments performs.

This is the percentage of the premium invested to produce a cash sum payable on death. This sum adds to the fixed death benefits under the life insurance element. If you make good investment decisions with a variable policy, the cash value can be high. Equally, the value of your investments can fall. You can borrow or draw down this money during your lifetime.

While the permanent policy remains in force, the tax is deferred on the investment income and capital gains. Taking a loan is not usually treated as a taxable distribution. But if you surrender the policy to recover some or all of its cash value, tax may be payable depending on the length of time you have held the policy and your personal tax situation. In general, income tax is not payable on death benefits which makes life insurance a useful tax planning tool for those who have large asset holdings.