Finding the appropriate life insurance cover.

The need for life insurance cover is invariably in response to either taking out a loan, the payment of which we wished covered in the event of our death, or to leave our loved ones financially supported after our demise. The job of finding the best level of life insurance cover and at a price that suits our budget can seem quite overwhelming. However, it might prove helpful if you use a specialist broker when seeking life insurance cover. With access to a wide range of insurance providers, a broker can easily search the marketplace and find the best deal for you.

The type of life insurance cover required depends on its purpose. If you need a policy as protection for a mortgage, then Decreasing Term Life insurance could fulfil your needs. This pays a lump sum should you die during the lifetime of the policy. The lump sum reduces by set instalments, reaching a zero value by the end of the policy's lifespan, reflecting the decreasing amount of the mortgage.

Life insurance cover to provide financial support for your loved ones after your death would probably best be served by Level term assurance. This also pays a lump sum (the value of the sum does not change) upon death of the policyholder within the duration of the policy.

Choosing the amount of cover can be perplexing, at the most basic level, it needs to cover the total of your debts less any existing life policies. To provide an income for your loved ones after your death, then enough money needs to be in the policy after the debts have been cleared, to be invested. Ideally, these investments should yield an annual return of roughly two thirds of your present income. A rough guide for a policy cover would be a maximum of twenty times your current annual net salary, plus the total of any loans including the mortgage.

Once the amount and type of life insurance cover has been determined then invariably our search is driven by the price of the premium. Cheaper premiums can be achieved by simply choosing a provider on price, many insurance companies sell the same policy but at very different prices. However, if your budget is not restricted then including certain additional extras maybe worthwhile for greater protection and peace of mind.

The basic level of life insurance cover would only make a payment in the event of the policyholder's death within the duration of the policy. It would not make a payment should the policyholder have an accident or suffer long-term sickness. Increasing the level of your policy to include critical illness cover would mean that a payment of an agreed amount would be made upon the diagnosis of the serious illness. The inclusion of a benefit called Waiver of Premium, might also be desirable, as this would ensure that the premiums would continued to be paid in the event illness or an accident. Both of these extra items of cover would of course increase the price of your premium.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best deal on their life insurance, critical illness cover and home and motor insurance.