We need life cover for two basic reasons: to protect others against financial hardship if we die, whether it is a surviving family or business partner, or to cover any debts we may have such as a mortgage or loan.

When buying a life insurance policy, there are two main things to consider, how much it will cost, and whether it will provide the right sort of protection.

The first is about paying over the odds for a particular type of policy when the plans are the same but one might be much cheaper than another.

This mainly applies to what are called Term Assurance, plans where for a given premium the insurance company will pay out a given sum, be it as a lump sum or as an income, and the price can vary enormously between companies.

In some cases costs could vary by two or three times and, if the policy is going to run for say twenty years, this could mean a saving of thousands of pounds.

An Independent Financial Adviser should have access to the different companies in the country and ought to be able to tell you the most appropriate for your needs.

The second is to be aware that life insurance doesn't come in just one model.

There is a whole variety available to suit every circumstance. There are plans which offer a facility that if your health deteriorates during the length of the cover, you are guaranteed to be able to obtain protection for the rest of your life, which might not otherwise be obtainable under a new policy. These are called Convertible Policies.

Other features can include such things as the payment of benefits if you are diagnosed as being terminally ill, which would mean funds are available to pay for private medical treatment, or may pay out on diagnosis of a "critical illness". In some cases, tax relief may also be available which could save you a lot of money over a number of years.

Popular policies since the early 1980s have been "flexible" whole of life plans that can have all sorts of different benefits added and might acquire a cash value.

An advantage with these types is that you can alter the cover as your own circumstances change, although the costs may have to increase in the future if a maximum level of cover is chosen at the start.

When considering this type of insurance you need to look at the reason for cover and how long you are going to need it for. If it is to protect your family, you might choose a Term Insurance policy until the children are grown up.

This won't acquire a cash value, but it is the cheapest and for those with young families, counting the pennies is especially important.

Because the cover may last for many years, and so will the costs, it is worth spending a little time making sure you get the right plan at the right price. A good Independent Adviser should show you what is available and which type suits your needs.

Alan Mills is an independent financial adviser with A. J. Mills Independent Financial Advisers, a member of DBS Financial Management PLC, which is regulated by the Personal Investment Authority. Not all contracts of PHI are regulated by the PIA. Answers given are for general guidance only and specific advice should be taken before acting on any of the suggestions made. All information is based on our understanding of current tax practices which are subject to change. The value of shares and investments can go down as well as up. The views expressed above are personal and do not necessarily reflect those of DBS Financial Management PLC. For a free factsheet on choosing life assurance call 01484 860123

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