Life insurance is a way of helping your family cope financially when you die. It is intended to provide help to your loved ones when they can’t rely on your salary or income any longer.

The pay-out can be used to clear debts, pay off the mortgage or just cover everyday expenses. It could even pay for your funeral if you haven’t set anything aside for that.

Level and decreasing-term insurance, and family income benefit policies, usually have guaranteed fixed premiums throughout the policy term.

That said, check the small print as some firms offer ‘reviewable’ premiums, which can be reviewed every five to ten years and normally go up in price.

But whole-of-life assurance is slightly different because it is typically linked to a specific investment. So if the investment does not perform well, then the premium is likely to increase so the insurer doesn’t lose money.

It all depends on your personal circumstances as the amount of cover, also known as the ‘sum insured’, can be different for each family.

Let’s say you are married, have a large mortgage and four children. In this case you are going to need more cover than a single parent living in a two-bedroom flat with one child.

Most of the time, the recommended level of life insurance is 10 times your annual salary or income. Obviously however you should make more detailed calculations to make sure you are fully covered.

Your premium will vary depending on the type of policy, the size of the sum insured and also the risk of a claim – if you have a dangerous job, for example.

Also, age is a factor, so life insurance will be more expensive for an older person. Similarly, if a customer is in poor health, they can expect to pay a higher premium.

The insurer will take into account occupation, hobbies, lifestyle – such as whether you smoke, your weight and your fitness – to help determine their premiums.

Even postcodes are checked, as certain areas of the country are more likely to claim.