Life insurance or life assurance provides cover in the event of death or critical illness.

The level of cover is selected by the individual or couple based on their financial needs and the cost of the policy is dependent on various factors - the age of applicants, their medical histories, the duration of the term and the type of cover provided. Cover can either be level throughout the life insurance term or reducing, usually in line with a reducing debt such as a mortgage.

Life insurance policy costs are based on risk, the more risk associated with an individual, the more expensive a policy is likely to be. Insurance companies employ statisticians or actuaries to calculate these risks and set premiums. Obviously the older an individual the more their life insurance will cost. Also if a person has a history of certain medical conditions in their family, this will also have an impact. The cheapest life insurance policies are typically those taken out by healthy young people for long terms of cover.

Some people will not qualify for life insurance - particularly older people (over 70 is the usual cut off) or people with certain life threatening medical conditions eg heart disease or lung conditions.

The usual way to arrange life insurance is through a broker, who will take your application and check against various policy providers and provide you with a range of options and costs. The broker earns a commission fee from the insurer for each policy they arrange. It is this commission fee that is the key to getting cheap life insurance. If you deal with a broker who takes only a small commission fee, then the premium costs to you are likely to be cheaper, so it pays to shop around.