There are no financial advisors worthy of the name that will not recommend a life insurance policy for anyone genuinely concerned about the future well-being of their family. Due to the payout contained within such policies, any lost income caused by bereavement will be of immense help to family and loved ones, particularly when it comes to compensating for a drastic drop in income.

The payout at the end of a life insurance policy can further be used to help pay for the numerous expenses associated with bereavement, such as funeral and other burial costs, legal fees, outstanding debts or the final administration of an estate.

Many people want a life insurance policy to ensure a substantial inheritance for their heirs, who become the named beneficiary of the policy. Others name a charity of their choice as the main beneficiary – a move which allows someone who has been a supporter of that charity all their life to make a far larger financial donation than would be possible under other circumstances.

Another sort of life insurance policy leads to the formation of a savings fund, which can be borrowed against or periodically drawn upon by the policy holder. As a life insurance policy stands or falls by the upkeep of its premiums, many people find that there is a far greater incentive to maintain the sum than there would be with a standard savings fund. In most places, interest on the savings is tax-free and in cases when the fund is only drawn upon in the event of the policy holders death it is usually free of any taxes at all.

However, as with all financial products, there are a dizzying number of life insurance policies on the market, and it is essential to look thoroughly before you pick one. An independent financial advisor will help you to discover which one is the most useful for an individual, given their budget and their particular needs. Many websites provide useful advice and definitions, although a face-to-face meeting with a specialist is usually a must.

Generally speaking, life insurance policies fall under two basic categories – investment-type and protection only. An investment-type policy is the savings-based scheme referred to earlier, while protection-only policies only exist to pay out in the event of the policy holder’s death. The cheapest form of this sort of policy is a term insurance policy, which agrees to pay out a sum if the death takes place within a set number of years.