Top 10 life insurance tips

Building up your wealth takes time - but an unexpected event can mean you lose much of it in an instant, so it makes sense to put safety nets in place. To help you decide whether you need a life insurance, imagine what would happen to your family if you weren't around. Critical illness insurance pays a lump sum if you are diagnosed with a life-threatening condition, such as cancer, heart attack, stroke or multiple sclerosis.

Here are our 10 top tips to ensure that your life and health are protected:

Make sure you buy enough cover. Think about covering debts such as your mortgage, and then provide a further £150,000 for every young child you have - more if you will need to pay out for school fees.

Look out for terminal illness benefit on life plans. This pays out the sum assured if you are diagnosed with a terminal illness and have less than 12 months to live.

Consider single life instead of joint life policies. Buying two single life policies potentially provides double the cover for couples, doesn't leave a surviving partner without cover later in life, and will often only cost a few percent more.

Under current IHT legislation, every £100,000 of life assurance is a potential £40,000 tax bill, so ask your insurer to write your policy in trust. This is a free, simple way to ensure the tax man doesn't take his slice of your loved one's money.

Many critical illness insurance policies automatically include cover worth up to £20,000 for children. This is the sixth most common cause of claim, so it's a useful benefit for parents.

Unlike income protection, critical illness policies only pay out for those conditions listed under the plan - so always read the policy documents carefully before you buy to ensure you know what's covered and what's not.

As your mortgage and family grow so should your sum assured, so exercise your guaranteed insurability options. At certain life stages - such as the birth of a child, marriage or buying a new home - you automatically have the right to increase your cover at no extra cost and without the need for a medical.

Check what cover you've already got: Life insurance, income protection and - less commonly - critical illness insurance can be included in employee benefits packages. Life insurance may be called 'death-in-service benefit', while income protection can be called 'long-term disability benefit' or 'permanent health insurance'. Avoid over-insuring by checking how much cover you already have.

Forgetting to mention a relatively minor health issue could result in your policy not paying out due to non-disclosure. Whether it's smoking habits, a bad back or occasional pins and needles, make sure your insurance company knows about it. If in doubt, tell your insurer.

Even though you may have bought a policy for 25 years or so, premiums have been reducing so it's worth shopping around every few years to see if you can get a better deal.