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Life insurance can pay your dependants a lump sum or regular payments if you die.

Term life insurance policies run for a fixed period of time – such as 5, 10 or 25 years. These kinds of policies only pay out if you die during the term of the policy.

A whole-of-life policy will pay out no matter when you die, as long as you keep up with your premium payments.

Life insurance only covers death – if you can’t provide for your family because of illness or disability, you won’t be covered.

Most policies have some exclusions (things they don't cover). For example, they may not pay out if you die due to drug or alcohol abuse, and you normally have to pay extra to be covered when you take part in risky sports.

And if you have a serious health problem when you take out the policy, your insurance may exclude any cause of death related to that illness.

You can buy policies which include other types of cover such as total and permanent disability and critical illness cover.

If you have dependants – such as school age children, a partner who relies on your income or a family living in a house with a mortgage that you pay – a life insurance policy can provide for them if you die.

You can’t rely on the government to take care of your family – the money they would get from the state is much lower than you’d probably expect. 

If you want to provide for your family financially if you die, life insurance is a must.