Life insurance is, as name implies, an insurance policy taken out on an individual's life. As with any other insurance policy, regular premiums are paid by policyholder to insurance company - and should policyholder die, then policy will pay out either a lump sum or a regular income.

People think about future more now than ever before. We want a good standard of living not just now but also as we grow older and this is why financial services industry has become more important.

The most obvious reason for a life insurance policy is to provide financial protection for family and loved ones, should you die unexpectedly. However, there are a number of different circumstances in which life insurance is an important factor to consider, such as protecting your mortgage, your estate or your business.

Upon death of policyholder, a life insurance contract provides a one-off lump sum payment - particularly important if either you or your family take on a big loan, any long-term financial commitment, or purchase a house. For example, if policyholder does die payment from a life insurance deal could be used to pay off a mortgage.

Life Insurance is particularly valuable if taken out at a younger age, due to fact that it will cost much less. It will help you to protect your family against any financial difficulties that may arise from your death. It can replace lost income, provide a lump sum towards funeral costs, pay off an outstanding loan or credit card.

A mortgage is really another word for a property loan - a loan that allows you to borrow a large amount of money in order to buy a home or property which is secured on value of that property, and which you pay back over an agreed period of time.

The term 'secured' means that if you default on payments and can't keep up with payments schedule as agreed, lender has right to sell your property in order to recover their money.

A mortgage can be broken down into four main parts:

Capital – This is amount of money that you borrow to buy house.

Interest – This is charge for borrowing money. Worked out as a percentage of capital. Term – This is fixed period of time that money is borrowed over.

Repayments – These are regular payments you make throughout term of mortgage. The mortgage is created by a legal charge on property and, significantly, does not involve transfer of land. The charge confirms that property has been pledged to lender as security for mortgage loan.

Mortgages are usually repaid over 25 years, but depending on your situation and earnings it can be arranged over either a longer or shorter period of time. The amount you borrow is called 'capital', and you will also have to pay back interest charged to you by lender.

The title deeds are held by lender but when purchase monies are paid over to vendor, usually through a solicitor, mortgagor becomes owner of property. The legal charge is supported by a loan agreement between two parties which sets out terms of loan, responsibilities and undertakings.

You have two options - repay capital and interest together - this is a 'repayment' mortgage, or repay interest only, and organise another investment to cover capital at end of term. This is known as an 'interest only' mortgage.

When looking at how much money a lender is willing to let you borrow, there are two factors that they will want to consider.