The most frequent reasons people take out life cover are to pay off debts upon their death - such as a mortgage - or to provide a lump sum payment when they die to their dependents (thus ensuring their dependents are financially secure).

Usually sold as a single or joint life policy, there are many different types of life insurance contracts available.

CRITICAL ILLNESS Also known as 'Serious Illness Insurance', this contract pays out a tax-free lump sum if you are diagnosed with one of a number of specified 'critical' illnesses during term of policy (eg heart attack or stroke - see list below).

The lump sum payment can be used for anything you want but most people use it to provide an income if they become too ill to continue working. Other uses may be to pay off a debt, such as a mortgage, or if necessary, adapt your home.

Most companies offer policies which cover you for death and critical illness, though it should be noted that normally policy will cease if you claim on critical illness aspect (ie you will no longer have life cover).

So what is mortgage payment protection insurance? MPPI is an invaluable insurance policy, protecting your mortgage payments in event of you being unable to work due to redundancy, having an accident or falling ill. This means you have peace of mind that you will keep a roof over your head while you find another job or convalesce.

Most MPPI policies are sold by mortgage lenders at time they provide a mortgage. However, very few lenders actually tell people that they can shop around for a cheaper rate – which, according to research*, could save an average of at least 32% on their monthly premiums, without compromising on level of cover provided.

Astonishingly, premiums do vary quite widely among mortgage lenders, with most expensive being a huge £7.70 for every £100 worth of unemployment and disability cover required compared with £3.95 for same cover being among cheapest!

For example, by taking out cheaper policy – but one with equal or even better product features - it means that you will pay only £19.75 to receive a monthly benefit of £500 against risks of both unemployment and disability. This compares with an average £29.00 per month from traditional mortgage lenders – a saving of 32%.

If you have a mortgage, you don’t have to have your lender’s mortgage protection cover. Even if you already have MPPI, it is simple to switch to another provider and make significant savings.

So what do you need to look out for when choosing an MPPI policy? First of all, you can choose amount of cover you need, as well as type and level of cover