Life insurance is quite literally insurance on your life. You (the policyholder) agree to pay an insurer - like Old Mutual - a premium every month and in return the insurer will pay your beneficiaries a lump sum when you die.

There are, at times, exceptions to this rule. If the insured person is suffering a terminal or critical illness a payment may be made.

Your regular income pays for certain things for your loved ones. If anything should happen to you, that income ceases. How will your family cope without that money? Having life insurance means that they can carry on paying the bills and making provision for their future.

Some things life insurance money can be used for:

• Living expenses
• Education costs
• Home loan repayments
• To settle debt

You pay a monthly premium for an amount of cover that you and your financial adviser, or service provider, have agreed on. You can choose to have the cover paid out to your beneficiaries as a regular income or a lump sum.

Some products give you the option to add disability and/or illness insurance to your life insurance cover.

Life insurance is underwritten, which means when you apply, the insurer gathers and analyses more information about your health and lifestyle through questions and medical examinations. The healthier you and your lifestyle are, the lower your premium will be.

Yes, you can take out life cover for your parents. They'll be listed as the insured persons in the contract and you'll be the premium payer. For more information on how to do this, please speak to a financial adviser.

Pay out times differ. Old Mutual can only pay the cover amount once the claim requirements have been met. It's important to note that the claim amount will only be paid into a South African bank account.

There's no simple answer to this question. The very best thing to do is to sit with your financial adviser and allow him or her to guide you. Ideally you need to ensure: 

• That your debt is taken care of - personal debt as well as larger debt such as your home loan
• Your children have sufficient funds for their tuition and 
• That your spouse/partner has enough for living expenses

It's time to consider life cover if you have loved ones who are financially dependent on you. It could be a spouse/partner, children or family members that you are responsible for. By taking out life cover you are planning to provide for them financially should anything happen to you.

Disability cover is insurance that pays out a cover amount (either lump sum or monthly) if an illness or injury renders you:

• Permanently disabled and unable to work
• Permanently impaired
• Unable to take care of yourself