Nobody enjoys thinking about this, so let me make it quick and practical. Life insurance is worth having if either of two things is true: someone depends on your income, or someone would be left with a debt if you died. If neither applies, it can wait. If either applies, it should not.

The four types

Mortgage protection is the one most people already have. Lenders require it under the Consumer Credit Act. It pays off the outstanding mortgage if you die during the term, and because the amount falls as the mortgage does, it is the cheapest form of cover. It clears the house. It does nothing else.

Term life cover pays a fixed lump sum if you die within a set number of years, for example €300,000 over 25 years. It is the cover that replaces income for a family. Once the term ends, so does the cover, and you paid only for protection, not savings.

Whole of life cover pays out whenever you die, however long you live. It is more expensive than term cover, sometimes considerably so, and it is used mainly for inheritance planning. A particular form, a Section 72 policy, is designed to pay the inheritance tax bill your children would otherwise face.

Serious illness cover pays a lump sum if you are diagnosed with one of a list of specified conditions, such as cancer, heart attack or stroke, and survive. It is not the same as income protection, which pays a regular income for any illness that stops you working. Many people are better served by income protection than by serious illness cover, and it is worth understanding the difference before you buy either.

How much cover you need

Ignore rules of thumb like "ten times salary". Do the sum for your own household instead.

Start with debts that would not be cleared by mortgage protection: car loans, credit cards, personal loans. Add the number of years your family would need your income replaced, multiplied by the annual amount. For a family with young children that might be until the youngest is through college. Add specific future costs, such as college fees. Subtract what you already have: employer death-in-service cover, which is often a multiple of salary, existing policies, and savings.

The result is the amount of term cover you need, and the number of years is the term. It is usually a larger figure than people expect and a lower premium than they fear.

What it costs

For a healthy non-smoker in their thirties, providers and comparison sites quote basic term cover from around €10 to €30 a month. That rises with age, with the amount insured and with the length of the term, and it rises sharply if you smoke or have a health condition. Whole of life cover costs several times more than term cover for the same sum insured.

Two things reduce the cost. Taking cover out earlier locks in a lower premium for the whole term. And getting more than one quote, because the same person can be priced quite differently by different insurers.

Tax

There is no tax relief on personal life cover premiums, unlike pension contributions or income protection. On the other side, a payout to your spouse or civil partner is exempt from inheritance tax. A payout to children or others may be liable to capital acquisitions tax above the relevant threshold, which is where whole of life and Section 72 policies come in.

Putting it in order

For most families the order is: mortgage protection because the lender requires it, income protection because illness is more likely than death during working life, then term life cover sized to the sum above. Serious illness cover and whole of life cover come after those, if at all.

If you already have policies and are not sure what they cover or whether the amounts still make sense, that is a review worth doing. Circumstances change, cover often does not. Get in touch and we will go through what you have.