In its simplest form, term insurance pays out the chosen amount of cover if you die during the chosen term.

The price you pay (called the 'premium') is usually fixed at the start and depends on the likelihood of the policy paying out - in other words, the likelihood that you will die during the term. The main factors affecting premiums are:

- Your age when you start the policy. Older people pay more.
- Your sex. On average, men die younger than women, so men pay more.
- Your health when you start the policy. Someone with poor health may be more likely to die, so will pay more.
- Your lifestyle and hobbies. Some things you choose to do - such as
- smoking - increase the likelihood of your dying prematurely, so you'll pay more.

You pay the premiums monthly throughout the term of the policy.

If, say, your health is poor or your lifestyle is considered risky, you may be refused cover or have to pay more than normal.

Insurance is a contract of 'utmost good faith'. This means that when you apply for cover you must tell the insurer about everything that affects the likelihood of your claiming. If you don't, your claims can be refused.

Examples of cost

The cost varies with the insurance company's assessment of how likely you are to claim. The table shows, for one insurance company, how age, sex and smoking affect the premiums.