Life Insurance (or Life Assurance) is a policy that pays out either a series of payments or a lump sum when you die. Some policies offer financial protection when you die, some help you to save by providing a lump sum after a certain number of years, and some do both.
In most cases these payments are tax-free. However, any money paid out after you die will form part of your estate, and may attract Inheritance Tax. This can be avoided by placing the Life Assurance in Trust. This separates out these proceeds from the estate and keeps them tax free.
Monthly premiums (or an annual sum) are paid to the Life Assurance company for either a given time span, or through to death. These policies can be combined with other forms of insurance, such as Critical Illness insurance. This will provide you with a lump sum if you are diagnosed with a specified critical illness or on death.
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