How do National Insurance numbers work? What is the relevance of the letters and numerals?

Answer 1

Only one number is allocated to you and you keep that same number all your life. It is unique to you and ensures we correctly record National Insurance contributions or credits to your National Insurance account. You will need these contributions and credits when you come to claim benefit, whether it is for a short while, like Incapacity Benefit or long term, such as your Retirement Pension.

Your National Insurance (National Insurance) Number is personal to you.
It is your account number allocated to you for you to use in all your dealings with HMRC and the Department for Work and Pensions (DWP - a new Department comprising in parts the former Department of Social Security).
It is not proof of your identity.
It looks something like this: AB123456C