Life Insurance is insurance that provides protection against economic loss caused by death of person insured. There are several types of Life Insurance, each having different characteristics. Some of key types of Life Insurance are: Term Life, Whole Life, Burial Insurance, Survivorship Life, Universal Life, and Variable Life Insurance. Outlined below is a useful description of each type:

Term Life Insurance

Term Life Insurance is lowest cost and simplest product available. Term insurance is a life insurance contract that provides protection for a limited number of years. The death benefit is only payable if death occurs during agreed-upon term. There are various types of Term Insurance Life Policies:

Level Term Life Insurance

means that your premiums are set at a level at beginning of contract and do not move up or down. The sum assured will remain same throughout term.

Increasing term insurance

This is a fixed term policy where sum assured will increase, either by a set percentage or by Retail price index (RPI) throughout policy term. Your premiums remain level throughout term if sum assured rises by a set percentage, or will rise according to RPI if sum assured does same.

Renewable term insurance

This is policy lasting for a smaller period, usually five years, which can be renewed, although sum assured cannot be increased, whilst premiums will increase with age.

Renewable increasable term insurance

is same as above but provides for an increasing sum assured.

Convertible term insurance

In exchange for regular premiums, a life insurance company will insure your life so that when you die, policy should pay out to protect your dependants from extra pain of financial hardship.

This is particularly important when buying a house, or when you or your family takes on a large, long-term financial commitment. In event of death, for example, payment from a life insurance policy can be used to pay off a mortgage.

Policies can be arranged on either a single or joint life basis. Depending on type of policy you choose, your insurer will pay either a lump sum or a regular income which you could use towards meeting any outstanding debts and trying to ensure your family is able to maintain its standard of living.

How much they receive depends upon 'guaranteed sum assured', amount for which your life is insured.

Many people first come across life insurance when they take out a mortgage, as lenders often insist on it to make sure loan is repaid if you should die still owing them money.

However in some circumstances, only having enough life insurance to repay mortgage is insufficient to fully protect dependants. If you have a partner who would suffer financially if you were to die or if you have young children who depend on you, then life insurance is very important.