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Our guide to life insurance policies

Have you been weighing up various Life Insurance policies? As a person grows older, it's impossible to put a value on the peace of mind the right life insurance policy can bring. With such an important decision, it's vital that you get it right.

With that in mind, it's essential to arm yourself with the facts, so we've put together our guide to the different types of life insurance you'll be faced with on your search.

Before we start, it's important to make a distinction between Life Insurance, and Life Assurance, they are two completely separate financial products, so make sure you know which one you're examining.

Life Insurance is a contract entered into between a person and an insurer that will pay a designated beneficiary a lump sum should the policy holder die during their coverage period. In return, the policy holder will pay regular amounts to the insurer for the privilege.

There are two different types of Life Insurance out there - Term Life Insurance and Permanent Life Insurance.

Term is more of a pure "insurance product" without any bells and whistles. If you die during the coverage period (which is limited to a time span agreed between both parties) it will pay out. The policy does not accrue any value over time.

The other type of insurance is Permanent Life Insurance. This type of Insurance is a permanent contract entered into between insurer and a person that will keep you protected until the day you die. It also accrues value during it's term, so it can be borrowed against, and used as an asset.

This type of insurance is more expensive, but if you have the money, it is well worth perusing.

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