There are essentially two different categories of Life Insurance, those that have no investment portion and only pay out a prescribed amount should you die and those that have an investment portion which could form part of any financial planning for retirement.

In the Category of Life Insurance that does not have any investment portion and only pays out in the event of your death:

Term Life Insurance

Term Life Insurance is taken out for a pre-determined period of time and has a fixed payout amount that will only pay out in the event of your death during the term of the policy. If you do not die within the period, there is no benefit which accrues to you.

Decreasing Term Life Insurance

This type of life insurance is common when you have a mortgage bond which decreases over time and is also for a fixed period of time. The benefit decreases over the period in line with the debt it is meant to cover so that in the event of your death the outstanding amount owing to the mortgage bond holder will be settled.

There is also the renewable term life insurance and the convertible term life insurance policy which offer the policy holder the ability to renew after the period or to convert it to a whole life policy for example after the period.

Group Term Insurance

This is Term Life insurance that would be taken out by an employer wishing to cover the life of key people in an organization for a period of time and operates on the same basis as term Life described above.

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The next type of Life Insurance which has an investment portion and provides a benefit in the event of death as well as being linked to investments to provide a cash value is referred to as permanent life Insurance of which the most common is whole life insurance.

Whole Life Insurance

Commonly incorporated into a retirement investment portfolio that provides cover until death that may include investments to build a cash portion or surrender value.

Universal Life Insurance and Variable Life Insurance policies are more flexible and should be discussed with a LIfe Insurance consultant.

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