There are several types of life insurance:

Level term insurance - designed to pay out a sum of money if the policyholder should die during the policy’s term. The sum assured is guaranteed and remains unchanged throughout the term.
Decreasing term life insurance i.e. mortgage protection cover – where the sum decreases during the policy. It is regularly used to protect capital and interest repayments on a mortgage.
Renewable term insurance – On the expiry date there is an option to continue without a health review.
Convertible term insurance – Level term insurance with the option to revert to whole life or endowment insurance.
Increasing term insurance – Due to inflation the value of money declines each year. Consequently, this form of insurance combats that with an escalating sum assured.
Index linked term insurance – Some insurers provide the option for the premium to be increased each year in relation to the Retail Price Index..
Pension term insurance – Standard term insurance but with contributions that attract tax relief so the net cost should be cheaper. As of 04 April 2006 the 10% contribution limit that can be used for pension term insurance will be lifted, meaning it will be easier to arrange pension term insurance without a pension fund.

In part three we`ll examine a form of term assurance that offers tax relief.

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