There are two common kinds of life insurance, these are "Term Life" and "Permanent Life".


1) Term Life

The name says it all, this type of life insurance is usually for a relatively short period of time. There are two main versions of term life insurance:

  • Non-Guaranteed Term Life - this type of term life insurance provides income protection usually for under one year. It is a popular option with younger people in good health but is hard to renew if your health has deteriorated over the term.
  • Renewable and Convertible Term Life - this type of insurance is similar to non-guaranteed except that the term is usually 5 years or more. The term is renewable afterwards rather than every year. This means your insurance rates dont change yearly like they do for non-guaranteed term life insurance.

2) Permanent Life Insurance

A permanent life policy is one that you pay into throughout your entire life. The payments are usually fixed from the time you purchased your policy. The younger you sign-up for this type of insurance the cheaper your monthly payments are. Here are several popular types:
  • Ordinary or Whole Life - this type of life insurance usually provides income protection for under one year. It is a popular option with younger people in good health and can be difficult to renew if your health has deteriorated over the term.
  • Universal Life - almost the exact same as whole life insurance, the main difference is that universal life policies have a much more flexible structure by allowing you to adjust the amount and time of your premiums and the size of the benefit if you pass away.
  • Variable Life - a variation of whole and ordinary life insurance. Variable insurance is a policy that provides both a death benefit and cash value for future use. Variable life insurance policies carry life coverage and fixed premiums like other life policies. But its unique because it gives the opportunity for policyholder to direct the money into an investment of choice in stock funds, bond funds, or money market funds. The better your investments perform, the higher death benefit you will have.
  • Joint life Life Insurance - this is a another unique policy which provides income protection between a couple. The first to partner to die will be insured.