The length and type of a life insurance term will relate directly to the needs of the individual. There are two main types of life insurance available – Term Life Insurance and Whole of Life Insurance. The difference between the two focuses on the length of the policy and what the payments (or premiums) are used for during the life insurance term.

Term Life Insurance is a life insurance term that covers a specified period of time. These generally vary between 5 and 30 years. Depending on the health and age of the individual, the cost of the premiums will change. But a general rule of thumb is that younger healthy people have less risk of death or serious injury so their premiums are much lower. The premiums paid for in this type of policy are solely for the cover of the life insurance term and its sum assured (the amount that will be received in the event of death or serious injury). No extra investments or saving schemes are included in the policy. Term Life Insurance normally can be tailored for specific cases of death or serious injury but due to the low premiums normally associated with Term Life Insurance it is recommended to always pay for full cover.

Whole of Life Insurance is a specialised life insurance term that does not have a specific ending date to the policy. Instead the policy is designed to last throughout the life of the individual. Obviously, this extra security comes at a cost, and it is not the only additional cost in this form of life insurance term. As part of the policy, investments are made for future retirement funds. This means an individual can see some of the policy benefits returning without the unfortunate circumstance of death or serious injury. But these investments are paid for through the premium of the policy, which one again, makes each premium more expensive. These premiums are also locked premium additions that can not be changed during the life insurance term. Another factor to watch out for with this type of life insurance term is the limit of the life insurance cover. So newer and cheaper Whole of Life policies actually only cover up to a certain age (normally 99 years) after which the returns are limited. While most life spans currently average below 99 years, it is not foolish to think that by the time our young generation reaches their twilight years medical science would have increased sufficiently to extend the average life beyond this mark.

Both types of life insurance term offer varying benefits and pitfalls. Both also require further premium increases if the individual wants there sum assured to increased in line with inflationary rates (policy escalation). They can also have decreasing or increasing premium payments over time, depending on the personal circumstance of the individual. But normally, due to the mediocrity of the Whole of Life Insurance investment vehicles, it is better to look towards Term Life Insurance and use the money saved in other specialised investment firms that produce better returns. Generally speaking, the extra cost of the ease of use and security of the Whole of Life Insurance policy is far higher than necessary. So if an individual wishes to purchase something as important as a life insurance term, apart from doing sufficient research into finding the best policies, they should also spend time looking at long term retirement investments in specialist companies and services that produce greater benefits than can be received through Whole of Life Insurance.