There are three main types of life assurance policy:

• Term assurance
• Whole life
• Endowment assurance

Term assurance policies are taken out as a means of insuring against the possibility of death within a specific period. The premiums payable are solely for the purpose of providing life cover as a form of protection. Term assurance is the most popular form of life insurance as it provides the cheapest premiums and is particularly useful in connection with mortgage repayments.

Both whole life and endowment assurance are effectively making an investment that becomes repayable at a future date, either on death or earlier. The premiums payable are for the purpose of providing a mix of life cover and investment, and as such, have cash–in or ‘surrender’ values. It is because of this surrender value that these policies are known as ‘substantive’. In the case of whole life policies, a payout will occur on the death of the life assured, whenever this takes place. On the other hand, an endowment policy will mature, and pay out a sum of money after a fixed period or on earlier death.

In addition to these plans, life offices also offer annuities and an increasing number of health insurances such as income protection, critical illness and long-term care.