One of the most important decisions you can ever possibly make for the good of you and your loved ones is getting good life insurance. Of course you can never be 100% sure that you have the best sort of insurance until you actually die and it comes into action. It is for this reason that I write this article. It will aim to outline the different types of life insurance available and will hopefully help you find the right sort of cover for your needs.

Essentially there are really two types of life insurance available on the market there are more but owing to their particular niche uses they are probably not relevant to be discussed here. The main types that you will come across, and probably need in one way or another, are Term Insurance and Whole of Life Assurance.

Whole of life insurance is fairly self explanatory and the easiest to explain, as it essentially insures you for the whole of your life. You specify an amount for which you want to insure your life, and you then agree to pay into an insurance policy a certain amount every month until your final day comes in whatever shape or form. You can feature in to this policy "indexation", which means that your policy performs in line with inflation. This can be extremely useful as the value of money has a big tendency to change over time. At the end of the day, you don't want to be paying good money into an insurance policy for a specified amount only to discover that when the time comes, that specified amount can barely get your family through to the end of the next week.

The reasons you would go for whole life insurance is family protection, so for example you want to make sure that if you die your family will still be able to maintain their standard of living by using the cash from the life insurance to invest and make a return equivalent to the income they have lost in the event of your death. It has to be said however that because whole life assurance runs for the whole of your life it is not the cheapest life insurance you can buy but then it is the only insurance that assures you of a payout which is why it is known as whole of life assurance.

The other type of life insurance comes in many guises but is simply known as Term insurance for the basic reason that it runs for a specified term, anything from one year to 50 or 60 years. You set the sum insured you require and you decide what term you like and that is it, it will run for that period at that level. If you die during that period it will pay out the benefit, if you don't it will just cease and that is it. Term insurance can also include indexation, as explained earlier, it doers the same thing just increases the premium and sum insured at the rate of inflation.

As I have said, term insurance comes in several forms. We have level term insurance, decreasing term or mortgage protection as it is sometimes known, family income benefit also called family income plans, convertible term and last but not least renewable term insurance. I will try to shed some light on these in the following paragraphs.

First is decreasing term or mortgage protection. This plan is the same as all term plans in so much as it runs for a specified period of time. However the difference is that the sum insured reduces year in year out. The reason for this is linked to the use it is put to. You would normally use this type of plan to cover a repayment mortgage and with repayment mortgages the amount of debt falls year in year out so the plan just mimics that reduction. The benefit of this is the premiums for 100,000 cover for mortgage protection which decreases each year are a lot cheaper than for 100,000 on level term. So if it is a repayment mortgage you need to cover then this plan is possibly the one for you.

Family Income Benefit, this plan in the big scheme of things is quite young; it was born out of the need for families to produce an amount of income each year rather than just a lump sum. The problem with a lump sum for family protection is it is incumbent on the beneficiaries to invest the money to produce the income they have lost as a result of the life assureds death. Family income plans do this with the minimum of hassle. All you do is take out the plan for a set period of time and for a set amount of income per annum and if the life assured dies then the plan just pays out that income each year until it has run its full term.

The last two types - convertible term and renewable term - are very similar in that they both allow you to alter the terms of the policy providing those alterations are made before the end of the term. The first one we will describe is a renewable plan. Renewable plans allow you to renew the policy at any time before the expiry date of the original term without any underwriting, or health checks. So a 10 year plan could be extended for 10 more years regardless of the state of your health, as long as you do it before the first plan expires.

The convertible plan takes it to another level. This sort of plan lets you convert the original policy from term insurance plan to whole of life, as long as it is done within the time of the original term. The reason you may want this option is if you couldn't afford a whole of life policy at the start but find yourself in a position to take one out later. Convertible policies allow you to change to whole of life when you can without having to undergo any health checks.

You should know, however, that convertible and renewable policies are more expensive than regular term policies. Also, when you do come to renew or convert your policy you will be asked to pay the premiums in accordance with a person of your age at that time, which will inevitably be higher than you have been previously paying, so don't be under the impression that you are getting a free lunch. The main thing is to ensure that you have the right cover needed regardless of your health.

So now you are hopefully a little bit more enlightened as to the different life insurances out there available to you. Nevertheless, it is strongly advised that you should consult an expert before making any decision, for as we know, the wrong decision can go undetected until it is too late to fix.