Life insurance policies are contracts between an insurance policy holder and an insurer to pay a predetermined beneficiary a sum of money in exchange for a premium when death occurs of the insured person. Some contracts allow for payment for other events such as terminal illness or critical illness.

Life insurance policies tend to fall into one of two major categories:

• Protection policies – designed to provide a benefit, typically a lump sum payment, in the event of death or other specified trigger in the policy. Term insurance is a common version of this type of policy.
• Investment policies – where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms of Investment Life Insurance are Variable Life, Whole Life and Universal life policies