Term life insurance

Term life insurance is the simplest - and cheapest - form of life insurance. Basically, you decide the amount of money you want your nearest and dearest to get in the event of your premature demise.

Term life insurance pays a tax-free lump sum in the event of death within a specified period of your choice (known as the 'term'). Fixed monthly - or annual - premiums are paid for the duration of the term.

A whole bunch of variables - your age, gender, state of health, previous ill health, the term you require - determines how much the premium will be.

For example, a 32-year-old non-smoking male requiring $190.000 of cover for 25 years will pay around $20 a month. And the premiums are fixed for the whole 25-year term.

Youíre covered for as long as you pay the monthly premiums. If you stop paying the premiums, the policy terminates. With this form of life insurance, thereís no investment element.

If you get to the end of the term and havenít claimed, you forfeit all the premiums youíve paid. No claim, no gain - but at least term insurance is cheap and the premiums remain constant.