A key challenge for understanding life insurance is the range of products that are available and the associated terminology. Now, when we talk about life insurance, most of us are familiar with traditional or non-participating life policies. This type of policy requires the policy holder to pay a fixed premium in exchange for a guaranteed payout on death, and there are two main types of non-participating policy. The first type of policy is term life insurance, and under this type of policy, the policy holder pays a fixed regular premium to the insurance company, and in exchange, the insurance company pays a guaranteed amount to the policy holder on their death. This guaranteed amount is sometimes referred to as the sum assured or the face value of the policy. Now, a term policy provides life cover for a specific period of time, typically, this is 25 years. If the policy holder stops paying the premiums at any point, then the insurance cover ceases or lapses. Now, the second type of policy is a whole life insurance policy. And just like term life insurance, the policy holder is required to pay fixed regular premiums to the insurance company, and in exchange, they receive a guaranteed death benefit on the death of the policy holder. However, the key difference here is that the policy provides cover for the whole of the policy holder's lifetime rather than just for a fixed period of time. This means that the policy builds a cash value whilst the policy holder is alive, allowing them to cash in or surrender their policy during their lifetime and receive a cash lump sum. This cash value reflects the cumulative premiums paid by the policy holder plus a fixed interest rate accrued on those premiums. In effect, a whole life policy therefore acts like a term life insurance policy with a fixed savings component.