However the guarantee period is often shorter than the eventual contract duration and to shed some light on this often-contentious issue it is important to understand that there are three main types of life assurance products.

These are: Universal Life, Whole Life and Term.

The first is the old-style Universal contract, which offered cover until the policy holder's death. This had a fixed premium but was usually written with an annual escalation of 10% to 15%, which came into effect every year on the policy's anniversary. Because the cover was guaranteed for life, premiums tended to be high, and grew every year as the annual escalation came into effect.

Due to their relative inefficiency these types of policies are gradually being phased out and replaced with Whole Life or Term policies. Universal policies generally had an investment element funded by a part of your monthly payments.

The second type of policy is Whole Life. These have been designed to give you a guaranteed level premium for 5, 10 or 20 years. After that, the insurance company will extend your cover but you may not wish to accept their rates. If you develop a health problem and your guarantee period has expired it would be difficult for you to switch to another insurance company.

Then third is a term life policy that has a fixed term, ranging from 10 to 20 years. The guarantee period for a term policy is usually about 13 years. There is no investment portion included and it is often the cheapest form of Life Insurance. Individuals usually take a term-life policy to run concurrently with their bond or until their children are no longer dependent upon them.

As you can see, the last two types of policies have premium guarantee periods. This means that on expiration the insurer will almost certainly raise your premium if the markets have not performed or their claims experience has exceed earlier projections.

It is impossible to predict economic influences for long periods. A premium that seems reasonable now may be totally unrealistic 10 or 15 years from now. Policy holders could be presented with significant premium increases or the option of reduced death or disability benefits.

In this event, you will be faced with the choice of staying with your existing insurer or looking for cover elsewhere. As mentioned, this could become difficult if your health has deteriorated.

Another problem that can go unnoticed is that a policy with a high investment portion may have the investment contributions decreased, over the years, to pay an increase in life cover costs.

The bottom line is to never sign any policy that you don’t fully understand and, when in doubt, get a second opinion.