Types of life insurance policies are generally separated into two main categories: Term and Permanent life insurance. The main difference between the two types is the amount of time the coverage lasts.
Term Life Insurance: This type of insurance expires after a certain amount of time. The coverage period is set at the time of purchase, and is normally valid for either 10, 20 or 30 years.
If you die during the coverage term then your beneficiaries will receive an insurance payout, known in this case as a death benefit. If you are still alive when your term life insurance policy ends then neither you or your beneficiaries will receive any money.
If you like your term life insurance policy, you usually will have the option to renew it for another term when it ends.
Permanent Life Insurance: This type of insurance covers you until your death, as long as you keep up with the monthly bill, which is called your premium. There are several types of permanent life insurance, including whole life insurance and universal life insurance.
Permanent life insurance rates are typically higher than you would pay for term life insurance rates.
Monthly premiums for permanent life insurance policies can be up to 15 times as expensive as the typical term life insurance policy.
For this reason, most financial advisors suggest that you buy a term life insurance policy if you are trying to save money.
To lock in the cheapest life insurance rates, it is also important to buy a policy at the right time.