Term Policies provide insurance for a specified period of time. This period is typically 10, 20 or even 30 years. If you die during this period, the company will pay the face value to your beneficiary. If you live past the term you selected, no benefit will be paid. Most term policies offer a death benefit with no savings or cash value.

If you are looking to buy the most life insurance for the least amount of money Term insurance may be the policy for you. Keep in mind that the price of term insurance increases as you get older. Term insurance policies will usually provide for a level death benefit and a level premium for the selected term.

When you buy term insurance you will need to decide how long you want the protection. Some term insurance policies can be converted to permanent insurance with no physical examination. If you do not pay the premium for your term insurance, it will usually lapse without cash value, as compared to a permanent policy that has cash value.

Universal Insurance is the most flexible of all the various kinds of policies because it treats the elements of the policy separately. Universal life allows you to change or skip premium payments or change the death benefit more easily than any other policy. It works by treating the three elements of the policy, premium, death benefit and cash value separately.

Cash values are accumulated by crediting premium payments and interest to a fund from which deductions are made for the expenses and cost of insurance. Interest rates are linked to an external index such as Treasury bills. Because the cash value element of this type of policy is interest rate sensitive, predictions of future Life costs are highly dependent upon the accuracy of interest rate projections. This policy can also be structured to operate like term insurance.

Whole Insurance is designed to provide coverage for your entire life unlike term insurance which provides protection for a specified time period. To keep the premium level, the premium at the younger ages exceed the actual cost of protection. This extra premium builds a cash value which helps pay for the policy in later years as the cost of the insurance rises above the premium.

Whole life policies stretch the cost of insurance over a longer period of time in order to level out the increasing cost of insurance. Under some policies, premiums are required to be paid for a set number of years. Under other policies, premiums are paid throughout the policyholder’s lifetime.

Variable Insurance has a death benefit that varies in relation to the investment experience of the assets underlying the policy. A higher rate of return on the invested fund can cause the death benefits to increase, while a low or negative rate will cause the death benefits to decrease. Variable Universal Life Insurance combines the flexibility of universal life insurance with the investment account features of variable life insurance.