Types of Life Insurance: Term and Permanent
There are many types of life insurance policies, however, most fit into one of two categories: term or permanent.
Term life insurance is the most budget-friendly type of life insurance that you can get. It is very
inexpensive and covers you and your family for a "term," or a set period of time. If you die during
the coverage term, your life insurance policy pays the death benefit to your designated
beneficiary. If you are still alive when the policy expires--congratulations! You’ve outlived your policy. However, your policy pays nothing. You will need to renew your policy or get another. Many employers offer term life insurance to their employees for free or at a low cost and usually for the same amount of the employee’s annual salary. If you leave the company, your term insurance ends.
The biggest advantage of term life insurance is that you can get a lot of coverage for a very small amount of money, which is often a good option for growing families who are often paying off debts and working to build financial security for the future. Term life won't break the bank but offers a lot of protection, particularly for those who are just getting started. The drawback is that it does expire, so If you decide to get term insurance, be sure you know how long your term will be and whether it can be renewed or converted into a permanent policy after the term expires.
Many growing families purchase term insurance for terms between 10, 15 or 20 years, with the assumption that when the term expires, they will no longer need life insurance because their family is grown, their house is paid off and the savings and investment accounts are in good shape.