Typically, individuals buy life insurance to cover themselves, but you may also consider purchasing a policy to cover your spouse or parent, or to establish a savings vehicle for your child. Since permanent life insurance policies earn a cash value over time, also consider long-term goals that the savings might help achieve while you’re alive, like buying a home or taking a dream vacation. The policyholder can dictate when your coverage will begin and when you can make changes to your coverage level. A traditional whole life policy may not produce the highest earnings possible, but more modern types of permanent life insurance, which we’ll address in the next section, offer more flexibility and possibly higher gains. Before we answer it let’s do a side by side comparison of the two types of life insurance, whole life and term, so we can easily see their features. This permanent life coverage allows you to take out a loan against the cash value if you have enough earnings to cover policy costs. This type of policy covers you for a set number of years -- 10- and 20-year policies are common, though some go even longer. This makes it very attractive to people, but if you outlive the length of the term policy you do not receive any death benefit. When thinking about life insurance, it’s important to understand all of your options – starting with the question of whether you’d like the cover amount to stay the same throughout the length of a policy, or decrease over time. Y ou’ve made the all-important decision to purchase a term life insurance policy but are unsure of which policy best fits your needs. Coverage does not expire, and the death benefit is guaranteed, as long as you continue paying premiums. 10/01/2020 | Categories: Types of Life Insurance There are two main  types of life insurance : Term life insurance covers a limited time period, such as 10, 20 or 30 years, and doesn’t build cash value. If the insured wants to maintain coverage, she will have to buy a new policy. Term life insurance covers temporary needs, while permanent policies last a … Since a term life policy will only cover you up to a specified age, it won’t provide protection for your survivors if you live well into your golden years. On the other hand, if you want long term coverage to help your spouse with any potential funeral costs, a whole life plan may serve you better. This is a nice perk, but it comes with several caveats. This type of life insurance features a fixed death benefit, and over time, builds a tax-deferred cash value. Whole Life Insurance: The 2 Primary Types, Choosing Between Different Types of Life Insurance, The Best Whole Life Insurance Companies of 2020. Term life policies feature flexible coverage levels, so you can choose the death benefit that fits your needs. (Technically, coverage on current policies lasts until the policy holder reaches the age of 120—if you think you may live even longer, check with your insurer to see if you will receive benefits beyond that age). Typically, term life policies don’t return any of your money when the term ends. Once the policy builds a cash value, you can borrow or withdraw funds for expenses such as unexpected medical costs, a down payment on a house, or a wedding gift for one of your children. There are three main types of term assurance to consider – level-term, decreasing-term and increasing-term insurance. "Life Insurance," see "Term Life Insurance." However, if your investments don’t perform well, the death benefit and cash value may decrease. The more likely you are to die during the term, the more you will pay in premiums. You can choose any type of beneficiary you like: your children or spouse, a business partner, or a beloved charity. There are three main types of life insurance. On the other hand, whole life is more expensive, but coverage is permanent. They also cost more than term life policies because they cover you for your entire life and their savings feature increases the insurer’s administrative costs. It’s called “whole” life because it covers you until death, regardless of your age at that time. For starters, any money you borrow and do not pay back will be deducted from the death benefit eventually paid to your beneficiaries. When it comes to types of life insurance, term may be the most popular but it’s not the only option. Term life insurance is by far the least expensive type of life insurance policy to pay on a yearly basis. Other types of life insurance Level term: pays out a lump sum if you die within the specified term. Typically offered through employers, associations, or professional organizations, group life insurance covers a group of people. If you want to continue to make sure your family are looked after if you’re no longer around to help them, then you should consider taking out a life insurance policy. That is to say: a whole life policy is a form of permanent life insurance. Variable universal life insurance blends the features of universal and variable life insurance by allowing you to invest in bonds, money market mutual funds, or stocks, and enabling you to change your death benefit and adjust premiums. This can range from as few as five to as many as 30 years, but a typical period for a term policy is 10 years. "Group Term Life Insurance," see "Carried Directly or Indirectly by the Employer." Know the various life insurance plans to select the right one at the right time. 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