What Is Life Insurance?

Whole life insurance is life insurance that covers you from the time you purchase it until the day you die, no matter how old you are when you die. The premium you are paying for whole life insurance will not change. Whatever you pay the day you get the policy is the same thing you will pay the month you die. These insurance policies do build cash value, which you can use if needed.

Variable life insurance utilizes investments to help grow the policy's value. With this structure, your insurance premiums are put into investments, and the performance of those investments determines the cash value and death benefit of the policy. Most of these policies will guarantee a certain level of death benefit, and the policy has the ability to increase the death benefit if the investments perform well.

Term life insurance has the most affordable premiums. With a term life insurance policy, you will purchase the life insurance for a set number of years, such as 20. If you die within that time, your beneficiaries will be paid the death benefit. However, there is no cash value in this policy, and if you do not die within the term period, you will lose the money you have invested into the policy. Some term life insurance policies have set monthly premiums, while others have premiums that increase as you age. Either way, these premiums are more affordable than whole life or variable life policies because of the lack of cash value.