The three most common are term life, whole life and universal life. Term life insurance provides coverage for a specified term of years. If you are the policy holder and you die during the term, the insurance company will typically pay the face amount of the policy to the person you named as the beneficiary. The term of the insurance can vary from one year up to 15 or more. The insurance premiums for term life generally increase with age.
Term insurance is the most economical form of life insurance.
Whole life insurance generally provides for a death benefit in return for a fixed premium that remains constant for your whole life. The drawback, of course, is that whole life is much more expensive than term insurance. Universal life, the newest form of insurance, now accounts for nearly 40 percent of all life insurance sold. While similar to whole life, universal life provides you with an annual statement of the amount of the premium credited to your cash value account. Unlike whole life, the cash value money is freely available.