Life insurance policies fall into two broad categories:
* Term insurance. These policies offer pure life insurance. You pay premiums for a certain time period, such as 10 years. Then you can buy another policy, if you still want coverage.
With term insurance, out-of-pocket costs are relatively low. However, these costs will increase as you grow older. What’s more, buying a new term policy may be difficult if your health has declined.
* Permanent insurance. As the name suggests, this form of life insurance is designed to remain in force indefinitely.
Permanent life insurance policies initially require greater outlays to pay the premiums. In essence, you’re paying for basic term coverage as well as making a contribution to an investment account, sometimes known as a policy’s cash value.
If you’re fairly confident that your life insurance need will expire some day, you could buy a term policy that would last for, say, 20 years. If you think you’ll need truly long-term protection, though, a permanent policy can be the best choice.
