There are essentially only two types of life insurance you can purchase: term or permanent insurance.

A term life insurance policy provides pure death protection for a specified period of time.

It’s a simple matter of an insurance company promising, in exchange for your payment (premium), to pay a specified amount if you die during the term (coverage period) of the policy.

Permanent life insurance policies combine death protection with some type of cash value accumulation.

The basic idea of a permanent policy is you pay more initially and the extra dollars put into the policy act as a savings vehicle that can later be drawn from – typically to maintain a level, affordable premium.

The fact there are only two types of life insurance policies isn’t well known. The reason for this is insurance companies cleverly structure and market permanent policies in myriad ways – usually involving different investment options for the savings portion of the policy.

For most people, during their working years, the motivating reason for purchasing life insurance is to financially provide for their loves ones if a breadwinner makes a hasty exit from this life (see: Reasons Why You Need Michigan Life Insurance). For those individuals term life insurance offers the best value providing death protection at the lowest overall cost.

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