Term Life

• Buy term insurance when you are young. This type of insurance covers you for a specified period of time. The standard lengths are 10, 20 and 30 years. If you buy this type of insurance at a young age, it is often inexpensive and will cover you and your family in case of accidental death or sickness.
  
  Term insurance does not have any cash value and does expire, so if you wish to be covered after that period, you may see a large increase in your premiums as term insurance can get very expensive as you age. Also, when your term expires, your health at this time will pay a large role in your new premium calculation as the healthier you are, the lower your premiums will be for your new policy.
  
  

Permanent Life

• Purchase a whole life policy. Whole life or permanent insurance, as it is often called, is a policy that will pay a benefit upon your death regardless of age. Whole life is substantially more expensive than term life as the rate of mortality increases dramatically with age, and payouts are inevitable for the insurance company.
  
  The main difference between whole life and term life is that whole life accrues a cash value. At the beginning of the policy, the premiums are quite high, and the actual cost of the insurance is lower. The insurance company takes the difference and invests it for you. Although this sounds like a great deal, the interest rates paid through these investments are often much less than mutual funds, bonds and stocks. Whole life is often the only affordable option for older adults.
  
  Universal life is a form of permanent insurance in which the insured picks the premium paid, and the death benefit amount is adjusted accordingly. It is far more flexible than standard whole life. Variable life is also available, which allows the insured to decide how the cash value is invested. If the investments increase in value, so does the death benefit. If the investments lose money, however, the death benefit will also decrease.