• There are three basic types of term life insurance available to consumers.life's a gamble image by Pix by Marti from Fotolia.com
  
  An individual seeking life insurance coverage can choose between two basic types of policies. Permanent insurance such as whole life or universal life is typically purchased to provide protection throughout the insured's lifetime. Permanent plans build cash value over time but are the more expensive option. Term insurance, on the other hand, provides protection for specific periods of time but does not accumulate cash. Policyholders can choose from three basic types of term insurance.
  
  

Level Term

• With level term insurance, the amount of the death benefit remains the same throughout the life of the policy. The policy is purchased for a specific period, typically ranging from 10 to 30 years or until the policyholder reaches age 65. The policyholder may purchase the policy to coincide with a specific period of life. For example, he may purchase a 20-year policy when his child is born to cover the period until the child is grown and goes out on his own. The policy premium will increase as the policyholder ages.
  
  

Renewable Term

• A renewable term policy may be a good choice for the policyholder who wishes to evaluate her insurance needs on an annual basis. It can also be an option for an individual who wants to start off with an inexpensive term policy but wishes to convert to a permanent cash-value plan such as whole life when her financial situation improves. With renewable term, the policyholder can elect to renew the policy each year regardless of health. The premium will increase each year to account for the increase in age, but the death benefit will remain the same.
  
  

Decreasing Term

• Decreasing term insurance can be considered the opposite of renewable policies because while the premium remains the same for the duration of the policy, the death benefit decreases over time. This type of policy is sometimes purchased to cover a home mortgage. As the policyholder's outstanding mortgage balance decreases over the years, the amount of insurance also decreases. When the mortgage is paid off, the policy term also ends, although the policyholder may elect to convert the policy to a permanent plan if he still needs insurance coverage.