Types

• There are two basic types of life insurance: term life and permanent life insurance. Term life insurance provides basic death benefit protection. Premiums are paid in exchange for a death benefit that is paid to your beneficiaries when you die. Permanent life insurance is life insurance that provides a death benefit and a cash reserve, called a cash value, that may be used at any time during your life.
  
  

Features

• Life insurance may be enhanced with various features. These features are called "riders." A rider is a modification to the base policy. The rider modifies the terms and conditions of the policy and normally provides some benefit to the policyholder. For example, a rider may provide the policyholder with a way to receive a refund of all premiums paid into the policy when the policy term is over. Or, a permanent life insurance policy rider may allow access to most of the premiums paid into the policy's cash value earlier than what the policyholder would otherwise be able to access this money.
  
  

Benefit

• The benefit of life insurance is that your family gets the peace of mind of not having to worry about where they will get the money to pay for financial debts after you pass away. The death benefit, regardless of the type of insurance you choose, pays out regardless. You will likely be able to purchase more death benefit with a term life insurance policy for the same amount of premium when compared to a permanent life insurance policy. However, the permanent life insurance policy will remain in force for your entire life whereas the term policy only lasts for a set number of years.
  
  

Consideration

• When choosing a life insurance policy as part of your financial plan, consider your financial goals and needs. A life insurance policy should provide death benefit protection that covers all of your financial liabilities, first and foremost. However, you may also want your life insurance policy to provide permanent protection. In these cases, you will need to analyze your budget so that you can afford the higher premiums associated with permanent life insurance.