There are two main types of life insurance that make up most if not all of the life insurance policies that you can acquire. These two types of insurance are whole life insurance or universal life insurance, and term life insurance. These two types of insurance are both quite different in nature, not only in how they behave but also what they cost and how long they last.

What is Term Life Insurance?
Term life insurance is a type of insurance that only lasts for a pre-specified amount of time. Some term life insurance policies last ten years, twenty years or thirty years in length but they rarely if ever last longer than this. Because term life insurance policies only last for a small amount of time rather than for the entire length of your life, term life insurance rates are typically more affordable than other types of life insurance products.

This is not only because term life insurance policies last only for a specified period of time, but also because they are less risky to the insurance provider than traditional whole life insurance policies. What makes these policies less risky for insurance providers is that if the insured does not pass away during the life insurance term, there is absolutely no payout for the insurance policy. While there are some term life insurance policies that pay back the collected insurance premiums at the end of the term period, most simply pay nothing out at all.

How Does This Differ From Whole Life Insurance?
Whole life insurance, also known as universal life insurance, has a much different set of characteristics. For example, whole life insurance policies begin as soon as you are approved, and continue until you pass away. Because there is a guaranteed payout in this case, these insurance policies are much riskier for insurance providers, guaranteeing that they will eventually have to pay out money.

Whole life insurance tends to have much higher life insurance rates, because of this guaranteed payout. Most insured people do not mind paying the additional premiums if it means a guaranteed payout to their beneficiaries upon their death. This is what sets whole life insurance apart from term life insurance.

Which Option is Right for You?
When it comes to choosing between term life insurance and whole life insurance, it should not be difficult for you to determine what your needs are. Choosing the right type of insurance has to do with adequately assessing your own needs and situation, and then acting accordingly. Acting accordingly essentially has to do with determining whether a short term insurance policy would be ideal for you, or whether a long-term option would be better. If you are young and preparing ahead of time for life insurance, then a whole life insurance policy would be ideal. If you are an older adult with children and a family to protect, a term life insurance policy with more protection for lower rates may be ideal.

If you are not sure what type of insurance to pursue, you may want to speak with a qualified insurance provider to get their advice on your particular situation.