The two most well known types of life insurance are known as “term” and “whole” insurance.

Term life insurance is the least expensive of the two.  This type gives coverage for a set period of time.  For many young families this is appealing because they can afford term life insurance, as opposed to whole life insurance, at a time when their finances are needed to provide daily support for their families.  Also, for others that may not have the financial resources to pay the higher cost charged for other types of policies this kind of life insurance is an affordable and appealing option.

Term life insurance does not accrue any interest.  It is similar to paying rent.  You pay the premiums and have coverage, but if you stop paying the premiums the coverage stops.  It is however, these very conditions that allow the premiums to make term life insurance affordable for many and provide financial security and stability for your family. 

Whole life insurance is a way to invest your money and earn interest, much like buying a house and building equity. Plus, whole life insurance will continue coverage until a person dies, there is no set length of time.  In the event of a person’s death, the family will receive the amount of the policy including the interest.  Whole life insurance is more expensive to purchase because of the payout at some point in time.  Since there is a payout at some point of time, this type of life insurance is considered an investment because it builds up cash value.