This is typically the simplest and least expensive insurance option. Term life insurance provides coverage at a fixed rate for a specified period of time. It’s a benefit policy that’s used primarily to cover the financial responsibilities of the insured, with the benefit to be paid only if the insured were to die during the specified term. Most term life policies can be converted to a more permanent insurance solution such as whole life or universal life insurance. Level Term insurance, as these policies are called, guarantee a fixed premium for a given period of time, usually in terms of 10, 15, 20 or 30 years. Your premium is based on your age and coverage options, with longer terms typically being more expensive.

As the most common type of permanent insurance, a whole life policy guarantees a death benefit for the lifetime of the insured as well as a cash value account for savings. Your premium remains constant throughout the duration of policy while payments over and above your premium are credited to your savings, which earn a fixed rate of interest.