A life insurance policy is a contract with an insurance company, often referred to as a “safety net.” In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured's death. Life insurance is chosen based on the needs and goals of the owner. There are two types: Term & Whole Life/Permanent.
Level term means that the death benefit stays the same throughout the duration of the policy.
Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policy's term.
Traditional Whole Life means both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy.
Universal or adjustable life offers you more flexibility than whole life insurance. You may be able to increase the death benefit, if you pass a medical examination.
Variable policies combine death protection with a savings account that you can invest in stocks, bonds and money market mutual funds.