Term vs. 'all the rest'

Before we get into the details, let's just start with the basics: all life insurance is term insurance. The foundation of every life insurance policy, no matter what the retail name of it is, is a one-year (term) calculation of what it would cost an insurance company to pay a specific sum of money to your designated beneficiary if you were to die within 12 months. That number is based primarily on your expected mortality – that is, how long statisticians say you are likely to live. So, if you were to buy a 12 month, or one year, (term) life insurance policy, the insurance company would have to place a certain amount of money away in a “reserve account” based on the likelihood that you would die during the next 12 months. If you are young, that’s not very likely, so not much money would be set aside, and if you are old, it is much more likely so a lot of money would have to be set aside. The insurance company would collect that money from you in the form of a payment called a premium. As a general rule, the younger you are tho lower your Premiums will be.

Term Insurance is typically the least expensive of all policies and allows you to obtain the maximum coverage for the lowest cost for a fixed period of time. In the majority of cases it is often the best way to go. The rate can be guaranteed for 5, 10, 15, 20, 25 or even 30 years!

Whole Life is also called "permanent" insurance. It protects you for your entire life. As long as you continue paying the premium it will always be there to provide a death benefit. It can also build up cash value that can be borrowed from the policy.

Universal Life is also called "permanent" insurance. With this type of policy, there is the potential for cash value to build up over time. The real focus is to provide a guaranteed death benefit to age 100 or beyond! It is very similar to a term policy that never ends. Many people find a combination of term insurance and universal life meets their need for protection for a period of time and leaving a legacy for their children.

Last to die Insurance is insurance on two lives that would pay upon the second death. These policies are used in estate planning to pay estate taxes.