What is Life Insurance?
An individual pays a certain amount on a regular basis. This money is used after the passing of the individual. It will be passed on to beneficiaries. Life insurance allows children, and other beneficiaries opportunities such as college, paying off mortgages, and retiring.
Term Life Insurance
Term life insurance is the simpler of the two types of life insurance. This type of policy requires you to pay a premium for a certain term. If the individual passes away within this term then an amount of money would be given to the beneficiaries of the plan. These plans are often based off of what an insurance company sees as your life expectancy. This may be based off of if you smoke for example. After the term of the policy is up and the individual has not passed, the plan is finished and a new plan must be bought. The money goes back to the insurance company. Term life is good for an individual who believes there is a set amount in their life, and wants to take the next "n" years to take care of obligations, and make sure their family will be taken care of.
Whole Life Insurance
A whole life insurance policy is a little more complicated. This type of plan works out better for the insurance company. There is no term with this plane, it extends for your whole life. An individual continues to pay on this plan until death, when your family will receive the payoff. It is a more expensive plan than a term life insurance plan. This type of plan is a guaranteed plan, because death is inevitable. As long as you continue to pay the premium it is guaranteed that your family will receive the money. The premium is more expensive because as it grows the money is kept in a "savings account" with the insurance company. At any point if you want out of the whole life plan you can get the pay out and the interest collected. At the same time though the insurance company has been taken high fees on this money.