Two Main Types of Life Insurance Policies: Term & Permanent
Term life insurance: you pay a premium and if you die during the term of the policy (e.g., 1-30 years), your beneficiary will get paid. Typically, term insurance is the most affordable, but it does not build any cash value over time.
Permanent life insurance: a portion of your premiums is put into an account, known as the cash value, which grows at a fixed or variable interest rate. You can withdraw from, invest, or borrow against the case value. Some policies tie the growth to investment accounts, so your cash value could go up or down, depending on the performance of your investments. It can take several years to build up a cash value. Premiums for permanent life insurance are higher than for term life, because of your ability to build up savings and because you're buying coverage for a longer period. There are different types of permanent life insurance options, including whole, variable, universal, and variable universal.
To understand the full range of life insurance options, individuals should consider speaking with a financial planner or insurance agent.