In the case of a death, life insurance will pay a set amount of money to the person that the insured individual specifies; this person is also known as the beneficiary.  The purpose life insurance is to protect your family and loved ones left behind from financial loss after your death.  There are three main types of life insurance: term life insurance, variable life insurance, and universal life insurance, all of which should be carefully studied so that every individual knows what plan is right for them when the time comes.  Read on for an explanation of these policies.

Term Life Insurance
Term life insurance is a temporary insurance that covers the insured person for a set number of years, usually 5, 10, or 20, and can usually be renewed at any time.  It is the most commonly purchased life insurance and is the cheapest, although premiums increase with age.  If the person insured passes before the term ends, a lump sum is given to the primary beneficiary; if they are still living before the term ends and they have not renewed the policy, it does not mature, and no payment is given out.

Variable Life Insurance
Variable life insurance gives lifetime protection to the insured person’s beneficiaries.  The great thing about this type of insurance is that you can put away some of the premium into another tax-deferred account for investing purposes.  The downside to this is that the insured person cannot take cash out of this account.

Universal Life Insurance
Universal life insurance is kind of like the variable life insurance in that it can also act as a tax-deferred savings account.  The only catch is, you are not in charge of your portfolio; the company decides how your money will be allocated into the different investments.  It is a flexible type of insurance that can change as the insured person’s needs change; this includes having the flexibility to adjust premium payments as financial situations alter.