Term Life Insurance
Term life is the easiest to understand type of life insurance available. Simply put, it pays out the selected benefit if the insured dies during the selected term - which is usually from 10 to 30 years. You might also see terms between 1 and 10 years, but these are in special, rare situations.
The main types of term life insurance policies are level term and decreasing term. Level term means that the death benefit will stay where it is throughout the term of the policy. Decreasing term is for special situations like mortages, or loans and the death benefit drops over the duration of the contract term. Only about 3% of all term life insurance purchased is decreasing term.
Whole or Permanent Life Insurance
Whole life is intended to last - your whole life - although policies will usually mature at age 100 or more commonly now 120. These calculations are based on actuarial tables. The main types of whole life insurance are universal life, variable universal life, and traditional whole life.
The idea of traditional whole life is that the death benefit and the premium are to stay the same throughout the contract of the policy. It is better to buy traditional whole life insurance when the insured is relatively young because the premiums increase as age increases.