The various life insurance policies cover nearly every aspect of life. The simplest are straightforward. That would be a permanent policy, paid for a period of 10 or 20 years, which remains in force until the insured person dies. Premiums for this type of policy usually are lowest when the insured person is young. This type of policy can be purchased at any age, but will have a premium twice as high for middle aged people compared to that charged for a young person under 25. Quite often it is purchased with the intention of using the pay out to pay for funeral expenses.

Somewhat more complicated are the policies that continue to collect a premium for the entire life of the insured. Included in this policy can be several features. One of the more attractive features is a cash account that can be borrowed from by the owner of the policy. The cash account is over and above the face value of the insurance policy.

A more common life insurance is the term policy. With a term policy an agreement is reached to provide a definite benefit, such as $200,000 for a set period, such as 25 years, at a premium that does not change over time. Such policies are often used to guarantee the payment of a home mortgage in the event of the policy owner’s death. At the end of the time period, the insurance ceases. No money is paid to the policy owner’s beneficiary unless the insured dies during the time the policy is in force.

These are the three main types that most people invest in. From here on, the policies become more complex. Just one example is the universal life insurance. This is a newer style of policy that has flexible premiums. The premiums are paid into a cash account that is invested in ways that result in higher interest rates. The policy owner can opt to use the interest generated to actually pay the premium for one or more months or can add it to the cash value of the policy. When interest rates are low, the policy owner may have to pay a higher premium to compensate for that. The cash account can also be borrowed from. The cash account also can be charged for administrative expenses of the fund.

There are also life insurance annuity policies that pay a monthly or quarterly sum after a certain age to supplement other retirement benefits. There are life insurance policies that allow the purchaser to share in the profits of the insurance company by either adding to the face value of the policy or accepting deposits into a cash account. There are even viatical settlements where a terminally ill person can elect to sell their policy for a percentage of the face value in return for a cash lump sum. The purchaser will gain the option to name a beneficiary and also collect the full face value amount when the terminally ill person dies.

Comparing the policies offered and matching these to individual needs takes some time but is very important.