Like any other product today, there are many kinds of life insurance. If you’re not careful, you could end up buying something you don’t want just because it sounds similar to the product you’re interested in purchasing. But life insurance can be difficult to understand. Although there are some good resources for learning about life insurance—like life insurance regulating bodies and reputable money advisers—this article will give you the basics.

First, there are really only two kinds of life insurance: term life and whole life. Term life is a type of insurance that you hold for a term of years. Once your term is up, you either give up your life insurance or you renew. With some policies, lifetime renewals are possible. Others do not allow this option. Regardless, a term life insurance policy only pays out if you die while you are in your covered term.

Whole life insurance, quite obviously, is a type of life insurance that you have for your whole life. Many people see this kind of life insurance as an investment. But whole life insurance is different from the kind of investments you might make using Sharebuilder or Etrade. Whole life insurance asks you to pay a larger premium so that a part of that premium will be invested. After retirement, the idea is that there will be enough of an investment for you to pay your life insurance premiums in your old age.

Deciding on the right type of life insurance policy for you depends on your goals and family situation. Some advisers, like CNN Money, suggest that alternate routes to investment are better. But others think investing in whole life insurance policies is an easy way to make a commitment toward investing and savings. In addition, people who choose whole life insurance policies often have benefits with the IRS and their state revenue departments. Whole life insurance benefits accrue tax-free.

There are many kinds of whole life insurance policies and many variants of term life insurance policies. One of the first decisions you’ll need to make when you start to shop for life insurance is how much coverage you want. Some life insurance calculators can help you determine how much coverage you will need for your family. If you choose whole life insurance, you’ll need to determine what kind of investment you want to make. A money market investment? Stocks, bonds, and mutual funds? When you choose a whole life insurance option, you’ll need to decide.

No matter why you need life insurance, you need to understand the different kinds of policies before you can make a commitment. Using the Internet and insurance regulating web sites, you can determine what kind of life insurance is best for you.

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