There are two primary rate structures used for term insurance: "increasing premium" and "level premium." Under an "increasing premium" policy, the premium increases every year. In contrast, the premium for a "level premium" policy will remain fixed for a certain period, and then will increase thereafter. In the case of a 20-year term policy, for example, the premium may remain fixed for the first 10 years, and then will gradually increase in years 11 through 20.

At the end of a policy's term, coverage will stop unless the policy is "renewed." In most cases, the renewal process is just a formality because term insurance contracts are usually "guaranteed renewable" (that is, no medical exam is required) for some period after the initial term ends, usually to age 65 or 70. However, the renewal is still an important event because it will most likely signal a significant increase in the policy's premium.

As mentioned above, term insurance is generally "guaranteed renewable" until age 65 or 70. So what happens after you reach the age limit specified in your term insurance contract? Well, you have two options. Some (but not all) term policies offer you the ability to convert your term policy into a whole life policy. The specifics surrounding this conversion are unique to each policy and insurer, so you'll need to consult your policy and insurance agent. Since you will be obtaining coverage at an older age, be prepared for a significant increase in your premium. If you do not have a conversion option, your only alternative is to apply for a brand new insurance policy. Again, since you will be obtaining coverage at an advanced age, don't be surprised if the premium you have to pay is significantly more than your old policy, especially if you have an existing medical condition.

* Fast Facts about Term Insurance:
o Limited coverage period
o Premiums increase over time
o Death benefit is fixed
o No "Cash Balance" feature

Whole life insurance (also called "permanent life insurance") provides coverage for an individual's entire lifetime. The policy does not have to be "renewed" at some point in the future. Once established, the policy cannot be canceled as long as the premiums are paid. Premiums for whole life insurance are fixed for the life of the policy. They do not increase as you age. In addition, a whole life policy contains a "built-in" savings account. A certain portion of the premium paid for whole life insurance is placed into a "cash balance" account that earns a guaranteed interest rate. As this account grows over time, the policy owner can use it in a number of ways. He can borrow against the balance, use the funds to pay the policy's premiums, or use the funds to purchase additional insurance. The owner can also "surrender" or "cash-in" the policy, in which case the insurance company cancels the policy and pays the policy owner the balance that has accumulated in the cash account. In this way, whole life insurance serves a dual purpose. It functions as both life insurance and as a financial investment.

You may also hear the terms "universal life" and "variable universal life" in discussions of permanent life insurance. These are variants on the traditional whole life policy. Their basic structure is the same, but they offer enhanced flexibility and additional investment options. For example, under a variable universal life policy, you can invest a portion of your cash balance account in stocks and mutual funds.

* Fast Facts about Whole Life Insurance:
o Lifetime coverage
o Premiums remain fixed
o Death benefit is fixed
o Includes "Cash Balance" feature

There is often a lively debate regarding which form of life insurance-term or whole life-is the "better" choice. In fact, each form of insurance has its advantages and disadvantages. The right choice depends on your individual circumstances. In all likelihood, you won't regret your decision one way or the other. What you will regret is not getting any insurance at all, or not getting it at a young age when it's much easier and cheaper to obtain. So don't let yourself be distracted by the options. Talk with a professional as soon as possible, and let them help you decide which form of life insurance is best for you.

Things to consider:

*Initial premiums for term are lower than whole life for the same death benefit. This makes term insurance a good choice for young individuals with limited income who have young children and need to obtain the maximum coverage for the lowest cost. It may also be a good choice for financially disciplined individuals who will use the money they save buying term insurance to fund additional investments.

*Whole life is the traditional form of life insurance. It is recommended for those who can afford the higher premiums, want a fixed premium, and want the security of lifetime coverage. It is good for those who are not disciplined savers, because it forces you to save, and at the same time provides an important safety net for your family.

Summary of Features-Term & Whole Life Feature Term

When comparing the two, these are things you'll want to know...

Term Life Insurance

*Coverage Varies, but guaranteed renewal is generally limited to age 65 or 70
*Your premium increases over time
*Death Benefits remain fixed
*No investment features
*Lower cost is a benefit to some

Whole Life Insurance

*Lifetime coverage
*Premium remains fixed
*Death Benefits remain fixed
*Cash Balance Account
*Savings make this a popular feature

It's important to understand that the overview provided above is a highly summarized comparison. Only a trained financial professional can properly provide you with the information you need to make a fully-informed decision. And only a financial professional can provide you with the best solution for your particular situation.
As with any financial decision, the assistance of a professional planner or insurance agent is critical.

You can also Learn How to Maximize Property Insurance here.