Life insurance can be purchased by individuals and is provided by many employers, often at no cost to the employee.  Frequently, additional amounts are available to employees at their own cost through payroll deduction.

People purchase life insurance policies for a variety of reasons.  Life insurance may be purchased to provide income security to family members upon the loss of a loved one; to cover burial expenses or final debts and estate taxes; or in the case of a business, to fund replacement of a key employee.

Term Life Insurance

This type of insurance provides protection for a specific period, usually 5, 10 or 20 years.  In the event that an insured person dies within that time, a tax-free benefit is paid to the beneficiary.  Many term policies can be converted into permanent life insurance policies without evidence of insurability.  Term insurance may be useful for young people with relatively low financial needs or resources.

Permanent Life Insurance

Permanent life insurance continues for your lifetime.  Upon your death, it pays a tax-free benefit to your designated beneficiary.  Additionally, a portion of the premiums you pay is deposited into a tax-deferred cash account, available for use during your lifetime if needed.  There are many types of permanent life insurance, including whole life, universal life and variable-universal life.