There are differences; some significant.  There are only major types of life insurance.  There’s term and there’s whole life.  Term is typically what first comes to mind when you think of life insurance.  It’s the type many of us purchase through payroll deductions. 

 

Whole life, on the other hand, is sometimes called “permanent” life insurance because it is intended to last (or be in force) for a person’s entire (or whole) life.  Insurance companies will sometimes try to sell it as an investment, although (in my opinion) it’s not a very good one. 

 

There are sub-categories within these two major types.   Term life has two basic types; level term and decreasing term.  Level term is where the death benefit (the amount payable) stays the same for the duration of the policy.  Decreasing term is where that amount decreases over time (and hence with age) during the life of the policy.  Whole life is more like a combination of insurance policy & savings account.  It is nearly always more expensive than a term life policy.  The savings aspects increases through your payments and thorough dividends the insurance company pays to you.

Term insurance is the most expensive and the biggest money maker for insurance companies.  It's the most expensive because by the time it may actually be needed it's too expensive and the policies are usually dropped.  Biggest money maker, because only about 10% of them ever pay a death claim, and many have premiums that have been paid for 30 years.

if youre covering a mortgage, buy term.  if youre rich and have an estate, buy whole life.  talk to an agent