Life insurance is designed to manage the risk associated with your death. For many people, life insurance helps provide funds for their families to pay off the house, pay for children's college educations, or provide income replacement. For others, it provides a way for a small business partner to have sufficient funds to "buy out" your half of the business if you die.
The two major types of life insurance are term insurance or whole life insurance. Term insurance is pure insurance that provides a benefit for a predetermined period of time (like twenty years). Term insurance is less expensive, but it is not permanent. If insurance is needed to pay off a liability with a definite end (like a mortgage), then term insurance can be an excellent choice. If, however, the risk has an uncertain time horizon or a certain loss (like a small business partner or estate tax), then permanent insurance is a more appropriate choice. The concept of "buying term and investing the difference" (with the idea that the investment can grow to meet the need) works at times, but be careful to do enough financial planning to determine that this is the best decision for you.
Again, I remind you that working with an insurance agent who is also a CERTIFIED FINANCIAL PLANNER (TM) pracitioner might help ensure that the person giving you advice looks at your finances holisitically, and not just as a sale.
Be prosperous!
Peggy
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