Term life insurance is insurance that pays out to a beneficiary if you die. Basically you pay a premium each year and in the event of your death the beneficiary will receive the amount of the policy. For instance, say you get a $20,000 policy and have to pay $5 per month. Each year you will pay this monthly premium but if you stop paying the policy or reach a certain age for many plans 65 or 80 the insurance will be terminated. Another type of insurance is whole insurance. This insurance is more expensive but you own the policy so if you would end the policy at some point you would get to cash it out at is surrender value and still have however much insurance you had paid up at the time.

Term life insurance is also referred to as "annually renewable" insurance. Every year the premium changes based on your new age for this year. Each year as you pay your premium, the policy renews and you have insurance coverage for another year.

Term insurance will get more expensive with each year it renews because as you get older the insurance companies rightly assume that there is an increased risk of your death as you get older. Term insurance is a pretty good deal when you are younger, but can be quite expensive as you get older.

Some life insurance companies offer what are known as "level term" policies. This means the premium stays level and does not increase annually. The premiums for a level term policy will be slightly more, but they will never go up like crazy like some regular term policies can do. Personally, I think level term policies are the best deal. Usually a level term policy will be for only 10 to 20 years. The life insurance companies won't go much longer than that.

A term life insurance policy will not accumulate cash value. In the event of your death, however, if you have paid your premium and the policy is in force, your beneficiary will receive a payment for the face value of the policy.