For some, life insurance means security, knowing that their family or business is safe should they unexpectedly pass away. For others it conjures up images of pushy salesmen and confusion about what they are buying.

Considering your affordable life insurance options now can give you peace of mind and satisfaction for years to come.

Three main types of policies exist. They can be described as follows:

Whole Life

Whole life insurance is one of the types of permanent insurance. If you continue to make regular premium payments, the policy will have lifelong effectiveness for you.

The cost of whole life insurance premiums will usually be more than the cost of an equivalent amount of term insurance because the cost is averaged. While the cost of term insurance goes up with each renewal, whole life insurance never needs renewing. Instead of paying smaller premiums when you're young and high premiums as you age, whole life premiums stay the same.

A savings option is sometimes added, which can be borrowed against.

Universal Life

Also a permanent form of insurance is universal life insurance. The policy remains in effect until your death. Even if your health worsens, premium will not increase, and there is no need for renewal.

Universal life also incorporates other financial services including a savings plan that can be made in addition to the policy. The savings that have accumulated can be exchanged if the policy is surrendered early. Policy owners can select additional options, such as adding another covered person to the policy, taking over management of their own investments, and paying premiums from the savings that have accumulated.

Universal life insurance is the most expensive option because of the amount of flexibility and options.

Term

Term insurance is less expensive than either of the other two types. Term insurance is selected for a certain period of time (term) such as; 1 year, 5 years, 10 years or 20 years.

Term insurance is a good choice for young families with dependants and high debts (such as a mortgage) that they will be no longer be responsible for in 15 to 20 years when the policy ends. A term policy can't be borrowed against or cashed in, because it doesn't carry a cash value. At the end of a term, the policy must be renewed, usually with higher premiums.

Covering basic financial requirements by using term insurance and building savings separately may allow a more affordable life insurance and reduce insurance needs later in life. Although you sacrifice long term protection.

Policy Riders

Depending on the needs of an individual there are other options that can be purchased with certain insurance policies.

The additions to the life insurance policy are called 'riders'. Some riders allow loans or cash payouts; others include AD&D (Accidental Death and Dismemberment), A&S (Accident and Sickness), insurance for disability income, and the addition of a spouse.

To receive the most affordable life insurance, Talk to an insurance broker who will explain the benefits of each feature and recommends only what best suits your needs. With a bit of understanding you can make the most responsible choice with your money and be confident your family or business is provided for.