Term life insurance
Term life insurance is almost always less expensive than whole life, particularly if you are young and your health is good. But it does its job well. You pick a period of time, usually between one and ten years. This is the “term”. While time runs, you pay a premium. If you die during this period, whoever you have nominated takes as your beneficiary.
In one sense, this is a simple kind of bet. If you live, you have paid your premiums and you get nothing back. If you die, your family or relatives benefit. But life is never simple. Insurance companies give you different choices. You can decide to have fixed or variable death benefits. Or you can buy cover that is renewable or convertible into a whole life policy at the end of the term without having to take a health examination.
That makes it all a balancing act for you. You do not get the same tax advantages for term policies nor do you build value but, if you’re on a tight budget and your health is good, this is a very affordable way of protecting the ones who depend on you.
