Life Insurance policies provide a specified monetary benefit to the policy beneficiary in the event of the death of the policyholder. Life insurance can be an important tool used to protect the financial well being of your family in the event of your death. Your need for life insurance will vary throughout your life and financial situation. When you are young and have no dependents such as a spouse and/pr children, your need for life insurance is very low. As you grow older, marry and have children, your need for life insurance increases dramatically. And finally when you are older and if your children are grown and financially self-sufficient, your need for life insurance may once again decrease.

Purchasing life insurance is an important decision. While it can protect your family, there can be a significant cost involved. Therefore, you and your family must weigh the need for life insurance versus the costs. One of the first steps in purchasing life insurance is determining how much you can afford to pay in annual premiums. You should not purchase a policy you cannot afford because if your policy is canceled for non-payment, it generally cannot be renewed.

Another consideration is what type of life insurance to purchase. Term insurance is life insurance that runs for a certain, specified term, such as 20 years. Term insurance pays a specfic death benefit, such as $500,000. If you do not die during the specified policy term, the insurance simply ends and neither you nor your family receive any benefit from it. This insurance is valuable though as the death benefit that it pays if a claim is made is much higher than variable life insurance.

Variable life insurance has no specific term and therefore remains active as long as the premiums are paid. Variable insurance has a specific death benefit but it is always much lower than the death benefot you could get from a term life insurance policy for the same premium. This is due to the fact that the policy does not end and therefore it can remain in effect until a claim is made. Variable policies also build a cash value based on some type of security or equity. Many popular variable policies build value based on some stock market index such as the S&P 500. These policies can be cashed out later in life making them popular retirement savings vehicles.

The premiums for life insurance as well as the limits you are allowed to purchase are based on many variables. Some you can control and some you cannot. Life insurance premiums are heavily influended by your age, something you cannot control. The older you become, the more expensive life insurance will be. So it is adviseable to purchase life insurance when you are young. Premiums are also extensively influenced by your general health, something most of us can control to some degree. If you smoke and are overweight, you will pay more than double what a non-smoker with no weight problems will pay. Your family's medical history is also examined and influences your premiums and limits.

Most health insurance companies require you to take a physical before selling you a life insurance policy. It is recommended that you schedule the exam well in advance and then do everything you can to improve your physical health before taking the exam. Losing 10 - 20 pounds and getting into better shape before an exam can literally save you thousands of dollars a year in insurance premiums. Forgetting the medical benefits of improving your health, the financial benefits alone are well worth the effort.

We have just given a very shallow overview of life insurance in this section. While we discussed the two major types of life insurance, term and variable, there are many different sub-categories of life insurance. In addition, there are numerous riders, exclusions and coverage enhancements that can be added to the standard policies. We recommend that you retain a good life insurance agent and then undertake a thorough review of your needs to determine which type of life insurance is right for your.