Term life insurance is generally recommended as the best type of insurance, according to SmartMoney.com. The rates can be two to four times lower than whole life policies, so a much larger face value can be purchased. Also term policies, which used to be limited to 10- to 15-year periods, can now be purchased for 30-year terms, which is another benefit according to CNNMoney.com.

On the Other: Benefits of Permanent Life Insurance Policies

Permanent life insurance policies (e.g. whole life, universal life and variable life) have higher premiums, but they also come with benefits, according to smartmoney.com. The policy will never expire as long as the premiums are paid; they build up a tax-deferred savings account; and there is no tax on the death benefit.

Bottom Line

The purpose of life insurance is to provide for dependents, according to CNNMoney.com, and it warns against using a life insurance policy as a means of investment. While permanent life insurance policies offer the ability to generate savings, more money can be made by investing the amount that is saved from the smaller term life premiums.

Source:

SmartMoney.com: Which Life Insurance is the Best

CNNMoney.com: Money 101 Lesson 20-Life Insurance:

Resource:

AARP.org: Life Insurance Calculator

LifeHappens.org: Life and Health Insurance Foundation for Information

USNews.com: US News and World Report-7 Killer Insurance Mistakes You are Probably Making