Term life is a good choice for you if you are young and need greater coverage for your young family. Term life insurance is a form of insurance that provides you with coverage for a particular amount of time. If the insured dies within that "term," the policy will pay a fixed amount of money to the designated beneficiary. The owner of a term policy pays a fixed premium amount on a scheduled basis. The amount of the premium is a calculation based on how much insurance you desire and your present age. Sounds depressing, doesn't it? It's like gambling with your life and hoping that your beneficiary wins. The bottom line is, if you are still alive at the end of the term of the policy, the insurance company keeps the money. If you die before the term is over, the death benefit is paid to your beneficiary.

A simple example of term insurance is traveler's insurance. Every day airline travelers purchase term life insurance to have extra life insurance in case they should die in flight. The term or time period of this policy is the duration of the flight. Of course, these people hope that the policy will not pay off. Statistically speaking, most people are aware that airline travel is safer than driving your car.

When we talk about term life insurance, there are several different types of term policies that people purchase that can last for a very short period of time, as is the case with traveler's insurance, or as long as 20 to 30 years:

• Level Term - This type of insurance is "level" because the premium does not change throughout the term of the policy. A level term policy can be written for one year, five years, and sometimes longer. The cost of this policy may be low and the premium will not change over the life of the policy. However, when the policy expires, if you should elect to renew the policy, the premium is sure to increase. If your health should decrease during the term of the policy, you may find it difficult to renew.
• Annual Renewable Term (ART) - As you age your life expectancy declines. (See the National Center for Health Statistics report on U.S. life expectancy.) An annual renewable term policy is renewed from year to year and, with the increased chance of your death, the premium also increases by an amount stated in the policy. Some renewable term policies are convertible to permanent policies, and are a good choice for those individuals who prefer the coverage of a whole life policy, but are unable to afford the more expensive coverage starting out. (Whole life is a life-long policy that combines the cash value death benefit with an investment component. Usually, the premium for a whole life policy is more expensive than the premium for a term life policy.)
• Decreasing Term - On this type of insurance the premiums remain constant throughout the term of the policy, but the amount of the death benefit decreases over time at a predictive rate. This policy makes sense for some people who, as their families mature, find that the need for a larger death benefit decreases over time.

Term life insurance tends to be very affordable. Some people elect to purchase term life and make other financial investments to expand their monetary resources as they reach retirement. Other financial investments might include investing in mutual funds, stocks, or bonds, for example. Based on your unique circumstances, with a little research you're sure to find a life insurance policy that will provide the coverage and the peace of mind you need.

Most carriers require that you have a physical check-up. If you're in good health, you're bound to get a better rate than someone who is generally unhealthy. The younger you are, the lower the premium you can expect to find. The premiums will increase the older you are.

As you explore your options for life insurance, create a profile that describes your current financial situation. Based on your circumstances, begin to draft a financial plan detailing the changing needs of your loved ones over the next 10 to 20 years. If you have limited resources for life insurance premiums today, term life may offer you both a lower cost and a guaranteed benefit - if and when your family will need it most. For more information about life insurance, see the State of Washington's Tips on Buying Life Insurance and Life Insurance Cautions.

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