Life insurance is a financial contract between an insurer (the company) and an insured person (you). The purpose of life insurance in the U.S. is to protect your finances in the case of death or disability. This protection is provided by paying out a certain sum of money to the beneficiaries or using the money to cover mortgage and loans in the event of your death.
Discussed below are the various types of life insurance available:

1. Variable life insurance
Variable life insurance involves investing the premium money into income-generating assets. The premiums on variable life insurance rise over time based on the performance of investments made by the insurer. When you decide to buy a policy, you select what level of risk with which you are comfortable. Higher interest earnings mean lower initial premiums, but also a chance to decrease later.

2. Whole life insurance
Whole life insurance is one of the most traditional life insurance policies and a form of permanent life insurance. In this type of policy, the premium amount remains constant throughout your lifetime. As such, you can use it as long as you want. There are two main benefits associated with this insurance — lower premiums and tax advantages. Premiums are lower primarily because there is no cash surrender value. However, some policies offer higher dividends when compared to term insurance.

3. Term Life Insurance
This is the cheapest form of life insurance offered by companies like AARP Life Insurance. Under this plan, you pay premiums until you die, at which point the policy proceeds will be paid to designated beneficiaries. For example, say you purchased $100,000 worth of term life insurance coverage. You would pay $1,500 per month ($18,000 annually). After three years, you would continue making payments but now at a reduced rate of $750 per month ($9,000 annually). After eight years, you would continue to make monthly $500 per month for another five years before being completely covered. Your total cost would come to around $25,000 ($22,200 after 10 years).

4. Guaranteed issue life insurance
If you had a guaranteed insurability clause, you’d know there was a way to get yourself financially protected even if you develop health conditions during the first few months of owning the policy. Today, only about half of insurers selling individual policies offer guaranteed insurability. Insurers often cite high administrative costs and a lack of consumer demand as the reasons they no longer offer guaranteed policies.

5. Simplified issue life insurance
This refers to a type of life insurance without medical underwriting. The policyholder applies online and selects an investment option. The company will assign either an A or B rating depending on their selections. An A means the applicant must not have any pre-existing conditions. A B rating indicates applicants should disclose any conditions they currently have. Applicants who receive a C rating are denied coverage. Once approved, the policy begins immediately, and the premiums do not vary depending on age or health status. With simplified issue life insurance, premiums tend to be cheaper than conventional policies. You may save 20% or more on average on annual premiums.

6. Universal life insurance
Premiums remain fixed for several years with universal life insurance, but you pay additional amounts each year to keep growing. This type of policy has relatively low premiums, since the growth rate is usually lower than those offered by other types of policies. If you have children or grandchildren to whom you expect to bequeath your remaining capital, this could be a good option. It offers more flexibility in choosing how much money to leave your beneficiaries.