Term insurance is pure death protection. It is the cheapest form of insurance you can get. They evaluate you, gender, health (non-smoker, etc.), age. If you are male, non-smoker, 25 years of age, it is covered for approximately 10 years, and you pay $370/month, at which point you are insured $1 million. Or you may opt for a 15 year policy, that is $450/month also at $1 million. However, when either the 10 yr or 15 yr term ends, you are re-evaluated. Being older, health issues, stats they have about risk factors and mortality, it is much more expensive to get another xyz year term coverage.
The company makes profit because being of a certain age, health background it is unlikely that you will die and they continue to collect your payments and your policy is finished out. The 15 year policy is attractive because once you reach a certain age level/health level, the numbers per month jumps. So, in effect a lot of people buy the 15 year policy, because god forbid anything happens, you know your family secure. There also is a 20 year policy, but you pay out $590/year because the insurance company is essentially taking a risk on you and guaranteeing that if anything happens they will pay out your term.
Basically getting a policy when you are just starting out and have a family is wise move, because you are still establishing yourself financially. At a certain point, people assume with age and job you would be able to have enough money to not have to renew your life insurance policy after the 10 or 15 year mark. So I have heard that a young family, getting life insurance for the 10 term policy, etc. is good. Otherwise, depending on your situation it may not be necessary which is why a lot of people don't do it. If you have a 401 K, Roth IRA, stocks etc., this could substitute as other funds to help support your survivors.
The aim of life insurance is to basically provide a way for you loved ones to make it through should you die. Depending on your job, depending on the spouse's job, depending on debt, depending on your investments, it may not necessarily be something you need.
Whole Life Insurance covers the person their entire life and upon death, the insurance company pays out to the person's beneficiaries. The company also invests the individual's money that they have collected so that it accrues. The down side, is that you pay more and premiums are fixed for the rest of the person's life. Universal Life Insurance is a hybrid of term insurance with savings accrued with interest. I don't know the specifics for the whole life and universal life, they serve various purposes. Each case though would have to be looked at the overall picture of the spouse, job/s, debt, loans, investment, savings, etc.
Talking to a financial planner who is aware of these things is best.
That's all I know.
