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Life insurance can help to protect against the risk of loss due to an early death. Life insurance promises to pay money through death benefits when you die, or living benefits if you need a loan or income at retirement. Life insurance can help by creating a lump-sum of cash that you can count on to help pay part of your children's education costs. Life insurance can be an important part of your financial plan. But choosing the right insurance takes a bit of work.

Life insurance can also help to provide for educational expenses if you die prematurely. It help preserve the assets you spent years accumulating. It also protects what you plan to accumulate during your life for your family -- just in case you're not around to accumulate it. Life insurance can be a valuable gift because it is leveraged, meaning that a small amount of money (premium) produces a large death benefit. Thus, the donor is credited for a much larger amount than the actual donation (premium).

Life insurance can be used to pay off these debts, leaving your other assets intact for your family to use. Life insurance can help preserve your estate from depletion by estate taxes. Life insurance can be whole, universal, or term. Whole life builds savings and provides a death benefit.

Term insurance has no buildup of cash value as some other types of insurance allow. Term insurance is the least expensive form of life cover. Premiums for smokers are more expensive. Term life insurance makes sense for most young, middle-income families with children because it covers a set period, with affordable premiums. An insurance premium for $250,000 coverage might be about $150 to $200 a year for a 30-year-old nonsmoker.

Premiums may be paid monthly, quarterly, semi-annually or annually. Premiums must be paid until that time. At 65, the supplemental and additional insurance ends and the basic insurance is at a reduced rate of coverage.

Term insurance is often used by the head of a family to obtain additional temporary insurance when the children are young. Term insurance policies frequently provide the insured with conversion options to whole-life policies. Term life insurance provides protection for a specific time. You can purchase these while paying off a mortgage or raising your children.

Term insurance provides death protection for a specific period. Death benefits are paid only if you die within that period. Term life insurance has no cash value. In deciding how much to purchase, you need to evaluate your family’s financial state and estimate how much your family would need after you have died and are no longer producing income. Term life insurance generally has low premiums for the first few years. However, the premiums can go up when the specified term expires, and the policy doesn’t build up any cash value.