Term insurance. This policy pays a death benefit if you die within a specific period of time (the term of the policy). Like auto and homeowner's insurance, term insurance only covers you during the time you're making payments. For this reason, it's less expensive than permanent life insurance. There are four different varieties of term insurance:

• Convertible term insurance lets you convert the policy into a permanent one at any time. There's no medical exam, but premiums may go up.
• Term insurance lets you sign on for a new term policy without a medical exam, although the premium may be higher.
• Level term insurance lets you pay the same premium every year for the length of the term and be entitled to the same amount of proceeds if you die during the term. If you want to renew it at the end, your premium may rise significantly, since you'll be older.
• Decreasing term insurance pays a death benefit that gradually decreases in value over time. Premiums usually remain the same throughout the term.