If you’re just starting your education about life insurance, term life insurance is not only the easiest type of policy to understand, the chances are very good that it’s exactly the type of life insurance you should buy to protect your family financially.

A term policy is simple in that every aspect of it is clearly defined. In return for paying fixed monthly amount, known as the premium, over a defined amount of time, known as the term, you receive a guarantee from the insurance company that should you pass away at any point during the life of the policy, your loved ones, the beneficiaries, will receive a defined amount of money, known as the payout amount or death benefit.

The important thing to understand is that if you outlive the duration of  a standard term policy then nothing will be paid out to your beneficiaries or refunded to you. Normally the length of time for which a term policy is in force is 20 to 30 years. This is a long time, but statistically a great majority of people who purchase term life do outlive their policies, and this enables insurance companies to keep premium amounts quite low. As you research the options that you have  for this kind of policy you might be surprised at the amount of coverage you can afford,  for premium amounts that are quite low, say less than $20/month.

Here’s a final word on the relative merits of term life versus so-called “permanent” life insurance. Insurance agents might try to sell you on the idea of a more expensive variety of permanent life insurance, such as whole life or universal life, by touting its investment benefits over the long term. The problem with permanent life insurance is that the premium amounts tend to be much, much higher than term life insurance, and most insurance experts agree that the price is too high to justify as an investment. You are probably better off getting a good term life insurance policy and investing whatever money you can each month in a sensible long-term investment portfolio.

Either way, do talk to trusted, financially-savvy relatives and friends, as well as a investment professional before you buy life insurance, as it is a very long-term financial commitment.