In trying to understand life insurance basics and some of the options available to you, term life insurance is probably the easiest to place to start. In return for a monthly premium payments, which normally stay the same over the length of time that the policy is in force, you receive the confidence that in the event of your death, your loved ones (referred to as "beneficiaries") will receive a defined payout amount, also known as a death benefit. You should understand that if you outlive the length of your policy, that the insurance company will not pay anything to you or your beneficiaries.
Understanding how term life insurance works is not much more complicated than that. One good thing about a term policy is that each aspect of it is strictly defined, so there are no surprises. The best thing of all is that it is almost always the cheapest form of life insurance that you can buy, usually by far.
Life insurance agents will often try to sell you on the benefits of other forms of coverage, usually one of the variations of "permanent" life insurance. Some forms of permanent life function a little like investments as well, and often give the policyholder some control over the investments toward which the money that he pays into the insurance policy goes.
You should be aware that most experts agree that permanent life insurance is not the best way to create and manage an investment portfolio. Rather, they usually suggest to buy a good long-term (20- to 30-year) term life policy, and use the fact of the much, much lower premium amounts to enable yourself to begin to save and invest on your own.
Term life insurance is well-suited for younger people who might just be starting a family don't have a lot of extra cash to spend on life insurance anyway. The good news is that for a lot less than you think, you can buy enough coverage to really protect the people who depend on you financially, should you unfortunately no longer be there for them.
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