If you’re just venturing into the world of term life insurance, figuring out the difference between all the types out there can be tricky. Why waste hours of your life that you’ll never get back looking into, well, life insurance.

A term life policy is the most basic type of life insurance policy. It’s life insurance that covers you for a specific period of time (aka “term”.)

When you pick a term life policy, you don’t just choose how much you want it to pay out – you also pick a period of time during which it’ll be in play. This can be anywhere from a year to 30 years.

Unlike complicated whole life policies – term life insurance is totally straight forward. There’s no accumulating cash value. If you don’t die during the time you’re covered, no money is paid out, period.

The way it works is, let’s say you pick a 20 year term, if you kick the bucket during those 20 years – then the person (or people) you name as beneficiaries will get paid the amount of coverage you purchased. If you don’t die during those 20 years, then you may have the option of renewing the policy – but premiums go up as you age.

Most companies offer conversion privileges to permanent policies, which means you can turn your term life policy into a "permanent" one under some circumstances. With permanent policies, a portion of your premium goes to building cash value with interest.

The benefit of a “renewable” term life policy is that it continues in force for an additional term (or terms) up to a certain age. So you will have coverage even if your health goes sour or you have other factors that would have get rejected where you applying for a new life insurance policy.

Term life insurance typically costs less than permanent insurance and the pay out will go to the person (or people) you choose to get it tax-free.