Essential life insurance tips

The cost of buying most types of life insurance has either remained stable or dropped over the past decade, according to the Insurance Information Institute.

Yet almost six out of every 10 Americans surveyed recently say they have not purchased coverage, as they believe it is too expensive.

The survey was released in early September by the nonprofit Life and health Insurance Foundation for Education in support of Life Insurance Awareness Month. Besides citing the cost of life insurance, consumers responded that they just had not gotten around to buying it (23 percent) or did not know enough about life insurance to purchase a policy (22 percent). Industry observers estimate that 68 million adult Americans have no life insurance, and many of those who do purchase far less coverage than experts recommend.

There are two major types of life insurance: Term and whole life.

Term insurance is a form of life insurance that pays if the death occurs during the "term" of the policy, which is usually anywhere from 1-30 years. The premium rates for term policies are lower today than they have ever been.

If you are buying a short-term life insurance policy (under 10 years), look for renewal guarantees. A renewal guarantee gives you the right to start a new term after the current one ends, paying a higher premium based on your current age, but without requiring you to undergo a new health exam or submit any other "evidence of insurability." Without the renewal guarantee, you would have to shop for life insurance all over again and, if your health has deteriorated in the interim, you might pay higher premiums or not get coverage at all.

Whole life insurance is sometimes referred to as "permanent" life insurance and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. Unlike term life, permanent policies pay a death benefit whenever you die, even if you live to be more than 100. Universal life is the most common type of permanent insurance policy, with traditional whole life the next most common type.

The premium rates for whole life policies have generally remained stable in recent years.