Although term life insurance is generally the least expensive type of life insurance on the market, variations in the type of term are likely to have an impact of the overall cost of the policy when you ask for a quote. There are three major types of term life insurance: level, decreasing and increasing. All three types will have variations in the premium quoted.

Level term life insurance means that the death benefit stays the same for the term of the policy. If you purchase a $100,000 policy for a 10-year term, the insurance company agrees to pay the full death benefit if you die any time during the 10 years. Premiums quoted are usually level as well, staying the same for the duration of the policy

Decreasing term life insurance means that the death benefit will decrease a set amount over each year of the term. Assume you purchase $100,000 of decreasing term for 10 years. Built into the policy is a reduction of the policy by $10,000 each year. This means that the value of the policy will be 0 at the end of the term. Decreasing term insurance is often recommended for people who have a mortgage. Since the balance on the mortgage decreases over time, it makes sense to have insurance that does the same. Premiums quoted for this type of policy are usually lower than for level or increasing term, and usually stay the same over the life of the policy.

Increasing term life insurance means that the death benefit will increase a set amount over each year of the term. For example, you can purchase $100,000 of increasing term for 10 years at an annual increase of 5%. This would provide you with a death benefit that will keep pace with or slightly exceed inflation. Some policies of this type are tied to a standard index, such as the cost of living. The premiums quoted for increasing term usually go up along with the coverage.

When getting quotes for term life insurance policies be sure you understand the three types of terms available so that youll be sure to get a quote tailored to your specific needs.