If you have dependents who count on you financially, life insurance is a must-have policy. Without it, your dependents will be left without financial means should something happen to you.

While you may know and understand that a life insurance policy is an absolute must, you may not know that there are two very different types of life insurance policies available and the differences between them.

When you decide to purchase a life insurance policy, you'll need to decide whether you want a term life policy or a whole life policy. Term life insurance policies are very basic. You pay your insurer a monthly premium and in return they will pay your beneficiaries the amount you are insured for if you were to pass away. There are no other benefits when it comes to a term life policy.

Whole life policies are a completely different story. A whole life policy provides a basic death benefit but it also builds a cash value throughout the life of the policy. Each time you make a premium payment, a portion of the payment goes towards paying for the death benefit of the policy and the other portion of the payment goes towards building the policy's cash value. The policy will also pay dividends or interest that also contribute to the growth of the policy's cash value.

While a term life policy does not build a cash value, the premiums of a term life policy will cost less than the premiums on a whole life policy. If you're looking to save money on insurance premiums, a term life policy may be your best bet.

Another difference between whole life policies and term life policies is that whole life policy premiums usually remain constant throughout the life of the policy while term life policies usually have premiums that increase over time. However, while the term life policy rates do increase over time, the total premiums that you pay for a whole life policy will still far exceed the total amounts you pay for a term life policy.

The final difference between whole life policies and term life policies is how long you have the policy for. A whole life policy is usually kept in effect throughout your entire life as long as you pay your premiums. A term life policy is usually not renewable past age 75, so benefits will end at that time. To see which policy is best for you speak to a broker.