Life Insurance Types

Term Life Insurance

Term life is the least expensive and most immediate way to provide a cash pay out for your financial dependents at your death.

What it does:

It pays a death benefit to the beneficiary you name that will: 1) cover your final expenses, and 2) provide a lump sum that can be invested to meet the ongoing needs of your dependents.
It covers you for the full amount of life insurance you choose for a specified period of time.
It can be convertible and renewable depending on the policy.
It gradually increases annual premiums as you get older.
It traditionally works well to meet temporary insurance needs.

What it doesn't do:

It doesn't provide a cash value account for some later point such as retirement.
It doesn't provide you permanent life insurance protection.

Whole Life Insurance

Whole life insurance provides permanent protection for your dependents while building a cash value account. With this type of insurance, the insurance company manages your policy's various accounts.

What it does:

It pays a death benefit to the beneficiary you name and offers you a low risk cash value account and tax-deferred cash accumulation.
It provides a fixed premium which can't increase during your lifetime as long as you continue to pay the planned amount.
It allows the insurance company to exclusively manage the cash value account in your policy.
It provides you the option to receive dividends from your policy or apply them to reduce payments.
It offers you the right to withdraw from the policy during your lifetime.

What it doesn't do:

It doesn't offer the account flexibility to invest in separate accounts such as money market, stock, and bond funds.
It doesn't allow you the account flexibility to split your money among different accounts or to move your money between accounts.
It doesn't offer premium flexibility.
It doesn't offer face amount flexibility.

Universal Life Insurance

Universal life insurance provides permanent protection for your dependents and is more flexible than whole or variable life.

What it does:

It pays a death benefit to the beneficiary you name and offers you a low risk cash value account and tax deferred accumulation.
It allows you to earn market rates of interest on your cash value account.
It offers the right to borrow or withdraw from the policy during your lifetime.
It allows you premium flexibility.
It offers face amount flexibility.

What it doesn't do:

It doesn't offer you the account flexibility to invest in separate accounts such as money market, stock, and bond funds.
It doesn't allow you the account flexibility to split your money among different accounts or to move your money between accounts.

Variable Life Insurance

Variable life insurance provides permanent protection for you and is the type of life insurance with account flexibility for the more risk-oriented policy holder.

What it does:

It pays a death benefit to the beneficiary you name and offers you low-risk, tax-deferred cash accumulation.
It allows the death benefit to vary in relation to the fund returns of the cash value account.
It allows you to borrow from the policy during your lifetime.

What it doesn't do:

It doesn't allow you to withdraw from the cash value account during your lifetime.
It doesn't offer you premium flexibility.
It doesn't offer you face amount flexibility.

Universal Variable Life Insurance

Universal Variable life is the type of insurance which gives you more control of cash value account policy features than any other insurance type.

What it does:

It pays a death benefit to the beneficiary you name and offers you low risk tax deferred cash value options.
It offers separate accounts for you to invest in such as money market, stock, and bond funds.
It offers premium flexibility.
It offers face amount flexibility.
It allows you to make withdrawals or to borrow from the policy during your lifetime.
It stipulates that if you terminate the contract in early years you will receive less cash value total return than in a whole contract.

What it doesn't do:

It requires you, the policyholder, to devote time to manage your policy's accounts. The policy's longterm success is contingent on the investment you make.
It doesn't work well with small premium amounts because your premium must cover your insurance and your accounts.