Life Insurance Information

The two main types of life insurance are term and permanent. Both are good policies that can address a variety of needs.

Term insurance is the most common type of life coverage. It can be compared to auto insurance; policies are purchased for a specific period of time. Common term policies span 10, 15, or 20 years. This type of policy provides the highest benefit at the lowest cost.

Permanent coverage comes in three types:

  • Universal life
  • Whole life
  • Variable life

Universal life builds a cash value based on an interest rate with a fixed minimum. A universal policy is purchased as a lifetime policy.

Whole life policies are also lifetime policies. They build cash value as well, with a goal of fixed returns. Additionally, they can be structured as a tax benefit.

Variable life polices build cash value based on the stock market (for example, index funds and mutual funds). It is not recommended that a variable policy be the primary life insurance policy due to higher administrative fees and the potential volatility of the stock market.