If you have dependents or other people with whom you share your life, life insurance can play a vital and valuable role at virtually every stage of your life.
What are the principal types of life insurance?
There are two major types of life insurance – term and whole life. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories including traditional whole life, universal life, variable life and variable universal life.
Life insurance products for groups are different from life insurance sold to individuals. The information below focuses on life insurance sold to individuals.
Term
Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions.
There are two basic types of term life insurance policies – level term and decreasing term.
- Level term means that the death benefit stays the same throughout the duration of the policy.
- Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policy’s term.
Whole Life/Permanent
Whole life or permanent insurance pays a death benefit whenever you die – even if you live to 100! There are three major types of whole life or permanent life insurance – traditional whole life, universal life and variable universal life. There are also variations within each type.
In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy.
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