Types of Life Insurance

Types of Life Insurance

Term Life Insurance

• Provides coverage for a specific period (e.g., 10, 20, or 30 years)
• Pays a death benefit only if the policyholder dies within the term
• No cash value component
• Generally less expensive than permanent life insurance
• Often used to cover temporary financial obligations (e.g., mortgage, car loan)

Universal Life Insurance

• A flexible premium policy that combines a death benefit with a savings component
• Allows adjustments to premium payments, death benefit, and investment options
• Cash value grows tax-deferred and can be borrowed against or used to pay premiums
• May include a guaranteed minimum interest rate
• Often used for estate planning, retirement, or business needs

Variable Life Insurance

• A type of permanent life insurance that allows investments in various assets (e.g., mutual funds, stocks)
• Cash value can fluctuate based on investment performance
• Offers a range of investment options, but may come with higher fees and risks
• Often used by those seeking potential long-term growth and flexibility

Whole Life Insurance

• A type of permanent life insurance that provides lifetime coverage
• Cash value grows at a fixed rate, and the policyholder can borrow against it
• Premiums are typically level and guaranteed
• Often used for estate planning, business succession, or guaranteed income

Policy Riders

• Additional features that can be added to a life insurance policy
• Examples:
  • Accidental Death Benefit Rider: pays an additional death benefit if the policyholder dies in an accident
  • Waiver of Premium Rider: waives premium payments if the policyholder becomes disabled
  • Long-Term Care Rider: provides funds for long-term care expenses
  • Guaranteed Insurability Rider: allows the policyholder to purchase additional coverage without evidence of insurability

Types of Life Insurance

Term Life Insurance

• Provides coverage for a specific period (e.g., 10, 20, or 30 years)
• Pays death benefit only if policyholder dies within the term
• No cash value component
• Generally less expensive than permanent life insurance
• Often used to cover temporary financial obligations (e.g., mortgage, car loan)

Universal Life Insurance

• Combines death benefit with a savings component
• Allows adjustments to premium payments, death benefit, and investment options
• Cash value grows tax-deferred and can be borrowed against or used to pay premiums
• May include a guaranteed minimum interest rate
• Often used for estate planning, retirement, or business needs

Variable Life Insurance

• Combines death benefit with investments in various assets (e.g., mutual funds, stocks)
• Cash value can fluctuate based on investment performance
• Offers range of investment options, but may come with higher fees and risks
• Often used by those seeking potential long-term growth and flexibility

Whole Life Insurance

• Provides lifetime coverage
• Cash value grows at a fixed rate, and policyholder can borrow against it
• Premiums are typically level and guaranteed
• Often used for estate planning, business succession, or guaranteed income

Policy Riders

• Additional features that can be added to a life insurance policy
• Examples:
• Accidental Death Benefit Rider: pays additional death benefit if policyholder dies in an accident
• Waiver of Premium Rider: waives premium payments if policyholder becomes disabled
• Long-Term Care Rider: provides funds for long-term care expenses
• Guaranteed Insurability Rider: allows policyholder to purchase additional coverage without evidence of insurability