Life Insurance Product Options
There are several types of life insurance products available, divided into two main categories, Term Life Insurance and Permanent Life insurance:
Term Life Insurance
It's called term insurance because the coverage lasts for a specific term. That term can be anywhere from one year to 20 years, and is typically renewable. So, for example, you could buy what's known as annual renewable term, pay the annual premium and renew each year at a price that would go up as you age.
Or, you could lock in the price for up to 20 years by buying what's known as a level-premium policy. The premium on the level-premium policy would start higher than with annual renewable, but it would remain the same for the policy's full term, whether five, 10 or 20 years.
Permanent Life Insurance
There are several types of permanet life insurance:
Whole life insurance is also called ordinary or straight life insurance. With whole life insurance, you pay a level premium over the life of the policy. The amount of your death benefit is also fixed.
Similar to other forms of permanent life insurance, whole life insurance builds up cash value in a tax-deferred accumulation fund. You can withdraw or borrow against the cash value. Unlike universal or variable life insurance, the cash value of a whole life policy is not used as a reserve to pay premium.
Variable Life Insurance
The two main differences between variable and universal life insurance are: 1) Variable life does not have flexible premiums, and 2) Variable life allows you to invest in riskier investments such as stocks, bonds, and mutual funds. (Universal life insurance is generally restricted to safe investments that earn a lower rate of return.)
Universal Life Insurance
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