Term Life Insurance
Term life is insurance that you pay for over a specified length of time, or term - generally 5 to 30 years. The amount of the death benefit or face value can be selected to meet your needs. Premiums, or payments, which can be the same amount or increase over time, must be made monthly, quarterly, semi-annually or annually. If you die during the term of coverage, the face amount of your policy will be paid to your beneficiaries.
If your financial circumstances change and you're able to pay a higher premium, you may want to convert your term policy to permanent life insurance - a policy that accumulates cash value on a tax deferred basis. Term policies generally have conversion options.
Universal Life Insurance
Universal life is permanent insurance, which has the potential to accumulate cash value. However, it offers additional features and options as well. For example, you can increase or decrease your policy's face amount to accommodate your changing protection needs. You can also increase or decrease the dollar amount of your premium payments and make additional lump sum payments to your policy.
A universal life policy can be easily modified to meet your changing needs and financial status. With features that allow you to adjust the amount of your coverage, skip payments or borrow against your cash value subject to certain limits, universal life is for many families the only life insurance policy they'll ever need.
Fixed Index Universal Life
Fixed index universal life is similar to universal life, but it ties the cash value account to the change in the index such as the S & P composite index which can possibly give a better return than most fixed accounts.
Variable Life Insurance
Variable life is permanent insurance, which allows you to invest a portion of your premium in various sub accounts. The policy owner can choose among several sub accounts, each of which has its own investment strategy, and invest the money in stocks, bonds, money markets or other securities in order to build your policy's cash value. However, because the performance of these investments is not guaranteed, there is an element of risk.
Whole Life Insurance
This is life insurance that you own for your entire lifetime. The amount of the death benefit or face value can be selected to meet your needs. Premiums, or payments, are fixed and can be paid monthly, quarterly, semi-annually or annually. As more premiums are paid, your policy accumulates a cash value, which grows on a tax-deferred basis.