Types Of Life Insurance
There are different types of life insurance for different needs. The underlying question is whether the need is temporary or permanent. Ownership can be personal or corporate.
Temporary Life Insurance
- for short-term needs such as for a mortgage loan or other kind of debt
- low cost because death is unlikely during the coverage period
- coverage ends at ages like 65 or 70, again before many death occur
- Term Life
Permanent Life Insurance
- provides insurance until death (i.e., you're insured as long as you like)
- more expensive because payment of the death benefit is certain (as long as the premiums are paid)
- three types
Comparison
| Benefit | Term | Term To 100 | Whole Life | Universal Life |
|---|---|---|---|---|
| Highest death benefit for the lowest cost | Yes | No | No | No |
| Permanent | No | Yes | Yes | Yes |
| "Face+Fund" | No | No | No | Yes |
| Investment Choices | No | No | No | Yes |
| Cash withdrawals | No | No | No | Yes |
| Policy Loans | No | No | Yes | Yes |
| Policy Dividends | No | No | Yes (if par) | No |
| Coverage continues if premium missed or skipped | No | No | Maybe | Maybe |
| Flexibility | No | No | Some | Lots |
| Number of lives insured | 1-2 | 1-2 | 1-2 | 1-5 |
| Premium flexibility | No | No | No | Yes (increase, decrease, skip) |
| Cost of Insurance Choices | generally increasing sharply (e.g,, every 10 years) | level | yearly increases | level or annual increases |
| Renewable | Generally | No need | No need | No need |
| Convertible to Permanent | Generally | No need | No need | No need |
| Creditor Protection | yes (limited period) | Yes | Yes | Yes |
page revision: 18, last edited: 08 Jul 2007 05:44