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
    1. Term To 100
    2. Whole Life
    3. Universal Life


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

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