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Types of Life Insurance. The Basics.

Young businessman thinking about types of life insurance

By Byron Udell | November 3, 2019

Life insurance comes in many shapes and sizes, but there are two basic types of life insurance policies: Term or Temporary life insurance and Permanent life insurance. They both do exactly what it sounds like:

Term insurance is temporary and offers coverage for a specific period of time and pays the face amount of the policy if the person insured dies during that “term.”

Permanent insurance usually has no fixed time limit; as long as the premiums are paid, the benefit will be paid no matter when the insured dies.

Term Life Insurance      
      Permanent Life Insurance
Guaranteed Level
Whole
Return of Premium
Universal
Annually renewable
Survivorship or 2nd-to-die
 

Key Differences:

      Term Life Insurance
      Permanent Life Insurance
Coverage
Temporary
For life
Expiration
Predetermined period of time
Until the death of the insured
Cash Value
No cash value
Potential long term savings

 

Types of Term Life Insurance Policies

Term life insurance, which is the most affordable policy available, is designed to meet your temporary needs by providing protection for a specified period of time the term (for example, a term of 10, 20 or 30 years). This policy makes sense if you have financial needs that will diminish over time, such as a home mortgage or your child’s tuition.

Each year, a premium is paid to cover the risk of death during that year. It has no cash value. The only way to collect anything is to die before it expires. If death occurs, the life insurance beneficiary collects the death benefit of the policy. The money issued is generally free of federal income taxes.

Interested in learning more about Term Life and how it Learn more about the different types of term life insurance.

Types of Permanent Life Insurance Policies

Permanent life insurance policies provide lifelong protection. As long as you continue to pay the premiums, coverage will continue and the death benefit will be paid when you die. Permanent life insurance also provides a savings element; these policies accumulate a cash value over a long period of time.

Is one type of life insurance better than the other? That depends. The type of life insurance product that suits you best depends on your personal, family, physical and financial circumstances. Learn more about the different types of life insurance that may better suit your life and coverage needs.

Now call us at 800-442-9899 and speak to a real person! (yes, we’re old school.) You have enough things to think about, so we’ve taken the stress out of shopping for life insurance.

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