The concept of life insurance is simple. You pay a premium for a specific amount of time, in case of an untimely death, a beneficiary will receive the amount listed in the policy. However, not all insurance policies are the same.
Term Life Insurance
Whole Life Insurance
Term life insurance provides a death benefit for a specific number of years, typically between 5 - 30 years.
Term insurance policies generally provide the largest death protection at the lowest cost. When the term is up, you no longer have coverage. However, policies can usually be converted to a permanent policy up to a certain age.
Whole Life is a type of permanent policy and will continue to pay a death benefit as long as you pay premiums, no matter your age. It also accumulates a cash value, therefore premiums are significantly higher.
You can also borrow against the cash value for any reason, amounts not repaid will be deducted from the policy's death benefit.
Universal Life Insurance
Universal Life is a type of permanent policy similar to Whole Life, offers more flexibility but is more expensive.
You can increase or decrease benefit amounts and premiums are adjusted accordingly.
Group Life Insurance