- Life insurance is a type of insurance coverage that pays a designated beneficiary a sum of money upon the policyholder's death. It provides financial security to the policyholder's family or loved ones in the event of their passing, covering expenses like funeral costs, debts, and other living expenses.
Term Life Insurance
Provides coverage for a specific period (e.g., 10, 20, 30 years). If the policyholder dies during this term, the beneficiary receives a death benefit. If the policyholder outlives the term, there’s no payout.
Features
- Affordable premiums
- Simple structure
- No cash value accumulation
- Option for renewal or conversion to permanent insurance at the end of the term (depends on the policy)
Whole Life Insurance
A permanent policy that provides lifelong coverage. It pays a death benefit to the beneficiary and also accumulates cash value over time.
Features
- Fixed premiums
- Cash value component (builds over time and can be borrowed against)
- Lifetime coverage
- Guaranteed death benefit and cash value growth
Universal Life Insurance
A flexible, permanent life insurance option that combines lifelong coverage with an investment component. The policyholder can adjust premiums and death benefits within limits.
Features
- Flexible premiums and death benefits
- Cash value accumulation (interest-bearing)
- Option to adjust coverage as life circumstances change
Variable Life Insurance
A permanent policy that allows the policyholder to invest the cash value in various securities (stocks, bonds, mutual funds). The death benefit and cash value fluctuate depending on the performance of the investments.
Features
- Flexible premiums and death benefits
- Investment component (higher potential returns, but with greater risk)
- Cash value and death benefit depend on the investment performance
Final Expense Insurance
A type of whole life insurance designed to cover funeral and burial expenses. It typically has a smaller death benefit (e.g., $5,000 to $25,000).
Features
- Simplified issue process (minimal underwriting)
- Low coverage amounts
- Fast approval process
