4 main structures
Types of life insurance: term, whole, universal, and variable
The four main types of life insurance: term (pure protection, fixed period, lowest cost), whole life (permanent, builds cash value at 1-4% return), universal life (permanent with flexible premiums), and variable life (cash value invested in sub-accounts). Term covers 90% of normal needs; the other three combine insurance with savings at typically poor risk-adjusted returns.
Level
Try calculatorKey takeaways
04 · ideas- Term provides pure death benefit coverage for a set period
- Whole life includes a savings component with level premiums for life
- Universal life offers flexible premiums and adjustable death benefit
- Variable life allows cash value to be invested in sub-accounts
Life insurance falls into two main categories: term and permanent.
Term life:- Death benefit for a specific period (10, 20, 30 years)
- No cash value component — pure insurance
- Fixed premiums for the term
- Least expensive per dollar of death benefit
- Lifelong coverage
- Cash value that grows at a guaranteed rate
- Fixed level premiums
- Most expensive form