What Are the Types of Life Insurance?


Quick Answer

Types of life insurance policies include whole life, universal life, variable life and variable universal life. The various types of insurance come with different durations, structures, costs and variations.

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Full Answer

Whole life insurance offers guaranteed insurance for the duration of the policyholder's life. Such policies include a tax-deferred cash value that increases until the contract has been surrendered. Premiums for whole life insurance policies remain unchanged, and the policyholder has a guaranteed death benefit.

Universal life insurance is much like whole life insurance, except that the protection, premiums and cash value can all be adjusted during the term of the contract. The cash values also accrue interest at a rate set by the insurance company.

Variable life insurance policies combine aspects of an investment fund with a whole life insurance policy. A general account acts as the policy provider's liability account, and a separate account is composed of several investment funds from the insurance provider's portfolio. The policy is called a variable life insurance policy because the overall death benefit and value of the cash can change.

A common practice is for an individual to take out a term life insurance policy as protection against risk before investing his savings into a mutual fund, brokerage account or another type of alternate investment.

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