The main types of life insurance include:
- Term Life Insurance:
- Provides coverage for a specific term, typically 10, 20, or 30 years.
- Pays out a death benefit if the insured individual passes away during the policy term.
- Typically more affordable than permanent life insurance.
- Commonly used to provide financial protection for a specific period, such as until a mortgage is paid off or until children are financially independent.
- Whole Life Insurance:
- Provides lifelong coverage as long as premiums are paid.
- Builds cash value over time, which can be borrowed against or withdrawn.
- Premiums are generally higher than term life insurance but remain level throughout the policyholder’s life.
- Universal Life Insurance:
- Offers flexible premium payments and an adjustable death benefit.
- Accumulates cash value that can be invested in various sub-accounts.
- Policyholders can change the amount and timing of premium payments, within certain limits.
