| Life insurance, at its core, is a means | | | | survivors upon the policyholder's death. |
| to protect the financial security of | | | | Whole life insurance policies were long |
| one's survivors. It is generally thought | | | | "the norm" in the insurance industry. |
| of as a way to provide income | | | | Universal Life Insurance |
| replacement for a wage earner's | | | | Universal Life Insurance is considered a |
| survivors in the event of death. Life | | | | more flexible approach to life |
| insurance is purchased from an insurer | | | | insurance. The required regular premium |
| by making regular payments of premiums | | | | amount can vary as long as the policy |
| during the life of the insured. Upon the | | | | has a cash value in excess of the |
| death of the insured, designated | | | | policy's costs. The insured can alter |
| beneficiaries receive a financial | | | | the policy's future pay out while the |
| benefit. | | | | policy remains in force, making it a |
| Although all life insurance policies | | | | flexible insurance solution for those |
| maintain those consistent | | | | who may have more complicated or |
| characteristics, there are different | | | | rapidly-changing needs than can be |
| means to achieving the same end. Four | | | | addressed with term or whole life |
| distinct types of life insurance have | | | | solutions. |
| been developed and are in common usage. | | | | Variable Universal Life Insurance |
| Term Life Insurance | | | | Variable Universal Life Insurance takes |
| Term life insurance is probably the most | | | | the flexibility of universal life |
| basic form of life insurance. Term | | | | coverage and adds to it by providing |
| insurance is purchased for a specific | | | | investment choices. The policy's cash |
| period of time (the term). The length of | | | | value is not based simply on an interest |
| the term can vary considerably. There | | | | rate determined by the insurer. Instead, |
| are term policies that are effective for | | | | the policy's value is based upon the |
| well over twenty years, whereas some | | | | performance of various investments. The |
| only involve a one-year term. A regular | | | | insured allocates his premiums among a |
| premium is paid throughout the term. If | | | | series of investment options with a |
| the insured dies at any point during the | | | | variable universal life insurance |
| term, the designated beneficiary | | | | policy. |
| receives the death benefit. If one | | | | Although all insurance policies do share |
| survives the term, however, there is no | | | | common characteristics, the four |
| pay out and the policy simply ends. | | | | different types of insurance policies |
| Whole Life Insurance | | | | have some marked differences. Each type |
| Whole life insurance has a long history | | | | of insurance policy has advantages and |
| and maintains great popularity. The cost | | | | limitations. For some, a simple term |
| of premiums is guaranteed for the entire | | | | policy will more than suffice to meet |
| time the policy in place. As premiums | | | | their life insurance needs. Others may |
| are paid, the insured accumulates a cash | | | | benefit considerably from a more |
| value for the policy, with the insurer | | | | full-featured insurance policy that |
| determining the interest rate applied to | | | | includes an investment component and the |
| that cash value. One may either "cash | | | | ability to alter the nature of benefits |
| out" their whole life policy, or | | | | and the premium. |
| maintain it so that benefits are paid to | | | | |