Types of Life Insurance

Understanding Different Life Insurance Policies and Their Benefits

Term Life Insurance

What is Term Life Insurance?

Term Life Insurance is the simplest and most affordable type of life insurance. It provides coverage for a specific period (term) and pays a death benefit if the insured passes away during that term.

Key Features

  • Fixed premium rates for the duration of the term
  • No cash value accumulation
  • Lower initial premiums compared to permanent insurance
  • Coverage periods typically range from 10 to 30 years
  • Commission Structure: 30% first year, 4% renewal

Best For

  • Young families with children
  • Individuals with temporary financial obligations
  • Those seeking maximum coverage at minimum cost
  • People with specific financial goals (e.g., mortgage protection)

Whole Life Insurance

What is Whole Life Insurance?

Whole Life Insurance is a permanent life insurance policy that provides coverage for the insured's entire life, as long as premiums are paid. It includes a cash value component that grows over time.

Key Features

  • Lifetime coverage
  • Guaranteed cash value growth
  • Fixed premium payments
  • Dividend payments (with participating policies)
  • Commission Structure: 50% first year, 6% renewal

Best For

  • Long-term financial planning
  • Estate planning
  • Wealth transfer
  • Individuals seeking guaranteed cash value growth

Universal Life Insurance

What is Universal Life Insurance?

Universal Life Insurance is a flexible permanent life insurance policy that combines death benefit protection with a cash value component. It offers adjustable premiums and death benefits.

Key Features

  • Flexible premium payments
  • Adjustable death benefits
  • Cash value growth potential
  • Interest-sensitive cash value
  • Commission Structure: 45% first year, 5% renewal

Best For

  • Individuals seeking flexibility in premium payments
  • Those wanting to adjust coverage as needs change
  • People interested in cash value growth potential
  • Long-term financial planning with flexibility

Comparing Insurance Types

Feature Term Life Whole Life Universal Life
Duration Specific term Lifetime Lifetime
Cash Value No Yes Yes
Premium Flexibility Fixed Fixed Flexible
Initial Cost Lowest Highest Medium
Commission Rate 30%/4% 50%/6% 45%/5%