Types of Life Insurance Policies

Term Life Insurance

Term Life Insurance is a simple form of life insurance developed to offer temporary protection to those on a limited budget. Term life insurance can be purchased in large amounts and, compared to permanent life insurance, has relatively low premiums.

  • Annual Renewable Term (ART) life insurance is a life insurance plan that guarantees the insurer will provide coverage for a set number of years. While premiums are paid each year, as if it were a one-year contract, the premiums rise as a person ages.
  • Level Term life insurance simply means that the premium is fixed for a term longer than one year. The most common terms are 5, 10, 15, 20, 25, 30, and sometimes 35 years.
  • 5-Year Term life insurance simply means that the premium and face value amount are fixed for a 5-year term. People who carry 5-year term policies usually do so for short-term needs.
  • 10-Year Term life insurance simply means that the premium and face value amount are fixed for a 10-year term. As with 5-year term policies, people who carry 10-year term usually do so for short-term needs.
  • 15-Year Term life insurance simply means that the premium and face value amount are fixed for a 15-year term. This type of term life insurance is usually well-suited for people who start policies later in life.
  • 20-Year Term life insurance simply means that the premium and face value amount are fixed for a 20-year term. This type of insurance is the most popular option and usually fits most family and business situations.
  • 25-Year Term life insurance simply means that the premium and face value amount are fixed for a 25-year term. This term is usually elected by people who require life insurance protection after their children have finished college and are out on their own.
  • 30-Year Term life insurance simply means that the premium is fixed for a 30-year term. People who carry 30-year term policies typically aim for long-term planning and are financially stable, so they can budget accordingly.
  • Term to Age 90 Life Insurance provides pure protection, which means it doesn’t acquire any cash value or pay out dividends from the insurance company. The premiums for this kind of policy remain the same for the first 10 years, and increase every year from there on.
  • Decreasing term life insurance provides a death benefit that decreases during the term in a specified way

Permanent Life Insurance

With permanent life insurance, the policy remains in effect for the insured’s lifetime. A payout is administered at the policy’s end and it accrues cash value.

  • Whole Life insurance is a policy that remains in effect throughout the insured’s lifetime, or their “whole life.” This particular insurance plan usually requires premiums be paid into the policy every year.
  • Universal life insurance is a type of permanent policy. It accumulates cash value from premiums paid into the policy that exceed the actual cost of the insurance.
  • Variable Life Insurance Variable Life Insurance, or Variable Appreciable Life Insurance, is another type of permanent life insurance that accumulates cash value while providing protection your beneficiary when you die.