Choosing the right type of life insurance requires an understanding of the four main coverage types and also getting a grasp of all your different options. The Internet can be a valuable source of free informative articles, government links and a connection to insurance industry resources that can help explain your coverage options and even help you find free quotes.
As a primer, the four main types of life insurance coverage are:
Term Life Insurance (search): The most common and affordable coverage because it pays only a death benefit and has no cash value.
Whole Life Insurance (search): Remains in force for life, it has a fixed premium, cash value accumulation, and no early withdrawal penalty.
Universal Life Insurance (search): Similar to whole life insurance, but with more flexible premiums. Good for younger buyers who may have fluctuations in their ability to pay.
Variable Life Insurance (search): Allows buyers to participate in a variety of tax-deferred investment options. You can apply the interest earned on these investments toward the premiums, potentially lowering the amount you pay. Under variable life insurance contracts, the owner can generally allocate the purchase payments among several types of investment portfolios wherein the cash value is determined by the performance of those investments. Accordingly, variable life insurance contracts require that you review a prospectus before investing money, and are regulated by the United States Securities and Exchange Commission.
