Life insurance is available in a number of different forms from several companies. Each company has financial representatives who help customers select the best insurance products for their needs. Some of the typical forms of life insurance policies include: whole life, variable life and term life.
Whole life: is a life insurance policy that remains in force for the insured’s whole life and requires (in most cases) premiums to be paid every year into the policy. A whole life policy sets a premium at the beginning of the policy and that premium does not change over the life of the policy. This form of insurance allows for a cash build-up during the insured’s life. This cash build-up can be used during the course of the policy or it will simply serve to increase the death benefit in the end.
Variable life: Variable life products begin with low premiums during the initial stages of the policy and these premiums increase steadily as the insured grows older. There should be a cash build-up as long as the various mutual funds selected by the insured perform well.
Term life: Term life policies have premiums that remain the same over the life of the policy, which typically ends when the insured reaches a specific age. There is no cash build-up in a term policy and, accordingly, the death benefit will not increase. Term life insurance coverage, however, can be relatively easy to comparison shop. It simply covers you in the event that you die before the end of the term for which you are covered.
Buying insurance of any kind is often confusing. In order to compare policies by price, you have to be sure that each policy carries the same benefits for the same amount, and figure in a dozen different factors. It’s enough to set your head spinning in most cases.