There are two basic
types of Life Insurance:
Term Life Insurance
is usually
a lower cost option, and provides coverage for
a specified period of time, such as 10, 20 or
30 years. If the policy holder dies within the
term period and the policy is in force, a death
benefit is paid to the beneficiaries. At the
end of the term, if the beneficiary is still
alive, the coverage ends. Term life policies
do not have cash values.
Permanent Life
Insurance
provides
lifetime insurance protection. There are four
types of permanent insurance: whole life, variable
life, universal life, and variable universal
life. Most permanent
policies offer a savings or investment component
combined with the insurance coverage. The investment
may offer a fixed interest rate or may be in
the form of money market securities, bonds or
mutual funds. This savings portion of the policy
allows the policy owner to build cash value
within the policy which can be borrowed or distributed
at some time in the future.
