The Different Types of Life Insurance
Understanding Made Easy
TERM LIFE
HOW IT WORKS: The Basics
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When Term Life is purchased the initial term length, benefit amount, and premium are determined.
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Term policies are only designed to last for a portion of your life, after they expire one of three things happens...
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Premium Increases ​(Only if Renewable Option available)
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Benefit Decreases (Only if Renewable Option available)
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Policy Terminates (No Renewable Option available)
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WHAT IS THIS BEST FOR?
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Loss of Income Protection
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Mortgage Protection​
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Key Person Insurance
UNIVERSAL LIFE
HOW IT WORKS: The Basics
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Works like a hybrid between a Term and Whole Life and can be tricky if not structured properly due to the Cost of Insurance (COI).
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The payor always pays the same premium, so initially when you a Universal policy the company charges you more than the current COI and you build up a cash value. After some years the COI will exceed the premium payment (peak in green line on graph) and the cash value will now have to help supplement that payment.
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Once the cash value expires the premium needs to be paid in full or policy expires.
WHAT IS THIS BEST FOR?
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Cash Value Accumulation
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Death Benefit
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Provides permanent coverage with flexibility
GROUP LIFE
HOW IT WORKS: The Basics
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Most common life insurance provided by work, typically Term coverage.
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You are part of a group that has the same characteristics, usually employer or age.
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You are not in control of policy or rate changes.
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Should not be relied upon as your only life insurance coverage.
WHAT IS THIS BEST FOR?
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It is an inexpensive way for adding extra coverage.
Are you an Employer?
ACCIDENTAL LIFE
HOW IT WORKS: The Basics
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Life insurance that only pays out if you die in an accident.
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It does not last your whole life, usually cut short by and age or term limit, whichever comes first.
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Very common to add onto a traditional policy as a Rider.
WHAT IS THIS BEST FOR?
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On its' own it is best for those who have dangerous jobs or travel a lot.
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Otherwise typically best to add on as a Rider.