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Your needs are unique. Your life insurance coverage can be too.

Explore the different types of life insurance to learn more about how each one works.

There are two primary types of life insurance:

  • Term
  • Permanent

Term Life Insurance offers coverage for a set period of time. If you pass away during the term that your policy is still in place, your beneficiaries receive a benefits payout.

Permanent Life Insurance offers coverage for your entire life, as long as you continue to pay your premiums in full and on time. When you pass away, your beneficiaries receive a payout on the policy. Permanent Life Insurance policies offer a component that can accrue tax-deferred cash value. You can access this cash value in various ways while you are alive.

There are different types of Permanent Life Insurance, including:

Whole Life Insurance
Universal Life Insurance
Variable Life Insurance
Final Expense Life Insurance

Whole Life Insurance is the most common type of Permanent Life Insurance policy.

Life insurance policies are subject to different underwriting requirements, depending on the specific policy you buy.

Many traditional Term or Permanent Life Insurance policies are "fully underwritten," meaning that applicants are thoroughly vetted by the insurance carrier before a policy is issued. The underwriting process typically includes a detailed health history questionnaire and a medical exam.

Some permanent policies and term policies are Simplified Issue Life Insurance. Simplified Issue Life Insurance policies ask a few basic health questions but skip the medical exam. Death benefit amounts are usually smaller than what an applicant could receive from a fully underwritten policy, but the approval process is faster.

Guaranteed Acceptance Life Insurance (also known as "Guaranteed-Issue Life Insurance") are Whole Life Insurance policies that don’t require customers to undergo a medical exam or answer health questions as part of the application process. Coverage is guaranteed, however premiums and benefits will vary depending upon your age. These policies are usually age restricted and may have a graded death benefit for an initial period of time. Death benefits are usually smaller than other forms of life insurance, and it's usually the most expensive type of policy per dollar of coverage.

Explore the different types of life insurance policies to learn how each type can serve different unique needs.

(scroll left to view full chart)

Type

Life Insurance Policy Length Cash Value  Premium Structure Additional Considerations
Term Term 1-30 years NO Stay level or increase over time, depending on policy Doesn’t accumulate cash value
Term w/return of premiums Termw/ return of premiums 1-30 years NO Stay level or increase over time, depending on policy Premiums are returned if policy expires1
Whole Whole The rest of your life2 YES Level Low risk, but less lucrative than other investment options
Universal Universal The rest of your life2 YES Can vary based on taxes and what customer wants to pay Premiums, death benefits, and frequency of payments can be changed.
Variable Whole Variable Whole The rest of your life2 YES Level Cash value may be at risk of losses due to underlying investments fluctuating, but also allows for greater earning potential
Variable Universal Variable Universal The rest of your life2 YES Can vary based on taxes and what customer wants to pay Similar to variable whole, above, but allows you to increase and decrease the death benefit

1This rider comes at an additional cost.

2As long as your premiums are paid on time.

Note: A permanent policy's cash value can be used to pay premiums, or may be accessed via loans or withdrawals. Policy loans and withdrawals will reduce cash values and death benefits, and may cause the policy to lapse. Additional premium payments may be required to keep the policy in force. Withdrawals may be subject to a surrender charge. Withdrawals and any unpaid loans are subject to ordinary income tax and, if taken prior to 59 1/2, a 10% federal additional tax.

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