Types of Life Insurance

These are the most common types of life insurance policies you'll see when you start shopping.

Term Life Insurance

Term Life insurance covers you for only a set number of years, typically between ten and 30 years. If you pass away during that time, your beneficiaries get the payout. If you outlive the term, the policy ends, and there won't be any death benefits. Since these policies don't cover you for life, they're usually the cheapest option.

Whole Life Insurance

Whole life insurance is a type of permanent insurance, which means it lasts your entire life as long as you keep paying your premiums. It also builds cash value, which grows at a fixed rate set by the insurer and can be borrowed against. Note that accessing your cash value will reduce the death benefit. If you get whole life insurance, expect your premiums to be higher than term life, but you'll have guaranteed lifelong coverage in exchange.

Universal Life Insurance

Universal Life Insurance is another type of permanent life insurance, but it's a bit more flexible than whole life insurance. With this policy type, you can adjust your premiums and coverage amount over time, though premiums paid need to be sufficient to cover the cost of insurance. Universal life insurance also has a cash value component, though the returns depend on interest rates.

Final Expense Insurance

Sometimes called burial insurance, final expense insurance is a smaller policy meant to cover funeral costs or medical bills. It's often marketed to older adults and doesn't require a medical exam.