Term life insurance, also known as pure life insurance, is a type of death benefit that pays the heirs of the policyholder throughout a specified period of time.
Once the term expires, the policyholder can either renew it for another term, convert the policy to permanent coverage, or allow the term life insurance policy to lapse.
Universal life (UL) insurance is permanent life insurance (lasting the lifetime of the insured) that has an investment savings element and low premiums similar to those of term life insurance. Most universal life insurance policies contain a flexible-premium option. But some require a single premium (single lump-sum premium) or fixed premiums (scheduled fixed premiums).
Whole life insurance, also known as traditional life insurance, provides permanent death benefit coverage for the life of the insured. In addition to paying a death benefit, whole life insurance also contains a savings component in which cash value may accumulate. Interest accrues at a fixed rate and on a tax-deferred basis.
Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash-value account with money that is invested in separate accounts, similar to mutual funds.
As a permanent life insurance policy, variable life insurance pays a death benefit to your beneficiaries when you die. The coverage then lasts until your death (in contrast to a term policy, which has a set term).
Because the cash value component of variable life insurance is invested in assets like mutual funds, it may rise or fall in value. So these policies carry more risk compared to other life insurance policies. You can often allocate a portion of your premium to a fixed account, which guarantees a rate of return, to reduce overall risk.
Long Term Care Insurance
Long-term care (LTC) insurance is coverage that provides nursing-home care, home-health care, and personal or adult daycare for individuals age 65 or older or with a chronic or disabling condition that needs constant supervision. LTC insurance offers more flexibility and options than many public assistance programs, such as Medicaid.