True Blue Life Insurance

2017 Life Insurance Buyers Guide:

Understanding The Different Types Of Life Insurance

Last updated: August 25, 2017 at 19:44 pm

1. Overview

smiling life insurance familyWhile there are different types of life insurance, in many cases, life insurance of any type seeks the same goal: income replacement. Wage earners who want to buy life insurance so they can provide a financial safety net to family members in the event of their early death are making a wise decision.

However, purchasing life insurance isn’t as straightforward as buying auto or home insurance. Not only must consumers choose what level of coverage, but also what type of insurance is best for their needs.

Below is a guide to two main types of life insurance, permanent life insurance and term life insurance, to help consumers make that decision.

Regardless of the type of life insurance you purchase, all types leave a death benefit to family members based on the amount of coverage selected. Some choose to buy life insurance to provide their family with enough money to continue their same lifestyle, others leave money specifically for funeral expenses and/or to pay off remaining debt, while others choose to include money for their children’s college education.

For those without children, some leave money to supplement retirement savings for their remaining spouse or perhaps leave money to their favorite charity. The coverage levels and the reasons people buy life insurance are as varied as the people who buy it—the variations are endless.

True Blue Life Insurance Product Comparison

Term Life InsuranceWhole Life InsuranceFinal Expense InsuranceUniversal Life InsuranceIndex Universal Life InsuranceVariable Life Insurance
PremiumsLevel for period of policy or increases every yearLevel for the life of the policyLevel for the life of the policyFlexible based on the needs of the customerLevel for the life of the policyLevel for the life of the policy
Cash ValueNone.Builds based on premiums paid in and paid up additions.Builds based on premiums paid in.Yes, can be used to pay premiums (not advised).Yes, through sub-accounts attached to market indexes.Through sub-account from insurance company’s investment pool.
Investment Vehicle Attached?No.No, unless it is a variable policy.No.No.Technically no, but sub account attached to market index. Yes.
Guaranteed Death BenefitYesYesYesYesYesYes
NotesMost affordable and provides the best value, dollar for dollar.Best used for estate planning purposes for wealthier individuals or older members of the population.Provides low amount of death benefits to help offset medical and funeral expenses.May become temporarily underfunded and may require additional cash deposits.Earns larger returns to build cash value with a safety net to cushion falls. For those wishing to maximize long-term returns and willing to take losses.

2. What Is Term Life Insurance?