| |
Term Life |
Whole Life |
Universal Life |
Variable Life |
| Premium |
Lower initially.
Increases with each renewal. |
Higher initially than Term Life
Insurance. Normally doesn't increase. |
Flexible premiums.
Premiums can rise as you get older or if the company's investments
do not do well. |
Fixed or flexible premiums. |
| Protects for |
A specified period. |
Entire life if you keep the policy. |
Entire life if you keep the policy. |
Entire life if you keep the policy. |
| Policy benefits |
Death benefits only, no cash surrender
value. |
Death benefits, possible dividends, and
eventually a cash surrender value. |
Flexible death benefits and eventually
a cash surrender value. |
Death benefits, earnings, and cash
surrender values vary in relation to the performance of the
investments you choose. |
| Advantages to Buyer |
Lower initial outlay. At first, may be
able to buy more insurance for less cost. |
Fixed premium amount.
Can take a loan against policy, or surrender policy for some cash. |
More flexibility.
Takes advantage of current interest rates. |
You can choose to invest your money in
stocks, bonds, money market or other accounts. |
| Disadvantages to Buyer |
Premium increases each time a new term
starts. The insurance company is free to substantially raise
premiums if your health changes. |
Dividends can be hurt by low interest
rates. You will lose money if you cash it in. Usually no cash
surrender value for at least 3-5 years. |
Same as Whole Life Insurance and you
assume greater risks due to program flexibility. |
Same as Whole Life Insurance and you
bear all the investment risk. |
| Options |
May be renewable and/or convertible to
a whole life policy. |
Partial cash surrenders may be
permitted. |
Minimum death benefit.
Partial cash surrenders permitted. |
May offer a guaranteed minimum death
benefit. |