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Life Insurance Types of Policies To determine what type of life insurance policy is right for you, you need to ask yourself some more questions. When will my debt disappear? When will my child's education be complete? How much will the amount I need decrease as I build up my investment plan? There are two basic types of life insurance policies: Term insurance and Permanent insurance. Term insurance Individual term Generally for short-term to mid-term obligations Charges for pure cost of insurance protection Does not build cash value Generally for a specific time period (e.g., 1 to 15 years) Usually renewable Group term Underwriting more lenient than individual coverage Employer may share the cost At termination of employment, coverage ceases unless employee converts to an individual policy Credit life Covers an outstanding loan balance Normally sold by banks and retailers High cost compared to individual and group term Permanent insurance Traditional whole life Level premiums and level death benefit Cost usually higher than term insurance in early policy years, lower in later years Portion of premium develops cash value over time that may be used for: Emergency funds Retirement income Purchase of a paid up policy Interest-sensitive whole life Accumulations based on earnings credited to policy's general account Credits excess interest rate above guaranteed rate Marketed by stock companies Cost similar to traditional whole life policies Insured retains some portion of investment risk Universal life Has features of both term and permanent insurance Side investment fund earns at a current interest rate Cash values are credited with a higher current interest rate Guaranteed minimum rate Same loan provisions as other permanent policies. Loan features include: Borrowed cash values continue to receive guaranteed interest rate Loans generally not taxable Partial surrender provision Withdraw part of cash value without a repayment provision Interest portion of withdrawal is taxable Death benefit options Pays beneficiary face amount of policy Pays beneficiary policy's face amount plus accumulated values Other types of life insurance Variable universal life Policy owner selects variable investment options Stock funds Bond funds Money market funds Provides an insurance coverage floor at death Insured retains some portion of investment risk Survivorship policies Traditional or interest-sensitive policies Pays beneficiary at time second insured dies Usually purchased when two people have a large estate, business property, or need cash for estate-tax payment Covers two lives, so premiums are lower and coverage is for a longer period of time Single premium life Single life policies, an interest-sensitive contract with tax-deferred earnings as well as life insurance protection Single premium payment I'm ready to complete the Insurance Planning Quick Report now. Take some time to understand important terms and provisions that are defined in the next section.

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