Life Insurance Policies
Term insurance
Term covers a set period with no cash value. Level term keeps the face amount constant; decreasing term, often paired with a mortgage, shrinks it; annual renewable term raises premiums each year. Renewable term allows renewal without new evidence up to a stated age. Convertible term allows exchange for permanent coverage, usually without evidence, at attained-age or original-age rates.
Permanent insurance
Whole life is guaranteed: level premium, guaranteed death benefit, guaranteed cash value, and a cash value equal to the face amount at maturity. Limited-pay and single-premium versions compress premiums. Universal life separates the components, letting the owner adjust premiums and death benefit while cash value grows at a declared rate. Option A pays a level death benefit; Option B pays face amount plus cash value. Variable and variable universal life place cash value in subaccounts tied to market performance; these are securities requiring FINRA registration in addition to the insurance license. Indexed universal life credits interest based on an index, subject to caps and floors. Survivorship, or second-to-die, policies pay on the second death and are used for estate planning.
Modified and graded products
Modified whole life charges lower premiums in early years; graded premium whole life steps premiums up over time.
Traps
Questions often suggest a noncancellable premium can be raised, or that variable products need only an insurance license. Term has no cash value, so loan and surrender questions do not apply to it.
Rule of thumb
If the policy's cash value depends on market performance, it is a security.