Life Insurance Policies
Term life
Term provides pure death protection for a stated period with no cash value. Level term keeps a constant face amount; decreasing term matches a declining debt such as a mortgage; increasing term steps up; annually renewable term (ART) renews each year at higher premiums. Renewable term lets the insured continue without evidence of insurability; convertible term lets the owner exchange it for permanent coverage without evidence, using either attained-age or original-age conversion.
Whole life
Ordinary (straight) whole life is paid to age 100 (or maturity) with guaranteed premiums, guaranteed cash value, and a guaranteed death benefit. Limited-pay versions (20-pay, paid-up at 65, single premium) compress premiums. Nonforfeiture options protect value if the owner stops paying.
Universal and variable
Universal life separates the elements: flexible premiums, adjustable death benefit, cash value credited with current interest, and monthly cost of insurance that rises with age - premiums are not guaranteed. Option A pays a level death benefit; Option B pays face plus cash value. Variable life and VUL place cash value in a separate account; the owner bears investment risk, and sale requires a securities license plus a prospectus. Indexed UL credits interest linked to an index, subject to a cap, floor, and participation rate.
Traps
UL premiums are fixed (false), Option B pays a level benefit (false), term builds cash value (false), and conversion requires new underwriting (false).
Rule of thumb
Match product to need horizon: temporary need → term; lifelong need or estate liquidity → permanent (survivorship for estate taxes).
Worked example
A 30-year, $300,000 mortgage pairs with 30-year decreasing term; a permanent need at death pairs with whole life.