Life Insurance Policies
Term insurance
Term provides pure death protection for a stated period with no cash value. Varieties: level (face constant), decreasing (face declines - mortgage protection), increasing (face rises), renewable (guaranteed renewal without proof of insurability, at higher premium), convertible (exchange for permanent coverage; conversion may be attained-age or original-age). Annual renewable term premiums rise each year. Trap: "term builds equity" is always false.
Whole life
Permanent coverage with level premiums, guaranteed cash value, and guaranteed death benefit. Structures: straight (ordinary) life - premiums to age 100/121; limited-pay (20-pay, life paid-up at 65); single premium. Guarantees are exactly that: guaranteed. Dividends are not.
Universal life
Flexible premium and adjustable death benefit, with a cash value that earns current interest and monthly cost of insurance charges that rise with the insured's age. Two death-benefit designs: Option A (level) - the death benefit stays level and the pure insurance amount shrinks as cash value grows; Option B (increasing) - death benefit equals face plus cash value. Watch the corridor and no-lapse guarantee provisions. Trap: UL is not guaranteed to stay in force if premiums are underfunded.
Variable and indexed products
Variable life / variable universal life place cash value in separate accounts invested in subaccounts; they are securities, require a prospectus and a registered representative. Indexed UL credits interest based on an index, subject to a cap, floor, and participation rate.
Other products
Survivorship (second-to-die) covers two lives - estate planning. Endowment matures at a set age. Modified/graded premium starts low then increases. Juvenile and family income policies fill niche needs.