Life Insurance Policies
Term insurance
Term is pure death protection with no cash value: level, decreasing (mortgage protection), increasing, annually renewable term, renewable term, convertible term, and return-of-premium term. Renewability guarantees the right to continue coverage without new evidence of insurability. Convertibility guarantees a change to permanent coverage without proof of health.
Permanent insurance
Whole life offers level premiums, a guaranteed cash value, and a guaranteed death benefit, and pays dividends only if it is participating. Limited-pay and single-premium compress the payment period. Universal life unbundles the components: flexible premiums, an adjustable death benefit, cash value credited with current interest, and monthly cost-of-insurance deductions. Option A keeps a level death benefit while cash value grows; Option B adds the cash value to the face amount. Indexed universal life credits interest from an external index with a floor and cap.
Variable products
Variable life and variable universal life invest cash value in subaccounts. They are securities: the producer needs both a state life license and FINRA registration, and the client must receive a prospectus.
Other forms
Survivorship (second-to-die) covers two lives and pays at the second death, often for estate taxes. Endowment matures at a stated age. Modified and graded-premium whole life charge less in early years.
Traps
"All universal life charges are guaranteed" is false; UL does not guarantee cash value growth. "Variable products are just insurance" is false; they are dual-regulated.
Rule of thumb
See "variable" and think prospectus plus dual licensing. See "guaranteed cash value" and think whole life.