Life Insurance Policies and Product Types
Term family
Term pays only if death occurs during the term; no cash value. Know the variants: level, decreasing (often mortgage protection), increasing, and annually renewable term (ART - cheap early, expensive later). Renewable guarantees continuation without new evidence, at higher attained-age rates; convertible allows exchange to permanent coverage without evidence, usually before a stated age or policy year.
Permanent family
Whole life guarantees level premium, level death benefit, and guaranteed cash value; limited-pay and single-premium versions compress payments. Universal life unbundles the elements: the premium goes to cash value, monthly cost of insurance and expenses are deducted, and the policy can lapse if cash value is exhausted. UL death benefit Option A is level (cash value grows inside a fixed face amount); Option B increases by the cash value. Indexed UL credits interest tied to an external index with a floor and cap.
Variable products
Variable life and variable universal life place cash value in a separate account; the owner bears investment risk. Selling them requires a life license and a securities registration plus a prospectus delivery - a classic exam trap. Fixed products never require a securities license.
Other types
Endowment (face amount payable at maturity), modified/graded premium (lower early premium, stepped up later), juvenile, family policy, and group.
Rule of thumb
Guarantees mean premium and death benefit are fixed and investment risk sits with the insurer. Non-guaranteed elements (UL interest, dividends, indexed credits, separate-account returns) shift risk to the owner.