Life Insurance Policies
Term insurance
Term covers a stated period with no cash value. Level term keeps a flat face amount; decreasing term (often paired with a mortgage) falls while premium stays level; increasing term rises; annually renewable term (ART) steps premium up each year. Renewable riders guarantee renewal without evidence of insurability to a stated age; conversion riders move the policy to permanent coverage, and the privilege is valuable because it can be exercised without underwriting.
Whole life
Whole life is permanent, level-premium, with guaranteed cash value and nonforfeiture options (cash surrender, reduced paid-up, extended term). Continuous-premium (straight life) pays to age 100 or 121; limited-pay (20-pay, paid-up at 65) compresses premiums; single premium is one lump sum. Dividends on participating policies are a return of premium and are not taxable income until they exceed cost basis.
Universal and variable products
Universal life separates the death benefit from the cash account; the cost of insurance is deducted monthly and the policy can lapse if cash value is exhausted. Option A (level) keeps a flat death benefit while cash value grows inside it; Option B increases the death benefit by the cash value. Variable life and VUL place cash value in separate accounts, are securities, and require a prospectus and proper registration; the owner bears investment risk. Indexed UL credits interest by formula tied to an index, subject to caps, floors, and participation rates.
Other policy types
Survivorship (second-to-die) covers two lives and pays at the second death - useful for estate taxes. Joint life pays at the first death. Modified and graded premium policies charge lower early premiums. Juvenile policies often include a payor benefit rider.
Trap
For UL questions, confirm whether the death benefit is level or increasing before computing the payout.