Types of Life Insurance: Policies & Chart

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When deciding which type and amount of life insurance is right for you, you'll need to answer these important questions:

What do you want the insurance to cover?
What amount of coverage do you need?
How long will you need the coverage for?
What's your budget?

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Understanding the Different Types of Life Policies

Answering those questions can help you understand which type of life insurance would work for your situation.

The two main types are:

Term, which provides temporary coverage.
Permanent, which provides coverage for the rest of your life.

Within both of these main types of life insurance are different types of policies.

The table below outlines various types of policies, including different types within term and permanent life, and what they typically offer. For more information on a specific type, click its name.

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Life Insurance product table
	Term Life Insurance	Universal Life Insurance	Indexed Universal Life Insurance	Survivorship Universal Life Insurance	Variable Universal Life Insurance
Temporary Coverage	Yes	Not Applicable	Not Applicable	Not Applicable	Not Applicable
Permanent Coverage	Not Applicable	Yes	Yes	Yes	Yes
Provides a Guaranteed Death Benefit	Yes	Yes	Yes	Yes	Yes
Focuses on Affordability	Yes	Not Applicable	Not Applicable	Not Applicable	Not Applicable
Can Provide Coverage for Your Lifetime	Not Applicable	Yes	Yes	Yes	Yes
Covers Two Lives With One Policy	Not Applicable	Not Applicable	Not Applicable	Yes	Not Applicable
Has the Potential to Build Cash Value	Not Applicable	Yes	Yes	Yes	Yes
Offers Growth Potential Based on Performance of Index	Not Applicable	Not Applicable	Yes	Not Applicable	Not Applicable
Offers Growth Potential Based on Market Performance	Not Applicable	Not Applicable	Not Applicable	Not Applicable	Yes
Features a Tax-advantaged Death Benefit	Yes	Yes	Yes	Yes	Yes
Includes the Ability to Access Money in Your Policy	Not Applicable	Yes	Yes	Yes	Yes
Offers Riders to Customize Your Policy	Yes	Yes	Yes	Yes	Yes
	Term Life Insurance	Universal Life Insurance	Indexed Universal Life Insurance	Survivorship Universal Life Insurance	Variable Universal Life Insurance

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Negotiating Life's Changing Needs

For most people, different times in their lives may require more coverage than others. Wherever you are in exploring how life insurance can help, several strategies can help you address your evolving needs and fit within your current budget. You can:

Buy a policy now that more than covers your current needs and may help protect your future.
Buy an initial policy now and then a supplemental policy later.
Start with Term and convert to Permanent later.
Purchase both Term and Permanent policies to get the benefits from the different features they offer.
Add optional features, also known as riders, to broaden the coverage that a particular policy provides.

When determining what to buy when, it is worth remembering that the younger you are when you buy, the more cost-effective it will likely be.

How Life Insurance Needs Can Change Over Time

You need an approach that helps you avoid buying insurance that does not last long enough and buying permanent insurance for temporary needs.

Details of changes of life insurance needs over time

This chart shows how a person's life insurance needs could change over time. On the extreme left of the chart we see an image of a single woman who has few responsibilities that would necessitate life insurance so her amount of coverage needed as represented by a bar is low. But as her life changes and we move to the right of the chart, we see her get married and settle down, purchase a home, and have children. These life changes can cause her coverage needs to rise. This need can reach a peak as we continue on to the right—she now could need life insurance to help protect her income, help support her spouse, and pay for the college education expenses of her children if something were to happen to her. Moving on, her coverage need starts to decline as her children finish college, as they become independent, and as she pays off her mortgage. Finally, at the extreme right of the chart her coverage need drops to a lower level. At this stage, her needs may be to be able to provide funds for final expenses, retirement income for her spouse, and a financial legacy to her beneficiaries.

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