Life policy types
The product taxonomy. The big divide is term (pure protection, no cash value) vs permanent (lifelong, builds cash value). All STABLE.
Term life — temporary, pure protection
Section titled “Term life — temporary, pure protection”Covers a set period; pays only if death occurs during the term; no cash value.
- Level term — level death benefit and premium for the term.
- Decreasing term — death benefit declines over time (often paired with a mortgage); premium usually level.
- Increasing term — death benefit rises over time.
- Renewable — renew at the end of the term without new evidence of insurability (at a higher, age-based rate).
- Convertible — convert to a permanent policy without proving insurability.
Term is the cheapest way to buy a large death benefit; it’s “rent,” not “own.”
Whole life — permanent, guaranteed
Section titled “Whole life — permanent, guaranteed”Lifelong coverage with guaranteed death benefit, level premium, and guaranteed cash value.
- Ordinary/straight whole life — premiums payable for life.
- Limited-pay (e.g., 20-pay, paid-up at 65) — premiums for a set period, coverage for life.
- Single-premium — one lump-sum premium funds the policy.
Universal life (UL) — permanent, flexible
Section titled “Universal life (UL) — permanent, flexible”Unbundles the policy into protection + cash value with flexible premiums and an adjustable death benefit.
- Option A (Level) — level death benefit (cash value grows within the benefit).
- Option B (Increasing) — death benefit = face amount plus the cash value.
- Cash value earns interest at a current rate (with a guaranteed floor).
Variable products — investment risk shifts to the owner
Section titled “Variable products — investment risk shifts to the owner”- Variable life and variable universal life (VUL) — cash value is invested in separate-account subaccounts (like mutual funds); the policyowner bears the investment risk and upside.
- Because they involve securities, selling them requires FINRA registration (a Series 6/7 + 63) in addition to a Life license — see 03 Lines of authority. (Not needed for the Glacis casualty path.)
Other forms
Section titled “Other forms”- Endowment — pays the face amount at a set age/date or at death (limited tax advantages today).
- Group life — coverage through an employer/association under a master contract; individual certificates; usually no/low medical underwriting.
Quick comparison
Section titled “Quick comparison”| Term | Whole life | Universal life | Variable (V/VUL) | |
|---|---|---|---|---|
| Cash value | No | Yes (guaranteed) | Yes (current rate) | Yes (market) |
| Premium | Level (for term) | Level, fixed | Flexible | Flexible |
| Investment risk | n/a | Insurer | Insurer (floor) | Policyowner |
| Extra license | No | No | No | FINRA |
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