 |
Term Life
Insurance |
Whole Life
Insurance |
Universal Life
Insurance |
| Definition |
Pure death benefit
protection for a
specified period
|
Permanent1 insurance
—
Death benefit
plus cash value |
Permanent1, flexible
insurance — Death
benefit plus cash value |
| Attributes |
|
|
|
| Death Benefit1 |
Fixed and permanent1 |
Fixed and permanent1 |
Adjustable |
| Premium |
Fixed |
Fixed |
Flexible |
| Cash Value |
None |
Yes |
Guaranteed minimum
and nonguaranteed,
interest-sensitive rate |
| Advantages |
|
|
|
| Death Benefit |
Affordable |
Guaranteed throughout
the entire life
of the insured |
Adjustable with
two options —
May be guaranteed
throughout the entire life
of the insured |
| Premium |
Least expensive
type of insurance |
Fixed and level |
Flexible and can be
guaranteed through
insured's lifetime |
| Cash Value |
None |
Guaranteed |
Potential for greater
cash value accumulation |
| Disadvantages |
|
|
|
| Death Benefit |
Coverage terminates
on specified date |
Fixed and permanent |
Flexible and permanent |
| Premium |
Likely to increase
after initial term |
Not flexible —
Higher than term insurance |
Generally higher than
whole life to
accommodate flexibility |
| Cash Value |
None |
Slow growth |
Portion of growth
is related to current
money market conditions |
| Other |
Can pay more in
premium than the
death benefit amount |
Great guarantees,
but you have to
pay higher premium |
Must keep the policy
properly funded
to avoid lapse |
