Life insurance is purchased from an insurer by making regular payments of premiums during the life of the insured. Upon the death of the insured, designated beneficiaries receive a financial benefit.

1. The Four Types of Life Insurance
Life insurance, at its core, is a means to protect the financial security of one's survivors. It is
generally thought of as a way to provide income replacement for wage earners survivors in the
event of death. Life insurance is purchased from an insurer by making regular payments of
premiums during the life of the insured. Upon the death of the insured, designated
beneficiaries receive a financial benefit.
Although all life insurance policies maintain those consistent characteristics, there are different
means to achieving the same end. Four distinct types of life insurance policy have been
developed and are in common usage.
Term Life Insurance
Term life insurance is probably the most basic form of life insurance. Term insurance is
purchased for a specific period of time (the term). The length of the term can vary considerably.
There are term policies that are effective for well over twenty years, whereas some only involve
a one-year term. A regular premium is paid throughout the term. If the insured dies at any
point during the term, the designated beneficiary receives the death benefit. If one survives the
term, however, there is no payout and the policy simply ends.
Whole Life Insurance
Whole life insurance has a long history and maintains great popularity. The cost of premiums is
guaranteed for the entire time the policy in place. As premiums are paid, the insured
accumulates a cash value for the policy, with the insurer determining the interest rate applied
to that cash value. One may either "cash out" their whole life policy, or maintain it so that

2. benefits are paid to survivors upon the policyholder's death. Whole life insurance policies were
long "the norm" in the insurance industry.
Universal Life Insurance
Universal Life Insurance is considered a more flexible approach to life insurance. The required
regular premium amount can vary as long as the policy has a cash value in excess of the policy's
costs. The insured can alter the policy's future payout while the policy remains in force, making
it a flexible insurance solution for those who may have more complicated or rapidly-changing
needs than can be addressed with term or whole life solutions.
Variable Universal Life Insurance
Variable Universal Life Insurance takes the flexibility of universal life coverage and adds to it by
providing investment choices. The policy's cash value is not based simply on an interest rate
determined by the insurer. Instead, the policy's value is based upon the performance of various
investments. The insured allocates his premiums among a series of investment options with a
variable universal life insurance policy.
Although all insurance policies do share common characteristics, the four different types of
insurance policies have some marked differences. Each type of insurance policy has advantages
and limitations. For some, a simple term policy will more than suffice to meet their life
insurance needs. Others may benefit considerably from a more full-featured insurance policy
that includes an investment component and the ability to alter the nature of benefits and the
premium. Learn more at geoinsurance.com/life-insurance.