What are the 4 types of life insurance?

All Replies

• 

  Kimberly Alex

  Participant

  December 18, 2025 at 8:16 pm

  Hi Michael here you are.

  There are generally four main types of life insurance, and which one makes sense really depends on what you’re trying to do.

  1. Term life insurance
  This is the simplest and cheapest option. You buy coverage for a set period (like 10, 20, or 30 years). If you pass away during that term, your beneficiaries get paid. If not, the policy just ends. Most people with families or mortgages go with term because it gives the most coverage for the lowest cost.

  2. Whole life insurance
  This lasts your entire life as long as you keep paying premiums. It’s more expensive, but it builds cash value over time that you can borrow against. Some people like it for long-term planning, but it’s usually overkill for most people.

  3. Universal life insurance
  This is a more flexible version of permanent life insurance. You can adjust premiums and sometimes the death benefit. It also builds cash value, but the returns aren’t guaranteed, so it takes a bit more attention to manage.

  4. Variable life insurance
  This one lets you invest the cash value into things like mutual funds. There’s more upside, but also more risk. If the investments perform poorly, it can affect the policy. It’s better suited for people who understand investing and are okay with risk.

  TL;DR:
  Term = cheap and straightforward
  Whole = lifetime coverage, expensive
  Universal = flexible but needs monitoring
  Variable = investment-focused, higher risk

  Most people end up choosing term life, but everyone’s situation is different.