Life insurance comes in many forms, designed to meet the needs of policyholders at various stages of their lives. Term life policies can be great choices for younger workers who just want to protect their loved ones against an untimely and unexpected early death. For those seeking a permanent policy solution, variable policies offer both that and an opportunity to invest part of the premium cost as well.
Term Life Policies
With a term life policy, you’re purchasing coverage for a specified period. Once that period ends, you stop paying the premiums and your protection ceases. You’re not building any cash value, and the insurance company doesn’t pay out any money unless the policyholder dies during that period, so term life tends to be the most affordable life insurance policy. It offers protection in case the policyholder dies unexpectedly, with no investment component attached.
Variable Life Policies
Variable life insurance policies combine a permanent life insurance policy with the opportunity to build cash value via investment income. A portion of your premiums can be placed in mutual funds or other investment vehicles, which generate tax-deferred earnings -- or can lead to losses if the investments fail to deliver. You can access money from a variable life insurance policies via withdrawals or loans, with the cash value and death benefit of the policy debited accordingly.