Life insurance isn’t limited to just term or whole policies — multiple types are designed for different needs, from short-term coverage to lifelong protection to end-of-life costs. Some policies offer affordability with no frills, while others build cash value or provide flexible benefits. When comparing options, it helps to start with a clear breakdown of the major categories and how they work.
Types of Life Insurance
Updated: June 30, 2025
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Key Takeaways
Term life offers affordable, time-limited coverage ideal for income replacement, while whole life provides lifetime protection and cash value but costs much more.
Specialty policies like final expense, AD&D and joint life insurance provide targeted coverage for funeral costs, accidental injury or death, or two-person households.
The best type of life insurance depends on your age, health, income and whether you need short-term coverage, lifelong protection or estate planning support.
Life Insurance Overview
Type | Description |
|---|---|
Term Life Insurance | Covers you for a set number of years, like 10, 20 or 30. It’s often the lowest-cost option and pays a benefit only if you pass away during the term. |
Whole Life Insurance | A permanent policy with fixed premiums, guaranteed death benefit and cash value that grows over time. It’s stable but usually more expensive. |
Universal Life Insurance | Also permanent, but with flexible premiums and adjustable coverage. Variants like indexed and variable UL link your policy's value to market performance. |
No-Medical-Exam Life Insurance | Includes simplified and guaranteed issue policies. These skip the medical exam but often cost more and offer lower coverage limits. |
Group Life Insurance | Offered through employers or associations. Coverage is often limited, and policies may not be portable if you leave your job. |
Final Expense Insurance | Designed to cover funeral and burial costs. Small coverage amounts, typically $5,000 to $25,000, are offered with easy approval for seniors. |
Accidental Death and Dismemberment (AD&D) | Pays a benefit only if death or injury occurs due to an accident. It’s usually a supplemental policy with limited coverage. |
Joint Life Insurance | Covers two people on one policy. Often used by couples planning around shared financial responsibilities or estate planning. |
The right policy for you will depend on your age, budget, health and financial goals. Below, we break down each type in detail to help you make the right call.
1. Term Life Insurance
Term life insurance provides coverage for a specific period — typically 10, 20 or 30 years. If you pass away during the term, your beneficiaries receive a death benefit. If you outlive the policy, the coverage ends with no payout. Term life is straightforward and often the most affordable type of life insurance, making it a popular choice for people looking to protect dependents during their working years.
There are three main types of term life insurance, each structured differently to meet various financial needs.
- Mortgage life policy is structured to pay off your remaining mortgage balance if you die before the loan is repaid. The death benefit decreases alongside your mortgage, and the lender is usually the beneficiary.
- Credit life insurance is offered with loans or lines of credit. If you pass away before the debt is paid off, the policy pays the remaining balance. The benefit decreases as the loan is repaid, and the policy ends once the balance hits zero.
Level Term Life
A level term policy offers fixed premiums and a constant death benefit throughout the term. You pay the same amount each year, and your beneficiaries receive a guaranteed payout if you die while the policy is active. It’s simple, predictable, and widely used for income replacement or family protection.
Yearly Renewable Term
A yearly renewable term (YRT) policy renews annually without requiring a new medical exam. It starts with lower premiums, but the cost increases each year as you age. While it offers short-term flexibility, the rising cost can make it expensive over time. YRT is often used for stopgap coverage between longer-term policies.
Decreasing Term Life
Decreasing term life insurance starts with a set death benefit that gradually reduces over the policy term, while premiums typically remain level. It’s commonly used to cover debts that shrink over time, like mortgages or loans.
Average Monthly Term Life Insurance Rates by Age
The average cost of term life insurance changes based on your age when you apply. Review the premium table below to see the average monthly rates by age and term for a $250,000 policy. These rates may be higher if you have pre-existing conditions or smoke, as higher-risk applicants pay more. Your gender may also affect your premium.
Average Monthly Rates for a $250,000 Term Life Policy by Age
| 30 | $16 | $20 |
| 40 | $23 | $29 |
| 50 | $45 | $64 |
| 60 | $91 | $164 |
| 70 | $243 | $752 |
FAQ About Term Life Insurance
MoneyGeek answered some of the most commonly asked questions about term life insurance.
What are the pros of term life insurance?
Term life insurance is an affordable way to get coverage. It often comes in terms of 10, 15, 20 or 30 years, allowing you to maintain coverage until you no longer need it. It is also easy to apply for, with some of the best term life insurance providers not requiring a medical exam.
What are the downsides of term life insurance?
While term life insurance can be a more affordable alternative than whole life insurance, it also has downsides. For instance, since it is designed to end after a certain period, this means you'll need to apply for renewal — and with renewal comes higher premiums. It may also be difficult to apply for this policy type as you age, but many providers have benefits specifically for older adults. Aside from this, term life insurance accumulates no cash value, unlike a whole life insurance policy.
What typically changes with the length of a term?
Longer-term life insurance policies often come with higher premiums. This is because the longer the term, the more likely a provider will have to pay a death benefit. However, this may not be the case if you opt for a decreasing term policy.
How is term life insurance different from whole life insurance?
The difference between term life and whole life insurance policies lies in the duration of the policy and the premiums paid. Generally, a term life policy is only in force for a certain period, while a whole life policy covers you until death. Since whole life policies carry more risk, they are often the more expensive choice.
Who is term life insurance best for?
Term life insurance benefits those who want an affordable life insurance option for a specified period. It is a no-frills option that allows individuals to get coverage easily.
2. Whole Life Insurance
Whole life insurance is a type of permanent life insurance that provides lifetime coverage with fixed premiums and a guaranteed death benefit. It also builds cash value over time, which grows at a set rate and can be borrowed against. Because of its predictability and long-term value, it’s often used for estate planning, covering final expenses or leaving an inheritance.
Unlike term life, whole life insurance doesn’t expire — as long as you keep paying the premiums, the policy remains in force. Some versions also offer dividends or investment-linked growth, giving policyholders additional financial flexibility. There are several types of whole life insurance, each offering different ways to manage costs and grow value.
Indexed Whole Life Insurance
Indexed whole life insurance links your policy’s cash value to a market index, such as the S&P 500. This gives your policy the potential for higher growth than traditional whole life, without directly investing in the stock market.
It still includes the core features of whole life: a fixed premium and guaranteed death benefit. Most policies offer a minimum interest rate, protecting your cash value even if the market underperforms — a balance of security and growth potential.
Modified Whole Life Insurance
Modified whole life insurance starts with lower premiums for the first few years, which then increase after a set period — usually five to ten years. The structure makes it easier to afford coverage early on, with the expectation that your income will rise later. This type still includes guaranteed lifelong coverage and builds cash value over time. It’s often chosen by younger buyers or people expecting their finances to improve in the near future.
Participating vs. Non-Participating Whole Life Insurance
Whole life insurance policies can also be classified as either participating or non-participating.
Participating whole life insurance may pay dividends based on the insurer’s profits. These dividends can be used to reduce premiums, increase the policy’s cash value or buy additional coverage. While not guaranteed, they can add long-term value to the policy.
Non-participating policies don’t pay dividends. Premiums and benefits are fixed and won’t change with the insurer’s financial performance. These policies are typically more affordable and offer stable, predictable terms — ideal for buyers who prefer simplicity.
FAQ About Whole Life Insurance
MoneyGeek answered some of the most commonly asked questions about whole life insurance.
What is the cash value feature of whole life insurance?
The cash value is the savings or investment component of a whole life insurance policy, which you cannot get with term life insurance. The cash value is a portion of your policy that earns interest tax-free, which you can withdraw or use to pay your premiums. When you cancel your policy, you receive the full cash value.
Why is whole life insurance more expensive than term life insurance?
Whole life insurance costs more than term life insurance because it covers you until death or a specified age. It also carries more risk for insurers since they can't predict illnesses you may develop as you age.
What are the pros of whole life insurance?
Whole life insurance offers several advantages:
- Coverage for your entire life
- Guaranteed payout for your beneficiaries when you die unexpectedly
- Ability to take out a loan against your policy when needed
- Flexibility when your financial situation changes
- Fixed premiums and death benefits
What are the downsides of whole life insurance?
Whole life insurance has disadvantages:
- More expensive premiums than alternatives like term and group life insurance
- The investment component takes time to accumulate value
- Costly cancellation fees
- Borrowing may be difficult if you don't meet minimum requirements
Who is whole life insurance best for?
Whole life insurance is best for those who start early and have beneficiaries already relying on them. The earlier you start, the lower your premiums will be for the rest of your life. It's also best for those who want to benefit from the savings component and have an extra fund when needed.
3. Universal Life Insurance (UL)
Universal life insurance (UL) is a permanent life insurance policy that offers more flexibility than whole life. Policyholders can adjust their premiums, death benefits, and cash value contributions over time. Unlike fixed-rate whole life policies, UL policies allocate a portion of your premium to a cash value account, which can be invested for potential growth.
There are two main types of UL: indexed universal life (IUL) and variable universal life (VUL). Both provide lifelong coverage and investment potential but differ in how funds are managed and how much risk you take on.
Indexed Universal Life Insurance (IUL)
Indexed universal life insurance ties your policy’s cash value growth to a market index, like the S&P 500, rather than individual stocks. This allows for moderate growth while protecting you from market losses through built-in floors and caps.
IUL policies are often chosen by conservative investors who want some exposure to the market without taking on full investment risk. Returns are limited by performance caps but won’t drop below the guaranteed floor, making this a safer option than directly investing in the market.
Variable Universal Life Insurance (VUL)
Variable universal life insurance gives you full control over how your cash value is invested. You can allocate funds across individual stocks, bonds, or mutual funds, with no caps or floors limiting growth or losses.
VUL offers higher growth potential but also comes with higher risk. When your investments underperform, your policy’s cash value — and its ability to cover premiums — can decline. VULs are best suited for policyholders comfortable with market volatility and long-term investing.
INDEXED VS. VARIABLE LIFE INSURANCE: WHAT’S THE DIFFERENCE?
IUL policies link your cash value growth to a market index, including caps and floors, limiting gains and losses. VUL policies, on the other hand, invest directly in stocks, bonds, or mutual funds, offering more growth potential but exposing you to greater risk. Only VULs give you full investment control, and in some cases, shareholder voting rights when your policy holds company stock.
What Makes Universal Life Insurance Different?
The main difference between universal and whole life insurance lies in flexibility and risk. Whole life offers guaranteed premiums and a fixed death benefit. Universal life, on the other hand, lets you adjust premiums and death benefits and invests a portion of your payments for potential growth.
Unlike whole life, UL policies don’t guarantee returns. Your cash value grows tax-deferred but is tied to market performance — and losses can reduce the fund below the required premium, putting your policy at risk. Universal life works best for those who are investment-savvy and comfortable managing long-term financial decisions.
Who is Universal Life Insurance Best For?
Universal life insurance isn’t right for everyone, but it can be a good fit when you meet the following criteria:
- You have a long investment timeline. UL policies take decades to build value due to gradual market growth and ongoing management fees.
- You're comfortable with investment risk. IULs and VULs are tied to market performance. Returns aren't guaranteed, and your policy’s value can drop in a downturn.
- You want flexible premiums and benefits. UL lets you adjust payments and death benefits over time, but you’ll need to actively manage your policy to keep it funded.
- You’re financially stable. Since poor market performance can reduce your cash value below the premium minimum, you’ll need other resources to keep the policy active.
- You already have basic coverage. UL works best as a secondary policy or wealth-building tool, not as your sole source of life insurance protection.
DO UNIVERSAL LIFE POLICIES HAVE EXTRA FEES?
Yes. In addition to your premium, both indexed and variable universal life policies typically charge monthly asset management fees. These are deducted from your policy’s cash value to cover the cost of managing your investments. When your policy’s value drops too low, you may need to pay the fees out of pocket to keep coverage active.
FAQ About Universal Life Insurance
MoneyGeek answered some of the most commonly asked questions about universal life insurance policies.
What is an index?
In stocks, an index fund consists of several stocks, bonds and securities that make up a specific index. They typically share the same market trend. For example, high-risk, high-reward assets with fluctuating market values belong to the same category. Your fund manager’s job is to place your money in an index fund that matches your investment horizon and risk appetite.
How many different types of indexes are there to choose from for IUL plans?
IUL fund managers can invest your premiums into various indexes, from conservative, blue-chip options like the S&P 500 to more niche, high-risk markets like Hang Seng. Some indexes you might encounter include the following:
- S&P 500
- S&P MidCap 400
- NASDAQ-100
- EURO STOXX 50
- Russell 2000 Index
- Hang Seng
- Invesco QQQ Trust ETF
- Fidelity ZERO Large Cap Index (FNILX)
- SPDR S&P 500 ETF Trust
- MSCI Emerging Markets Index
The availability of indexes can vary depending on the specific insurance provider and the terms of the IUL policy.
Where do my premium investments go in an indexed universal life insurance policy?
In an IUL, your premiums don’t go directly to the stock market. Instead, your fund manager invests them in market indexes that align with your goals, risk tolerance and investment horizon. You won't own individual shares, but you'll have a diverse index of various assets that complement each other.
What are index floors and caps?
An index cap limits the interest rate your insurer can charge during a recession, while the floors indicate the charges when the strike price exceeds the rates. Proper caps and floors effectively hedge market fluctuations. You and your fund manager should set index floors and caps before policy approval.
What are some of the downsides of indexed universal life insurance?
IUL policies let you invest in market indexes, which generally carry less risk than individual stocks. Long-term investors might find the rewards too small. Given the diverse assets and fixed index floors/caps, your funds may not have much room to grow in the long run.
Who is indexed universal life insurance not suitable for?
Long-term investors who want to make steady quarterly payments may not find IUL appealing. It generally suits conservative investors making a lump-sum payment.
Who is variable universal life insurance best for?
Variable life insurance suits long-term investors with a high-risk appetite and a lengthy investment horizon. Given market fluctuations, you should let investments sit for decades. For short-term protection with a lump sum, consider IUL instead.
What is a no-lapse guarantee, and why is it especially important for VUL plans?
The No-Lapse Guarantee Agreement (NLGA) ensures that your policy stays in effect regardless of investment performance. In worst-case scenarios, you'll still get coverage when your fund value plummets. You'll need to get this rider or add-on upon application, which costs extra.
Can I pay someone else to invest my earnings in a variable universal life insurance plan?
Professional fund managers will take over your portfolio. You must undergo the proper underwriting process to apply for a policy and insure yourself. You can't ask someone else to open a VUL policy for you.
Can I adjust death benefits or premiums in a variable universal life insurance plan?
You can adjust the amount of a variable death benefit. Work with your fund manager to hedge losses while making minimum monthly payments during recessions. You can also opt for fixed interest rates. When you have prior experience with stock investments, variable benefits will help you better maximize your fund value.
4. Life Insurance Without a Medical Exam
Most life insurance policies require a detailed underwriting process to assess your risk — often including a medical exam. Insurers consider your age, health, lifestyle, and even your hobbies to determine eligibility and pricing. The more detailed and accurate your health information, the more likely you are to qualify for lower premiums.
For those with medical conditions or who prefer to skip the exam, some life insurance options offer a faster, more accessible path to coverage — though often at a higher cost and with lower benefit limits. Below are the main types of life insurance that typically don’t require a medical exam.
- Simplified issue policies offer higher coverage limits (typically up to $250,000) and lower premiums than guaranteed acceptance, but you must be in reasonably good health to qualify.
- Guaranteed acceptance policies require no medical questions at all, making them accessible to nearly anyone. However, they come with higher premiums, limited coverage (usually capped at $25,000 to $50,000), and a waiting period — if the insured dies within two years, beneficiaries typically receive only the premiums paid plus interest.
Group Life Insurance
Group life insurance is offered through employers or organizations and covers a pool of people with a standard set of benefits. The employer often subsidizes premiums, and coverage is usually more affordable than individual whole life insurance.
However, group life coverage has limitations. You can’t customize your policy, and everyone receives the same benefits regardless of individual needs. Coverage usually ends when you leave the employer, and though exams aren't required, some group policies still deny applicants with terminal illnesses, hazardous jobs, or risky lifestyles.
Simplified and Guaranteed Issue Whole Life Insurance
For individual coverage with minimal hassle, simplified issue and guaranteed acceptance policies are options that avoid medical exams. Instead, insurers ask a few health questions and verify your answers using third-party sources. These policies are often used for final expense planning.
IS GUARANTEED ISSUE LIFE INSURANCE TRULY A “NO QUESTIONS ASKED” POLICY?
Guaranteed issue life insurance skips medical exams and accepts almost everyone, but it comes with tradeoffs. Premiums are high, coverage is limited — often capped at $25,000 — and most policies include a two-year waiting period. If you pass away during that time, your beneficiaries typically receive only the premiums paid plus interest.
5. Other Types of Life Insurance
In addition to term, whole, and universal policies, several other life insurance products are designed for specific needs — from covering end-of-life expenses to protecting couples or providing accident-only coverage.
- First-to-Die provides a payout when the first insured person dies, helping the surviving spouse or dependents maintain financial stability.
- Last-to-Die pays only after both policyholders pass away. It’s often used for estate planning, such as covering estate taxes or passing wealth to heirs.
Final Expense Life Insurance
Final expense life insurance is a permanent policy designed to cover funeral, burial, and related end-of-life costs. Coverage amounts are low — often between $5,000 and $25,000 — but premiums are typically affordable, and acceptance rates are high, even for older adults or those with health issues.
This policy is best for people whose loved ones don’t need large financial support but would benefit from help covering final expenses. Just note that term and whole life insurance policies can also serve this role if structured properly.
Accidental Death and Dismemberment (AD&D)
Accidental death and dismemberment (AD&D) insurance pays a benefit if the insured dies or suffers serious injury — such as loss of sight, hearing, speech, or a limb — due to an accident. It’s typically inexpensive and offered as a standalone policy or as a rider on traditional life insurance. However, it doesn’t cover illness-related deaths and is generally considered supplemental protection.
Joint Life Insurance
Joint life insurance covers two people — often spouses — under one policy. It pays out either after the first death (first-to-die) or after both policyholders pass away (last-to-die):
This type of policy can be more affordable than buying two separate plans but may offer less flexibility if the couple separates or has differing coverage needs.
Types of Life Insurance Policies: Buyer’s Guide
Choosing the right life insurance policy goes beyond knowing the types — it’s about matching coverage to your goals, budget, and long-term needs. This guide walks you through how to make that choice, understand premium structures, and learn what actually makes up a policy. Whether you're buying for the first time or reviewing options, start here.
How to Pick a Life Insurance Policy
Choosing a life insurance policy requires careful consideration. It's about finding the right coverage that aligns with your financial goals and provides security for your loved ones.
- 1
Assess Your Needs
Start by evaluating your financial situation and identifying your dependents' needs. Consider your income, debts, living expenses and future financial obligations. This will help you determine how much coverage you need.
- 2
Understand the Different Types of Policies
Research about the different types of life insurance policies available. Understand the differences between term, whole, universal and other life insurance policies.
- 3
Compare Quotes
Prices can vary significantly from one company to another for the same coverage, so it's important to get quotes from multiple insurance companies. Use online tools or work with an insurance broker to compare rates.
- 4
Review the Policy Details
Before making a decision, carefully read the policy details. Understand the terms, conditions, exclusions and the process for filing a claim. If there's anything you don't understand, don't hesitate to ask questions.
- 5
Consider the Insurer's Reputation
Look at the insurer's reputation for customer service and their financial stability. Check online reviews and ratings from independent agencies like AM Best and Standard & Poor's.
- 6
Regularly Review and Update Your Policy
Once you've purchased a policy, reviewing it regularly and updating it as necessary is wise. Major life events like marriage, the birth of a child, buying a home or changing jobs can affect your coverage needs.
MONEYGEEK EXPERT TIP
Your life insurance insurability, or the risk an insurer takes on when issuing a policy, can impact your premium. Factors such as age, health status, lifestyle habits (like smoking) and family medical history can all affect your insurability. Securing a policy when you're young and healthy is often advantageous. Some policies, like guaranteed issue life insurance, offer coverage without a medical exam for people who are less healthy, but these plans typically come with higher premiums. Always consider your current and future insurability when choosing a life insurance policy.
Types of Life Insurance Premiums
Your premium is the amount you pay to keep your life insurance policy active. The structure of these payments can vary depending on the policy type, your age, health, and financial goals. Understanding how different premium models work can help you choose a policy that fits your budget over time.
Premium Type | Description |
|---|---|
Level Premiums | Level premiums stay the same throughout the policy term, making them easy to budget for. This structure is common in term life insurance and some whole life policies. |
Flexible Premiums | Available in universal life insurance, flexible premiums let you adjust payment amounts and timing within set limits. This can be helpful if your income fluctuates or you want to increase contributions over time. |
Single Premiums | A single premium policy is funded with one lump-sum payment. It provides immediate, fully paid-up coverage and is best for buyers with significant cash on hand who want to avoid ongoing payments. |
Modified Premiums | With modified premiums, payments start lower for the first few years, then increase. This structure suits buyers expecting higher future income but requires planning for the later cost jump. |
Renewable Premiums | Some term life policies offer renewable premiums, allowing you to renew coverage without a medical exam. However, rates rise with age at each renewal. |
Choosing the right premium structure depends on how steady your income is, how long you need coverage and how much flexibility you want. If predictable costs are important, level premiums may make sense — but if you need room to adjust, consider flexible or modified options.
Key Parts of a Life Insurance Policy
At its core, life insurance is a contract between you and an insurer. You pay regular premiums, and in return, the insurer promises to provide a death benefit to your chosen beneficiaries when you pass away. The goal is to provide financial protection for your loved ones — helping them cover everyday expenses, debts or major costs like education or housing. Whether you're considering term or permanent coverage, most policies include the same basic components:
Term
The policy's term is how long it lasts. For instance, whole life insurance covers you for the rest of your life and will not expire. Term life insurance provides coverage for a fixed number of years.
Premium
The premium is how much you pay for the policy. You can pay on a monthly, quarterly or annual basis. You can even choose to pay a lump sum for a policy.
Death Benefit
The death benefit is how much your beneficiaries will receive from your policy after you die.
Beneficiary
This is who will receive the death benefit once you die.
These four elements form the foundation of any life insurance policy. No matter the type, they’re always present. In addition, you may have the option to add insurance riders, which are custom features that enhance your policy at an extra cost. Common riders include a guaranteed insurability rider (allowing future coverage increases), an accelerated death benefit (for terminal illness), and a waiver of premium rider (if you become disabled).
Life Insurance Types: Bottom Line
In this page, we explained the main types of life insurance — from term and whole life to universal, no-exam, and niche policies like AD&D and joint coverage. Each serves a different purpose, depending on your age, financial goals, health status and coverage needs.
If you want affordable, temporary protection, term life may be your best bet. For lifelong coverage with added financial value, whole or universal life might make more sense. And if you need simplified options, no-medical-exam policies can offer peace of mind, though often at a higher cost. Before choosing a policy, compare rates, review your coverage needs and consider how much flexibility you’ll want as your life changes.
Different Types of Life Insurance: FAQ
Given the variety of life insurance choices, it can be challenging to determine which is best for you and your loved ones. Review some of the most frequently asked questions below to understand your options.
How much life insurance do I need?
Your ideal life insurance coverage amount depends on your income and your family’s household expenses. Ideally, your death benefit should cover all their needs. If budget permits, the policy coverage should equal 10 to 15 times your annual income. However, if purchasing that coverage amount doesn't work for your current budget, you can gradually increase your coverage as your income increases over the years.
Why do I need life insurance?
Life insurance doesn’t protect you; it protects your dependents and gives you peace of mind. If you are the breadwinner, your family may have no income if you die unexpectedly; life insurance provides your beneficiaries a financial safety net.
How much does life insurance typically cost per month?
Several factors affect life insurance premiums. Rates will vary depending on your current medical condition, gender, age, coverage needs and policy type. To get an idea of how much you could spend, a healthy 40-year-old male would likely pay around $34 a month for a 10-year term life insurance policy.
What are the basic components of a life insurance policy?
All policies include a premium, beneficiary, death benefit and term length. The conditions vary based on your insurer. For instance, a lesser-known insurance provider might offer much cheaper coverage, but you'll also have less assurance of its financial security.
How many life insurance policies can I have at one time?
The law doesn’t limit the number of life insurance policies you can get. As long as you have the money to pay your premiums, you can get as many whole and term life insurance policies as you want. Remember that they will lapse when you default on payments. Don't haphazardly increase your coverage to avoid losing all the money you paid.
What kind of life insurance do I need?
Get a life insurance policy that suits your lifestyle. Consider your current income, household expenses, dependents, income sources and term-length needs. Don’t just copy other policy owners, as their policies may not be best for your situation.
How many types of life insurance are there?
There are several types of life insurance, but they generally fall into two categories: term life insurance and permanent life insurance. Term life insurance includes level term, yearly renewable term and decreasing term. Permanent life insurance includes whole life and universal life. Other types of insurance include no-medical exam policies, final expense, accidental death and dismemberment and joint life insurance.
What are the different types of life insurance?
There are different types of life insurance policies, varying in features and benefits. Four types of life insurance are the most well-known: term, whole, universal and variable policies.
What is the best type of life insurance?
The best type of life insurance depends on your individual needs, financial situation and long-term goals. Term life insurance is often a good choice for those needing coverage for a specific period, while whole life and universal life insurance can provide lifelong coverage and a cash value component. You may consult with a financial advisor or insurance professional to determine the best option for you.
What is the cheapest type of life insurance?
Term life insurance is generally the least expensive type of life insurance. It provides coverage for a specific period, typically 10 to 30 years, and does not have a cash value component. Term life insurance premiums are usually lower than permanent life insurance policies like whole life or universal life.
What is covered in a life insurance policy?
A life insurance policy provides a death benefit, which is a sum of money paid out to the beneficiaries upon the policyholder's death. The coverage can be used to cover a variety of expenses, including funeral costs, outstanding debts and living expenses. Some policies also include a cash value component that grows over time and can be borrowed against if needed. Specific coverage details can vary based on the type of policy.
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term life insurance, which is one of the two main types of life insurance, provides the greatest amount of coverage for a specific period.
Which type of life insurance policy pays the face amount?
Whole life insurance policies guarantee payment of the face amount to the beneficiaries, provided premiums are maintained.
Which type of life insurance policy is best suited for paying off the outstanding balance?
Decreasing term life insurance is designed to pay off outstanding balances as the benefit decreases over time, aligning with debt reduction.
Which type of life insurance will a business typically use?
Businesses often use key person life insurance to protect against the financial loss from the death of a critical employee. This can be in the form of term, permanent or variable life insurance.
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal life insurance offers flexible premiums and an adjustable death benefit, providing adaptability to changing financial circumstances.
Life Insurance Policy Types and Rates: Our Review Methodology
To help readers compare their life insurance options, MoneyGeek analyzed 1,488 life insurance quotes and evaluated providers based on key metrics like affordability, customer satisfaction, financial stability and product diversity. All coverage costs and company data were updated in 2025.
How We Scored Life Insurance Companies
MoneyGeek created a custom scoring system to rate insurers across five core categories. Companies can earn up to five points per category, which are weighted to calculate a final MoneyGeek score out of 100.
Weighting for General Life Insurance Rankings:
- Affordability: 30%
- Financial Stability: 25%
- Buying Process: 20%
- Customer Satisfaction: 15%
- Product Diversity: 10%
Weighting for Whole Life Insurance Rankings:
- Financial Stability: 35%
- Customer Satisfaction: 25%
- Buying Process: 20%
- Product Diversity: 20%
*Affordability was not considered for whole life insurance due to a lack of pricing data.
Weighting for No-Medical-Exam Life Insurance Rankings:
- Product Diversity: 35%
- Financial Stability: 25%
- Customer Satisfaction: 20%
- Buying Process: 20%
*Affordability was not considered for no-exam policies due to limited quote availability.
Weighting for Cheap Life Insurance Rankings:
- Affordability: 50%
- Financial Stability: 15%
- Buying Process: 20%
- Customer Satisfaction: 5%
- Product Diversity: 10%
Data Sources and Evaluation Criteria
Each company’s score reflects the following inputs:
- Cost data obtained from online quotes
- Financial strength ratings from AM Best
- Company history, including years in business
- Customer complaint index data from the National Association of Insurance Commissioners (NAIC), 2020 to 2022
- Online buying tools and payment flexibility
- A variety of available life insurance products
Sample Profile Used for Quotes
We used a standard applicant profile to request quotes:
- 40-year-old male
- Nonsmoker
- 5'11", 175 lbs
- Excellent health rating
We also adjusted the profile by age, gender, health status, tobacco use and location to compare policies for different types of buyers. Term life quotes were gathered across varying term lengths and coverage amounts. Where necessary, we extended insights through observed pricing patterns to project coverage trends.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.