If you anticipate a long-term need for life insurance, permanent life rather than term coverage may be your best choice. Among permanent insurance policies, you have these options:
- Whole-life This is the traditional form of permanent life insurance. Premiums are fixed and there are strong guarantees covering the death benefit.
- Universal life. This type of insurance gives you more flexibility in paying premiums. Compared with whole-life insurance, there is less certainty regarding cash values or death benefits: they may wind up higher or lower, depending on the insurance company’s investment success and the interest-rate climate.
- Variable life. With this form of permanent insurance, you make the investment decisions, directing your premiums into stock funds, bond funds, etc. If you choose wisely, your cash value and death benefit may grow rapidly. However, guarantees generally are limited to a minimum death benefit.
Recently, variable universal life (VUL) insurance has become popular. VUL offers the upside potential (and the risks) of variable life along with the flexibility of universal life.
