• Written by
    Lindsey Crossmier

    Lindsey Crossmier

    Financial Writer

    Lindsey Crossmier is an accomplished writer with experience working for The Florida Review and Bookstar PR. As a financial writer, she covers Medicare, life insurance and dental insurance topics for RetireGuide. Research-based data drives her work.

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  • Edited By
    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

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  • Reviewed By
    Eric Estevez
    Eric Estevez, Independent Licensed Life Insurance Agent

    Eric Estevez

    Owner of HLC Insurance Broker, LLC

    Eric Estevez is a duly licensed independent insurance broker and a former financial institution auditor with more than a decade of professional experience. He has specialized in federal, state and local compliance for both large and small businesses.

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  • Published: May 11, 2020
  • Updated: July 6, 2023
  • 6 min read time
  • This page features 7 Cited Research Articles
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APA Crossmier, L. (2023, July 6). Types of Life Insurance. RetireGuide.com. Retrieved July 15, 2024, from https://www.retireguide.com/life-insurance/types/

MLA Crossmier, Lindsey. "Types of Life Insurance." RetireGuide.com, 6 Jul 2023, https://www.retireguide.com/life-insurance/types/.

Chicago Crossmier, Lindsey. "Types of Life Insurance." RetireGuide.com. Last modified July 6, 2023. https://www.retireguide.com/life-insurance/types/.

What Are the Main Types of Life Insurance?

There are two main types of life insurance: term and permanent. While both policy types have the same purpose – to financially protect your loved ones when you pass – they differ in coverage, features and overall cost.

The 2 Main Life Insurance Types
Policy TypeCoverage LengthAverage Cost Noteworthy Features
TermTemporary (usually between 10 – 30 years) AffordableCan add riders for additional coverage

Option to convert into permanent policy in some cases

Some policies allow you to skip a medical exam
PermanentLifelongMore expensiveCan add riders for additional coverage

Some policies allow flexible premiums and death benefit

All permanent policies have tax-deferred cash value components

Term policies are the most popular, according to the Insurance Information Institute. They offer straightforward, cost-effective temporary coverage – with no complex bells and whistles. Your premiums and death benefit for term policies are fixed.

Permanent policies offer more flexibility, lifelong coverage and additional benefits for a higher premium cost. All permanent policies have a cash value component, which grows tax deferred. Think of permanent policies as death benefits with a bonus savings account.

The 3 Main Types of Permanent Life Insurance

The 3 Main Types of Permanent Life Insurance
Whole
Whole policies are the most common type of permanent policy, according to the Insurance Information Institute. Similar to term policies, they have a fixed death benefit and premiums, but whole life has lifelong coverage.
Universal
Universal policies have flexible death benefits and premiums. However, there can be repercussions if you adjust or skip your premiums regularly. Make sure to read the fine print of your policy or consult an advisor before doing so.
Variable
Variable policies have flexible death benefits and premiums. They also offer investment opportunities, which present more risk. If your investments perform well, the value of your policy will increase. However, if your investments fail, your policy’s value can suffer. But for some policies, the death benefit will not decrease below a certain threshold.
A combination of term and permanent policies can be optimal if you have enough discretionary income to fund both policies.

Comparing Different Types of Life Insurance

Carefully compare different types of life insurance when shopping for coverage. There isn’t a one-size-fits-all policy. Consider your specific needs – and the policy features that could address them.

Life Insurance Policy TypeCoverage LengthAverage CostCash Value ComponentMedical Exam Required?
Term5-, 10-, 15-, 20-, 25- and 30-year term lengths Affordable premiums for high coverage (coverage limit usually around 25 times your yearly income)NoVaries
WholeLifelongMost expensive premiums for high coverageYesVaries
UniversalLifelongCostly premiums for high coverageYesYes
Variable LifelongCostly premiums for high coverageYesYes
Burial InsuranceLifelongCostly premiums with limited coverage (typically between $5,000 and $20,000)YesNo

Other Types of Life Insurance

While not as popular, there are other types of life insurance to consider. These options are either separate policies or available as rider add-ons to your life insurance policy.

Other Types
Group Life Insurance
This is a type of term policy available through your employer. Keep in mind that group policies are known to have limited coverage.
Mortgage Life Insurance
Covers the remaining balance of your mortgage to your lender when you pass.
Survivorship/Joint Life Insurance
Covers two people under the same policy.
Accidental Death and Dismemberment (AD&D) Insurance
AD&D insurance is available as a separate policy and a rider add-on. This type pays you a death benefit if you get severely injured or die due to an accident.
Credit Life Insurance
Pays a death benefit to cover any remaining debt when you pass. This type of benefit goes to your lenders, not your beneficiaries.
Life Insurance Coverage You Can Count On*.
You may qualify for up to $2M in coverage with no medical exams required. Policies are issued by highly rated insurers, and, like us, they’re not going anywhere.
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Factors To Consider When Choosing Life Insurance

Generally, there are four factors to consider when choosing a life insurance policy — your age, health, budget and the amount of coverage you need.

4 Factors To Consider for Life Insurance Coverage
Age
Your age is perhaps the biggest factor in determining the best life insurance product for you. For example, if a 30-year-old is looking to buy a 10-year term policy with $250,000 of coverage, a premium quote through Progressive is $12.40 a month. However, if a 50-year-old is looking at the same exact policy, the premium quote has nearly tripled to $29.36 a month. The younger you are, the more affordable your premiums will be.
Health
According to the Texas Department of Insurance, if you’re found to be in poor health, or you smoke — you’ll face higher premiums. You can try to incorporate healthier habits before purchasing a life insurance policy or look for a policy that doesn’t require a medical exam.
Budget
Choose a life insurance policy with premiums that fall within your budget. If you can’t keep up with your premiums, your policy will lapse. And if you were to pass away while your policy has lapsed, your beneficiaries typically won’t receive a death benefit.
Amount of Coverage You Need
You may only want life insurance for a certain time period, such as when your kids are growing up. Or, you may want the peace of mind of lifelong coverage that can pay for funeral expenses and guarantee the financial well-being of your spouse. Make sure you choose a policy with coverage that fits your needs.
Life Insurance Calculator: Estimate Your Needed Coverage

Make sure to get quotes from multiple life insurance companies. Don’t accept your first quote; you’ll get different premium quotes for the same exact policy coverage.

Compare at least three life insurance quotes before buying a life insurance policy.

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Which Life Insurance Is Right for You?

If You Want:Consider a:
Temporary, affordable life insurance coverage with a fixed death benefit and premiumTerm Life Insurance Policy
Lifelong coverage with a fixed death benefit and premiumWhole Life Insurance Policy
Lifelong coverage with a flexible death benefit and premiumsUniversal Life Insurance Policy
Lifelong coverage with investment opportunities, a flexible death benefit and premiumsVariable Universal Life Insurance Policy
Lifelong coverage that is quickly approved without a medical exam, for a small, fixed death benefit to cover final expensesBurial Insurance

Frequently Asked Questions about Types of Life Insurance

What are the three main types of permanent life insurance?
The three main types of permanent life insurance are whole, universal and variable life insurance. All offer lifelong coverage with cash value components, and each permanent policy type has individual benefits to consider – such as flexibility and investment options.
What are the different types of underwriting methods in life insurance?
There are generally two types of underwriting methods with life insurance — traditional underwriting and accelerated underwriting. Traditional underwriting requires a medical exam, while accelerated underwriting does not. It’s important to note that accelerated underwriting is normally only for those with good health and under the age of 60. It’s not uncommon to find term policies that don’t require a medical exam.

Editor Malori Malone contributed to this article.

Last Modified: July 6, 2023
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7 Cited Research Articles

  1. Texas Department of Insurance. (2023, May 2). Life Insurance Guide. Retrieved from https://www.tdi.texas.gov/pubs/consumer/cb018.html
  2. Millar, A. (2023, March 31). What Is Whole of Life Insurance? Retrieved from https://www.usnews.com/uk/360-reviews/life-insurance/whole-life-insurance
  3. Lincoln Heritage Funeral Advantage. (2023, March 29). What is Burial or Funeral Insurance & How Does it Work? Retrieved from https://www.lhlic.com/consumer-resources/burial-funeral-insurance/
  4. Insurance Information Institute. (2023). What Are the Different Types of Term Life Insurance Policies? Retrieved from https://www.iii.org/article/what-are-different-types-term-life-insurance-policies
  5. Insurance Information Institute. (2023). What Are the Different Types of Permanent Life Insurance Policies? Retrieved from https://www.iii.org/article/what-are-different-types-permanent-life-insurance-policies
  6. Progressive. (2023). How Much Does Life Insurance Cost? Retrieved from https://www.progressive.com/answers/how-much-is-life-insurance/
  7. Securian Financial. (2021). Life Insurance Underwriting: Frequently Asked Questions. Retrieved from https://www.securian.com/insights-tools/articles/life-insurance-underwriting-faqs.html