1. Term Life Insurance
Term life insurance is a type of permanent insurance policy that lasts for a specific amount of time. You pay a premium for the coverage over the term of the policy, and then at the end of the term, the policy expires. If you die before the term ends, your beneficiaries receive the death benefit. If you survive until the end of the term without dying, you don’t get any money.
2. Whole Life Insurance
Whole life insurance is similar to term life insurance except that whole life policies have no expiration date. Instead, the premiums continue to accumulate throughout the insured’s lifetime. When the policyholder dies, the proceeds go directly to his or her beneficiaries.
3. Universal Life Insurance
Universal life insurance combines the features of both term life insurance and whole life insurance. Premium payments begin immediately after purchase and continue forever. At some point in the future, however, the policyholder may choose to stop paying premiums and let the policy lapse. In this case, the beneficiary receives the full death benefit.
An annuity is a contract between two parties where the insurer agrees to make periodic payments to the holder of the annuity. These payments are based on a formula set forth in the contract. The payments are guaranteed for a specified period of time, called the annuitant’s retirement age. After the retirement age, the payments cease.
5. Variable Life Insurance
Variable life insurance is similar to universal life insurance except that the amount of each payment varies depending on how much the policyholder pays in premiums. As long as the policyholder continues to pay premiums, the amount of the payments remains constant. However, if the policyholder stops making payments, the amount of the remaining payments decreases.
6. Indexed Annuities
Indexed annuities combine the features of variable life insurance and annuity contracts. Like variable life insurance, indexed annuities guarantee fixed payments for a certain period of time. But unlike variable life insurance, indexed annuities are linked to an investment index, such as the S&P 500 stock market index. So, as the value of the index rises and falls, the payments increase and decrease accordingly.
7. Fixed Indexed Annuities (FIA)
Fixed indexed annuities are similar to indexed annuities except that they guarantee a fixed rate of return instead of an investment index.