The New Jersey Society of Certified Public Accountants offers an overview of the most common types of life insurance:
Term insurance. Term life insurance policies offer death benefits only. Term insurance is simple to understand and it allows you to purchase the most coverage for the least amount of money.
Whole life insurance. Rather than insuring you for just a part or a "term" of your life, a whole life policy is designed to cover you for your entire life. Whole life policies cost more than term policies because, in addition to providing a death benefit, a whole life policy builds up what is referred to as "cash value."
Universal life insurance. Flexibility is the key selling point of universal life insurance. With this type of whole life insurance, you can increase or decrease the death benefit as your insurance needs change.
Variable life insurance. Variable life insurance differs from whole life insurance in that it allows you to invest the cash value of the policy in stocks, bonds or money market funds within the insurance company's portfolios.
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