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Last updated 11/14/2025
Life insurance provides financial support for loved ones if the policyholder passes away. After a policy is issued, the insurance company cannot cancel it due to changes in the policyholder’s health. Multiple types of life insurance are available, allowing individuals to select a policy that suits their specific needs.

Term Life Insurance
Term life insurance offers coverage for a set period of time. Policies are commonly issued for 1, 5, 10, or 20 years, or until a specific age (such as 65). A death benefit is paid only  if the policyholder dies during the term. This type of insurance can be a good choice when coverage is needed for a limited time or a specific financial obligation (such as a mortgage). Term insurance is generally more affordable than permanent insurance, particularly in the early policy durations. Types of term life insurance policies include:

• Level term insurance: Provides a fixed death benefit and premium amount throughout the term, typically 10, 20, or 30 years. These amounts do not change, even if the insured’s health changes.
• Decreasing term insurance: Offers a death benefit that decreases over time. This type is often used to cover debts that reduce over time, such as a mortgage.
• Renewable term insurance: Allows the policy to be renewed at the end of the term without proof of insurability, as long as premiums continue to be paid.
• Convertible term insurance: Gives the option to convert the term policy into a permanent policy that builds cash value. Premiums are usually higher to reflect this added benefit.
• Return of Premium (ROP): This feature refunds part or all of the premiums paid if the policyholder outlives the term and no death benefit is paid. These policies tend to cost more due to the potential for a refund.

Whole Life Insurance
Whole life insurance offers a fixed amount of coverage that lasts for the insured’s entire life. The benefit is paid only after the insured passes away. These policies are designed to build cash value over time, which grows without being taxed. This cash value comes from the premiums paid, minus any fees and insurance costs. Policyholders may borrow money against the cash value.

State laws require whole life policies to include nonforfeiture values. These are benefits that must be paid in cash or other insurance options if the policy ends due to missed payments or if the policy is surrendered.

Types of whole life insurance include:

• Nonparticipating whole life insurance policy: This type does not pay dividends. The insurer sets the premium, death benefit, and cash value when the policy is issued, and these amounts stay the same.
• Participating policy: This type may pay dividends based on the insurer’s financial performance. Dividends can be used to lower premiums or buy more coverage. These policies offer more flexibility but usually cost more.
• Indeterminate premium whole life insurance: This nonparticipating policy has premiums that can change each year based on the insurer’s costs and earnings. However, premiums cannot go above a set maximum. Initial premiums are usually lower than other types.
• Ordinary level premium whole life insurance: Premiums stay the same throughout the insured’s life or until the policy’s cash value matches its face value.
• Limited payment whole life insurance: Premiums are paid over a shorter time, but coverage lasts a lifetime. These policies build cash value faster and have higher premiums than ordinary whole life policies. They may be participating or nonparticipating.
• Single premium whole life insurance: This is a limited payment policy where coverage is bought with one lump-sum payment. It provides lifetime protection and immediate cash value.

Universal Life Insurance
Universal life insurance is a type of permanent coverage that combines term insurance with a cash account that earns interest without being taxed. In most cases, the amount paid for premiums and the death benefit can change based on decisions made by the policyholder. The policy remains active as long as the cash value is enough to cover insurance costs. Loans may be taken against the cash value.

Some universal life products are classified as variable universal life insurance, where funds are placed a separate account managed by the insurer. The interest earned in these accounts is not guaranteed and may decrease depending on market performance.

Another option is indexed universal life insurance, which includes both fixed and variable features. Interest earned in these policies is tied to external investment indexes, such as bonds or the S&P 500. These policies offer a guaranteed minimum interest rate.

The Ï㽶ÊÓƵ Life Insurance and Annuities (A) Committee monitors and coordinates all Ï㽶ÊÓƵ activity in this area. The Committee reviews new life insurance products and monitors regulatory issues to help protect consumers and maintain fair insurance markets. It also oversees working groups focused on topics like annuity suitability and life insurance illustrations.

The mission of the Life Actuarial (A) Task Force is to identify, investigate, and develop solutions to actuarial problems in the life insurance industry. This includes updating rules for reserves, mortality tables, and expense reporting. The Task Force also works with actuarial organizations to improve standards and develops tools like the Generally Recognized Expense Table (GRET) and the Generator of Economic Scenarios (GOES) to guide financial calculations and policy evaluations.