Discover Your Options: Choosing the Best Life Insurance Policy for Your Coverage Needs

Understanding Life Insurance Policies

There are many types of life insurance policies that can help protect your family. They all fall into two main categories: term and permanent.

With term life insurance, you receive coverage for a defined length of time, like ten years. If you pass away during that time, money is paid to your beneficiaries. However, once the term ends, you must secure new coverage or go without.

On the other hand, permanent life insurance (such as whole life and universal life) provides lifelong death benefit coverage. It also includes a cash value component. This can help you build your retirement nest egg while offering protection and other financial benefits along the way.

To help you decide which kind of protection will work best for you, this guide will cover:

• The basic features of a life insurance policy

• The different kinds of policies you can obtain through GiveLife, including:

- Term life insurance

- Whole life insurance

- Universal life insurance

- Indexed universal life insurance

- Final expense insurance

- Simplified issue and guaranteed issue life insurance

• How to choose the right policy for you

  
  

Choosing the right life insurance policy depends on your financial goals, current budget, and long-term plans. This guide will help you understand your options and make an informed choice. When you're ready to buy life insurance, you can choose from various methods, such as contacting a local agent or financial professional, exploring online marketplaces, or reaching out directly to insurance companies.

What Are the Basic Features of a Life Insurance Policy?

At its core, a life insurance policy is a promise to provide financial protection to your loved ones if you’re not there. The way a policy carries out that promise is defined by a few key features:

• The death benefit: This is the amount of money the insurance company will pay when the insured person dies. Typically, this benefit is income-tax-free. The life insurance company is responsible for assessing risks, processing claims, and determining premiums.

• The beneficiaries: These are the people who receive the death benefit. It can go to a single person, like a surviving spouse, or be divided among several people. A beneficiary doesn’t have to be a blood relative or even a person; you can leave all or part of your death benefit to an entity, such as a charitable cause.

  
  

• The policy length or term: This is the time period that the insurer agrees to pay a death benefit. A term policy is defined for a specific number of years, such as 10, 20, or 30. A permanent policy lasts for the life of the insured.

  
  

• The premium: This is the monthly or yearly payment needed to keep the policy active.

  
  

• The cash value: The policy’s cash value component can build over time. It can be cashed out or borrowed against. A permanent life insurance policy is a cash value life insurance policy, while a term policy has no cash value.

  
  

All of these features should be considered when choosing a policy that fits your needs.

The Different Types of Life Insurance Policies Offered by GiveLife

1. Term Life Insurance

A term life policy provides coverage for a specific term or length of time, typically between 10 and 30 years. It is sometimes called “pure life insurance” because it has no cash value. It’s designed solely to give your beneficiaries a payout if you die during the term.

Most individual term policies have level premiums, meaning you pay the same amount every month. When the term expires, there’s no more coverage. You either go without or get a new policy, which will likely be more expensive. Many providers, including Guardian, allow you to convert a term policy to permanent life insurance during the coverage period.

This calculator can help you determine the cost of term life insurance at your desired coverage level. Consider how many years your family will need financial protection. For most people, this lasts until the kids are grown, the house is paid off, and there's some money to protect the surviving spouse.

Who Should Consider Term Life Insurance?

Term life insurance generally has lower premiums, helping you save on monthly expenses. However, it provides a benefit for a limited time and lacks a cash value component. It may be a good fit for:

• Young families: Families wanting financial protection until their children come of age may choose a 10- or 20-year policy.

• Families with mortgages: Those wanting coverage until their mortgage is paid off can benefit from term life.

• Temporary financial protection: Households seeking temporary protection, like a couple approaching retirement, may choose term life just in case one spouse passes before retirement benefits kick in.

  
  

2. Whole Life Insurance

A whole life policy is a permanent life insurance policy that provides coverage for your entire life. It includes a cash value component, where a portion of your premium goes into a cash value account that grows over time on a tax-deferred basis.

Compared to other forms of permanent life insurance, a whole life policy has three defining characteristics:

• The level premium payments remain the same for life.

• The death benefit is guaranteed as long as premiums are paid.

• The policy includes guaranteed cash values that grow at a guaranteed rate.

  
  

Cash value provides several significant benefits you can use while you’re still alive. It takes a few years to grow into a useful amount, but once it does, you can borrow against it, use it to help pay premiums, or even surrender it for cash to live on in retirement.

When you get this type of policy from a mutual company like GiveLife, your cash value can earn annual dividends. While not guaranteed, Guardian has paid participating policyholders a dividend every year since 1868.

Who Should Consider Whole Life Insurance?

This type of policy may be a good choice if you’re concerned with:

• Building wealth: It allows you to accumulate cash value on a tax-deferred basis, making it a good savings vehicle.

• Estate planning: It can serve as a powerful estate planning tool.

• Wealth transfer: It can be used to pass wealth on to beneficiaries in a tax-efficient manner.

• Final expenses: It can cover end-of-life expenses, such as medical care, outstanding debts, and funeral costs.

  
  

3. Universal Life Insurance

A universal life policy offers the same cash value and lifetime coverage benefits as whole life. However, the premium payments are flexible. You can raise or lower the amount you pay within the limits of the policy.

Who Should Consider Universal Life Insurance?

This type of policy may be a good fit for:

• Households with variable income: Premium payments can be adjusted to adapt to changing income levels.

• Faster cash value accumulation: If you choose to pay higher premiums, your policy will accumulate cash value faster.

  
  

4. Indexed Universal Life Insurance

Indexed universal life insurance aims to balance investment risk and reward. Like other forms of universal life, indexed policies also offer flexible premiums.

With indexed universal life, you can link your cash value growth to the performance of a stock market index, such as the S&P 500. These policies use downside protection and upside caps. This means that during a bad year for the market, your cash value will not decline. In a good year, your cash value won’t grow as much as the index itself. Essentially, you’re trading a bit of upside potential for downside protection.

Who Should Consider Indexed Universal Life Insurance?

Indexed policies may be a good fit for those who want to enjoy some stock market returns without taking on a lot of stock market risk.

5. Final Expense Insurance

Final expense insurance is a form of life insurance intended to cover end-of-life expenses, such as funeral and burial costs. Older individuals often buy final expense insurance to protect loved ones from covering these costs out-of-pocket. While the premiums for these policies tend to be modest, there is no cash value component, and the death benefit is very limited.

6. Simplified Issue and Guaranteed Issue Insurance

Most life insurance policies require a medical exam as part of the application process. Simplified issue and guaranteed issue policies don’t require a medical exam. These policies are primarily designed for older applicants or those with serious health problems who may not qualify for policies that require an exam.

Some term policies and most final expense policies are either simplified issue or guaranteed issue. When applying for a simplified issue policy, you'll fill out a health questionnaire instead of undergoing an exam. With a guaranteed issue policy, no medical information is needed to qualify for approval. These policies typically offer lower coverage levels than other types, and premiums tend to be higher because the insurance company assumes a higher risk.

Whole Life Insurance vs. Term Life Insurance

As you can see, annual premiums for whole life policies are substantially higher than term life. Here’s why:

• The policy length: A whole life policy lasts your entire life, while a term policy only provides coverage for a limited number of years. With whole life, your beneficiaries are guaranteed to receive a death benefit regardless of when you pass. With term life, once the term expires, your beneficiaries are no longer entitled to a death benefit.

  
  

• The cash value: A term policy has no value once it expires. A whole life policy accumulates cash value, making it a lifelong asset that can help you meet financial goals up to and after retirement.

  
  

How to Choose the Right Policy for You

Before making your final decision, speak to a financial professional or insurance agent about the various life insurance plans. Consider:

1. What length of time do you need coverage for?

   Term life covers you for a specific period (typically 10, 20, or 30 years), while whole life covers you for your entire life (as long as premiums are paid).

   
   

2. How much coverage do you need?

   Regardless of the type of policy, you’ll need to choose the coverage amount. Death benefits can range from as little as $10,000 to $1 million or more, significantly affecting your premiums.

   
   

3. Are you interested in growing your wealth?

   Certain forms of life insurance offer a cash value component that grows your money in a tax-deferred manner.

   
   

4. How much coverage can you afford?

   You’ll need to know how much you can afford for monthly premiums.

   
   

Once you’ve made a decision, remember: No matter what kind of policy you get, ensure it’s from an experienced insurer that’s financially strong. One of the main benefits of having life insurance is that it provides a level of certainty in a world that is anything but. Financial strength ratings are an objective way to gain assurance that the company will be there for your family many years down the road.

Frequently Asked Questions About Types of Life Insurance

What type of life insurance is best?

There is no correct answer to this question. The best type of life insurance for you depends on your life circumstances, your financial goals, and your budget. Be sure to explore all your options before making a decision.

How much does a $1,000,000 insurance policy cost per month?

There is no one answer to this question. Life insurance premiums vary widely and depend on several factors, including the type of coverage, the length of coverage, the policyholder’s age, gender, health status, and more.

That said, as of October 2024, the average monthly premium for a $1,000,000 whole life policy was $1,161 for a 40-year-old female non-smoker in good health and $1,372 for a 40-year-old male non-smoker in good health. As of 2025, the average monthly premium for a $1,000,000 20-year term life policy is $41 for a 40-year-old female non-smoker in good health and $49 for a 40-year-old male non-smoker in good health.

What happens if you outlive your term life insurance?

If you outlive your term life insurance policy, the policy simply expires. You will not need to keep paying premiums, but there will be no death benefit paid when you pass. That said, if you wish to be covered, you can purchase a new term policy.