Life insurance covers more ground than term and whole life. Different types address different needs, like short-term income replacement, lifelong coverage or end-of-life costs. Some stay affordable with basic coverage. Others build cash value or offer adjustable benefits. The main types and how they work:
Types of Life Insurance
The most common types of life insurance are term, whole, universal, variable and final expense. Specialty options may better suit certain situations.
Find the best type of life insurance for your needs.
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Updated: June 10, 2026
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Key Takeaways
There are several types of life insurance. Each offers different costs, coverage lengths and features.
Specialty types include no-exam, joint, group, mortgage protection, credit, and accidental death & dismemberment life insurance.
There are two main types of life insurance based on coverage length. Term life insurance provides temporary protection, while permanent life insurance offers lifetime coverage.
What Are the Different Types of Life Insurance?
Type | Coverage Length | Best for |
|---|---|---|
10 to 30 years | Affordable life insurance for a set period | |
Lifetime | Early planners with beneficiaries who rely on them financially | |
Lifetime | Permanent coverage with flexible payment options | |
Lifetime | High earners who are comfortable taking on investment risk | |
Lifetime | Seniors covering burial and end-of-life expenses |
Other options include group life insurance through employers, no-exam policies with simplified underwriting, joint coverage for couples or business partners and accidental death and dismemberment insurance. Each fits a specific situation and isn't a substitute for standard life insurance coverage.
Term Life Insurance
Term life insurance covers a set period of 10, 20 or 30 years (a few insurers offer 40-year terms). Die during the term and your beneficiaries get a death benefit, subject to policy terms and conditions. Outlive the policy and coverage ends with no payout. Term life costs less than permanent insurance and works simply. Most people buy it to protect dependents during working years.
- Affordable way to get financial protection
- Allows you to maintain coverage until you no longer need it
- Easy to apply for, with some of the best term life insurance providers not requiring a medical exam
- Need to apply for renewal after the set period
- Renewal often comes with higher premiums
- May be difficult to apply for as you age (though many providers have benefits specifically for older adults)
- Doesn't accumulate cash value
Pros
Cons
TERM LIFE CONVERSION OPTION
Need long-term coverage? Many term policies let you switch to permanent coverage without medical exams within set timeframes (usually the first 10 to 20 years). Start with cheap term coverage now and switch later if your needs change.
Whole Life Insurance
Whole life insurance is a type of permanent life insurance that provides lifetime coverage with fixed premiums and a guaranteed death benefit. Whole life insurance also builds cash value over time, which grows at a set rate and can be borrowed against. Because of its predictability and long-term value, whole life insurance is often used for estate planning, covering final expenses or leaving an inheritance.
Unlike term life insurance, whole life insurance doesn't expire. As long as you pay premiums, the policy stays active. Some versions also offer dividends or investment-linked growth, giving you additional financial flexibility.
- Offers coverage for your entire life
- Guaranteed payout for your beneficiaries when you die unexpectedly
- Allows you to take out a loan against your policy when needed
- Comes with fixed premiums and death benefits
- More expensive premiums than alternatives like term life insurance
- Investment component takes time to accumulate value
- Cancellation fees can be costly
- Borrowing may be difficult if you don't meet the minimum requirements
Pros
Cons
WHOLE LIFE INSURANCE CASH VALUE
Borrowing against your policy's cash value reduces both the available cash and the death benefit until the loan is repaid. Interest accrues on the balance, and the rate isn't always cheaper than other borrowing options. An unpaid loan can eventually cause the policy to lapse.
Dividends can be taken as cash, applied to lower premiums, used to buy additional coverage or left in the policy to grow with interest.
Universal Life Insurance
Universal life insurance (UL) is permanent life insurance with more flexibility than whole life. Premiums, the death benefit and cash value contributions are all adjustable as circumstances change. Part of each premium goes into a cash value account invested for potential growth.
UL policies don't guarantee investment returns. Cash value grows tax-deferred but tracks market performance, and losses can deplete the account below the level needed to keep the policy active. UL is best suited to people who are comfortable making long-term financial decisions and understand the investment component.
- Offers flexibility in premium payments
- Can increase or decrease your death benefit as your needs change
- Provides permanent coverage that lasts your lifetime as long as you maintain sufficient cash value
- Costs less than whole life insurance while still building cash value
- Lacks guarantees
- Cash value growth depends on interest rates set by the insurer, which can fluctuate
- Policy could lapse if the cash value runs out
- Requires more active management than whole life insurance to ensure it stays in force
Pros
Cons
UNIVERSAL LIFE NO-LAPSE GUARANTEE OPTION
Some universal life policies include a no-lapse guarantee. Others make it available as an optional rider at added cost. The guarantee keeps coverage active even if the cash value drops to zero, as long as minimum premiums are paid. Without it, flexible premium payments carry more risk of the policy lapsing.
The policy may lapse if contributions fall short and the cash value can't cover insurance charges. Policy lapse risk varies by insurer and policy design. Consult your policy documents for specific lapse provisions.
Variable Life Insurance
Variable life insurance is a form of permanent coverage that lets you invest the policy’s cash value in different accounts such as mutual funds, stocks and bonds. It comes in two types: variable whole life with fixed premiums and variable universal life with flexible premiums.
Your cash value, and in some cases your death benefit, can increase or decrease based on market performance. Most policies include a guaranteed minimum death benefit even if the market performs poorly. Still, your cash value can still go down if the investments lose value.
- Provides the highest potential for cash value growth among all life insurance types
- Gives control over how cash value is invested
- Allows you to choose from various investment options offered by the insurer
- Offers permanent coverage that lasts your lifetime
- Carries significant investment risk
- Cash value can decrease if chosen investments underperform
- Requires active management and investment knowledge to choose appropriate funds
- Comes with higher fees than other life insurance types due to investment management costs
- Typically fixed at higher amounts than whole life insurance
Pros
Cons
Final Expense Life Insurance
Final expense life insurance is a permanent policy that covers funeral, burial and related end-of-life costs. Coverage amounts are low, often between $5,000 and $25,000, but premiums are typically affordable, and acceptance rates are high, even for older adults or those with health issues.
Final expense insurance is best for people whose loved ones don’t need large financial support but would benefit from help covering final expenses. If appropriately structured, term and whole life insurance policies can also serve this role.
- Offers guaranteed or simplified approval without a medical exam
- Coverage goes into effect quickly, often within one to three days
- Premiums remain level for life
- Benefits pay out quickly to cover immediate funeral and burial expenses
- Expensive per dollar of protection
- Costs more than term life insurance for the same coverage amount if you can qualify for traditional policies
- Coverage amounts capped at low limits, typically $5,000 to $25,000
- May not pay full death benefit if you die within the first two or three years
Pros
Cons
Other Types of Life Insurance
Other life insurance products are designed for specific needs. There are also various types based on the type of underwriting (how insurers evaluate your health and lifestyle to determine your premiums and coverage eligibility).
Different Types of Life Insurance by Coverage
- First-to-die pays when the first insured person dies, helping the surviving spouse or dependents maintain financial stability.
- Last-to-die pays only after both policyholders pass away. It’s often used for estate planning, covering estate taxes or passing wealth to heirs.
Annual Renewable Life Insurance
An annual renewable term (ART) policy renews yearly without requiring a new medical exam. It starts with lower premiums, but the cost increases each year as you age. While it offers short-term flexibility, the rising cost can make it expensive over time. ART is often used for stopgap coverage between longer-term policies.
Mortgage Protection Life Insurance
Mortgage life policies are structured to pay off your remaining mortgage balance if you die before the loan is repaid. The death benefit decreases alongside your mortgage, and the lender is usually the beneficiary.
Credit Life Insurance
This type of temporary life coverage is offered with loans or lines of credit. If you pass away before the debt is paid off, the policy pays the remaining balance. The benefit decreases as the loan is repaid, and the policy ends once the balance hits zero.
Accidental Death and Dismemberment Insurance
Accidental death and dismemberment (AD&D) insurance pays a benefit if the insured dies or suffers serious injury, such as loss of sight, hearing, speech or a limb, due to an accident. It’s inexpensive and offered as a standalone policy or as a rider on traditional life insurance. But it doesn’t cover illness-related deaths and is generally considered supplemental protection.
Group Life Insurance
Group life insurance is offered through employers or organizations and covers a pool of people with a standard set of benefits. The employer often subsidizes premiums, and coverage is usually more affordable than individual whole life insurance.
Group life coverage has limitations. You can’t customize your policy, and everyone receives the same benefits regardless of individual needs. Coverage usually ends when you leave the employer, and though exams aren't required, some group policies still deny applicants with terminal illnesses, hazardous jobs or risky lifestyles.
Joint Life Insurance
Joint life insurance covers two people, often spouses, under one policy. It pays out either after the first death (first-to-die) or after both policyholders pass away (last-to-die):
This type of policy can be more affordable than buying two separate plans, but it may offer less flexibility if the couple separates or has differing coverage needs.
Different Types of Life Insurance by Underwriting
- Simplified issue policies offer higher coverage limits (typically up to $250,000) and lower premiums than guaranteed acceptance, but you must be in reasonably good health to qualify.
- Guaranteed acceptance life insurance plans require no medical questions at all, making them accessible to nearly anyone. These policies come with higher premiums, limited coverage (usually capped at $25,000 to $50,000) and a waiting period. If the insured dies within two years, beneficiaries receive only the premiums paid plus interest.
Fully Underwritten Life Insurance
Most life insurance policies require a detailed underwriting process to assess your risk, often including a medical exam. Insurers consider your age, health, lifestyle and even your hobbies to determine eligibility and pricing. The more detailed and accurate your health information, the more likely you are to qualify for lower premiums.
Fully underwritten policies require detailed health questionnaires, medical exams and sometimes medical records review, but offer the best rates for healthy applicants.
No-Exam Life Insurance
If you have medical conditions or prefer to skip the exam, some life insurance options offer faster, more accessible coverage, though often at a higher cost and with lower benefit limits.
Here are the main types of life insurance that don’t require a medical exam.
How to Choose the Best Type of Life Insurance
Choose coverage that fits your financial goals and the needs of the people who depend on your income.
- 1Assess Your Needs
Take stock of your income, debts, living expenses and future financial obligations. Factor in what your dependents would need if your income stopped. Our life insurance calculator gives you a quick coverage estimate.
- 2Understand the Different Types of Policies
Before comparing prices, get clear on what separates term, whole, universal and other policy types. The type you choose affects cost, flexibility and how long coverage lasts.
- 3Compare Quotes
Life insurance costs vary across insurers for the same coverage. Get quotes from several companies before deciding. Online tools and independent brokers both give you side-by-side comparisons.
- 4Review the Policy Details
Read the full policy before committing. Check terms, conditions, exclusions and the claims process. Ask your agent to explain anything that isn't clear.
- 5Consider the Insurer's Reputation
Verify the insurer's financial stability through ratings from AM Best or Standard & Poor's and read customer reviews before buying.
- 6Regularly Review and Update Your Policy
Coverage needs shift with major life events: job changes that affect income, marriage or divorce, the birth or adoption of a child, a home purchase, significant debt changes or a meaningful improvement in health. Review the policy at each of these points and update it accordingly.
*Life insurance regulations and available products vary by state. This information is for educational purposes only and should not replace professional insurance advice.
Life Insurance Types: Bottom Line
The main types of life insurance range from term and whole life to universal, variable, final expense and niche policies like AD&D and joint coverage. They each serving different purposes based on your age, financial goals, health status and coverage needs.
Compare rates, review your coverage needs and consider how much flexibility you'll want as your life changes.
Different Types of Life Insurance: FAQ
We answer common questions about life insurance types.
What is the cheapest type of life insurance?
Term life insurance is the least expensive life insurance, providing coverage for a specific period, typically 10 to 30 years, without a cash value component. Term life insurance premiums are lower than those of permanent life insurance policies like whole life or universal life.
What typically changes with the length of a term?
Longer-term life insurance policies often come with higher premiums because the longer the term, the more likely a provider will have to pay a death benefit. But this may not be the case if you opt for a decreasing term policy.
What are the different types of permanent life insurance?
Permanent life insurance covers three main types: whole life, universal life and variable life. All three last your entire life and build cash value. Whole life has guaranteed premiums and a guaranteed death benefit. Universal life has flexible premiums and an adjustable death benefit. Variable life lets you invest the cash value in market-based options.
What kind of life insurance do I need?
Get a life insurance policy that suits your lifestyle by considering your current income, household expenses, dependents, income sources and term-length needs. The right policy for others may not work best for your situation.
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About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident insurance expert. He has spent nearly a decade analyzing the market, first at LendingTree and now at MoneyGeek, where he has produced original research on hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
He covers economics and insurance at MoneyGeek, and his work has been featured in The Washington Post, The New York Times and NPR, among other outlets.
Like all MoneyGeek analysts, he draws on independent cost and consumer experience data. No insurance company partnership influences his recommendations.
Fitzpatrick earned his degrees from Johns Hopkins University (M.A. Economics and International Relations) and Boston College (B.A.). He began his career in financial risk management at State Street. He's also a five-time “Jeopardy!” champion.