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Policy Types

Understanding the different types of life insurance

Read this informative article on the differences between whole, universal and term life insurance policies and how some life insurance options can earn cash value.

Life insurance policies have two main categories: term and permanent.

Term life insurance

You can think of term life insurance as temporary life insurance. When you buy a term policy, you pay a fixed amount for coverage with a set expiration date. For example, a 20-year term policy would remain in force for 20 years from the day the coverage started as long as premiums were maintained. If you died during this period, your designated beneficiaries would receive the policy death benefit. If you live past your policy's term period and you want to remain insured, you'd need to buy another life insurance policy, or pay a new premium amount that may be significantly higher than your previous payments.

Permanent life insurance

In contrast, permanent life insurance policies don't have a set expiration date. These policies are designed to last your entire life, provided you keep making your required premium payments on time. Permanent life insurance policies offer an additional feature known as “cash value.” This is money in your policy that you can withdraw or borrow against. It is important to note that loans against an insurance policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest. There are three common types of permanent insurance policies:

Whole life insurance

Whole life insurance policies have a fixed premium, meaning you need to pay the same amount each year. Whole life insurance also provides steady, fixed growth on your cash value.

Universal life insurance

Universal life insurance policies have flexible premiums. You can change how much you pay each year; though you need to pay a minimum amount or the policy will lapse. Your earnings in a universal life policy can vary based on the specifics of your policy and the interest rates that are credited. Some years, universal policies may earn more than whole life and others they may earn less.

Variable life insurance

Variable life insurance policies allow you to invest a portion of your premium into the insurer's separate account, providing access to professionally managed investment options. You can potentially earn higher cash value with these policies. However, if your chosen investment options under-perform (or if sufficient premiums are not paid), the policy may lapse or not accumulate sufficient value to maintain the policy.



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Variable Life products issued by Protective Life Insurance Company (PLICO) in all states except New York and in New York by Protective Life & Annuity Insurance Company (PLAICO). Securities offered by Investment Distributors, Inc. (IDI). All companies located in Birmingham, AL. IDI is the principal underwriter for registered insurance products issued by PLICO and PLAICO, its affiliates.
Investors should carefully consider the investment objectives, risks, charges and expenses of the applicable variable universal life insurance policy and its underlying investment options before investing. This and other information is contained in the prospectuses for the applicable variable universal life insurance policy and its underlying investment options. Investors should read the prospectuses carefully before investing. Prospectuses may be obtained by contacting PLICO at 800.265.1545.

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.