Which of the following types of life insurance could not be described as an investment with a savings component?

Term life insurance

Is the most basic, and often least expensive, form of life insurance for people under age 50. A term policy is written for a specific period of time, typically 1 to 10 years, and may be renewable at the end of each term. Also, the premiums will likely increase at the end of each term and can become prohibitively expensive for older individuals.

Universal life insurance

Is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also more flexible in regard to premiums and face value. Premiums may be increased, decreased, or deferred, and cash values can be withdrawn. You may also have the option to change the amount you are insured for, known as the face amount. Universal life policies typically offer a guaranteed* return on cash value. Premiums may be increased, decreased, or deferred, and cash values can be withdrawn.1

Variable life insurance

Generally offers fixed premiums and the ability to invest your cash value in a choice of stock, bond, or money market-based investment options offered by your insurer. Cash values and death benefits can rise and fall based on the performance of your investment choices.

Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options may be volatile. These investment options are subject to market risk including loss of principal.

On the plus side, capital gains and other investment earnings accrue tax-deferred as long as the funds remain invested in the insurance contract.**

* All guarantees are backed by the claims paying ability of the issuing company.
** Variable investment options within variable life insurance policies are subject to fluctuation in value and market risk, including the possibility of loss of principal. Variable life insurance policies are sold by prospectus.  Please consider the charges, risks, expenses and investment objectives carefully before purchasing a variable annuity contract.  For a prospectus containing this and other information, please ask your Financial Professional.  Read it and consider the information carefully before purchasing a policy.

Withdrawals from life insurance policies may be subject to fees, penalties, and income taxes depending on the specific life insurance policy and the policyholder’s tax situation. Withdrawals reduce the policy value and death benefit.

Life insurance contains exclusions, limitations, and terms for keeping it in force.  For costs and complete details contact a financial professional.  

This information is provided for informational purposes only. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. 

Please be advised that this document is not intended as legal or tax advice.  Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.

Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a variable life insurance.  For a prospectus containing this and other information, please contact a financial professional.  Read it carefully before you invest or send money.

Equitable Financial Life Insurance Company (New York, NY) issues life insurance and annuity products. Securities offered through Equitable Advisors, LLC, member FINRA, SIPC. Equitable Financial Life Insurance Company and Equitable Advisors are affiliated and do not provide tax or legal advice.

There are two basic life insurance options: term and permanent. Term lasts for a specific, pre-set period. Permanent lasts your entire lifetime.

Depending on your needs, you may want the affordability of term life which is most often used for temporary, short-term needs like your mortgage. Or, you may prefer the lifelong protection and cash value that most permanent life insurance products offer.

Consider some of these key differences to decide which is right for you.

1. Length of coverage. Our term life insurance provides coverage for 1-, 10-, 15-, 20-, 25- or 30-year terms, and it’s designed for flexibility. Permanent insurance, which includes whole life and universal life, is designed for lifelong financial protection, as long as the policy’s in force.
2. Cost of premium. Initially, term life premiums are generally lower than permanent life. However, term life premiums typically increase upon each renewal, while permanent life premiums stay the same.*
3. Cash value. With most types of permanent insurance, there is a savings component known as cash value; the longer you pay into your policy, the more its cash value grows. You can choose to cash in or borrow against your permanent life policy and use the funds as needed. Term insurance does not accumulate cash value because it doesn’t have a savings component.
4. Convertible policies. If you have a term insurance policy, you can convert it to a permanent policy. Permanent policies are not convertible.
5. Death benefits. All our life insurance products pay a death benefit upon the insured person’s death if the contract and term have not expired and are still in good standing.

Which is best for you?

If your main concern is affordability, term life insurance starts with the lowest monthly premium. Term Life 1 even offers a one-year, guaranteed-renewable term.

If you’re looking for the best overall solution for you and your family, the decision of term versus permanent doesn’t have to be an either/or situation. Often, the best choice is a combination of both types of insurance. The key is finding a solution that matches your duration and insurance needs.

If you have questions about life insurance, contact your local Financial Advisor. They’ll be happy to discuss your insurance needs and solutions. Have you considered finding your balance of life insurance and investments? Together they help provide complete financial security.

*Universal life premiums can change upon client request.

What are the 3 main types of life insurance?

Which type of life insurance is also an investment?

What are 4 types of whole life policies?

Which of the following life insurance policies combine term insurance with an investment elements?