With so many kinds of life insurance to choose from, you can feel overwhelmed. It helps to know what you need a policy to do, then find the best match.

If you're looking for life insurance, you're in luck -- there are many types of life insurance to choose from. You might also see this as a downside -- with so many choices, you can worry you're making the wrong pick.

You don't want to end up paying for a policy that isn't right. And switching to a different policy later will mean higher rates due to your higher age and possible new medical conditions.

Many life insurance buyers look at term vs. whole life insurance. Most policies sold are whole life insurance.

But that doesn't mean whole life insurance is right for you. Here's a look at the main types of life insurance and who they're a good fit for.

Term life insurance

Good for people who: Want life insurance to cover specific debts or a certain number of years. For example:

  • The years until a mortgage or credit card debt is paid off
  • The years until children graduate college

How it works: With term life insurance you make two choices: The amount you need and the number of years you want coverage. It's the cheapest form of life insurance. There's a chance you could outlive the policy. If that happens, there's no payout. However, it's not money wasted because you had coverage in place for the time period you selected.

Term life insurance has no cash value, meaning you can't withdraw money from the policy.

Compare: Life insurance quotes

Whole life insurance

Good for people who: Want life insurance with cash value, with a guaranteed rate of growth for the cash value, and a policy that will be there no matter when they die.

How it works: Whole life insurance typically has a level premium (meaning your payment doesn't change), a guaranteed interest rate on the cash value and a guaranteed death benefit amount. You might hear people use the words "whole life" and "permanent life" insurance interchangeably, but whole life is a subset of permanent life insurance. It's also the most expensive way to buy permanent life insurance, due to all the guarantees in it.

Universal life insurance (UL)

Good for people who: Want life insurance that will last no matter when they die, with the possibility to vary premiums and the death benefit amount (with indexed and variable UL policies).

How it works: It's important to know the differences among universal life insurance policies if you're thinking of purchasing one. The three main types of universal life are:

  • Guaranteed: Generally has no cash value but stays in effect as long as you pay the premiums.
  • Indexed: Links your cash value to a financial index such as the S&P 500.
  • Variable: Puts your cash value into investment "sub-accounts" that you should monitor. It's the riskiest type of UL because you could lose your cash value if the investments tank.

Some UL policies let you vary your premium amounts and the death benefit, within certain parameters. So as your situation changes your life insurance can be flexible.

Annual rates for life insurance types for a $100,000 policy

Gender and age 10-year term life 20-year term life 30-year term life

Guaranteed universal
life (to age 100)

Whole life
Male, 30






Male, 40






Female, 30






Female, 40






Source: EverQuote research. We average the three cheapest rates found for term and universal life and the two cheapest rates found for whole life. Rates are for men and women of average height and weight, in very good health. Your own rates will be different.

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Types of underwriting

Layered onto the types of life insurance is a variety of underwriting methods. This refers to how the policies are priced and is based on how much information about you the life insurer has. Here's a quick comparison:

Underwriting method What to know
Fully underwritten Takes your personal and medical information into account, and could include a life insurance medical exam. This is generally the way to get the best price, even if you have a couple medical issues.
Simplified issue Applications for simplified issue policies ask a few questions and don't require a life insurance medical exam. If you answer "yes" to any of the questions you'll be disqualified.
Guaranteed issue Applications for guaranteed issue policies have no medical questions, no exam and you can't be turned down. It may sound convenient, but it's the most expensive way to buy life insurance. Available coverage amounts could be small, and the policy will likely not pay out the full amount if you die within the first few years of having it.

Other types of life insurance

Burial and final expense: These are generally whole life insurance policies in small coverage amounts, meant only to pay for a funeral and last medical bills.

Mortgage life insurance: Covers only the current balance of your mortgage, and the payout goes right to your lender.

Survivorship life insurance: Insures two lives on one policy, such as a husband and wife. It pays out when both have died.