Best Life Insurance Companies in 2025
There are many , but they all fall under two categories: term life insurance, which is only in force for a set time, and permanent life insurance, which is designed to be in effect for your entire life. Permanent life insurance comes with a component. Depending on , having one or both of these types of policies could be an integral part of your financial plan.
With a , you and the life insurance company enter into a contract for a specified death benefit amount for a set number of years. Unlike permanent life insurance, term life insurance doesn’t have a cash value component, and because it’s only active for a set number of years, it’s possible to outlive your policy and receive no benefits. However, you may be able to convert it into a permanent life policy at the end of your term.
In contrast to term coverage, stays in place for your entire life (although, technically, a maximum coverage age of 90 to 121 does exist, depending on the company) as long as you pay the premiums. There are many types of permanent coverage, but the two main forms are whole and universal.
Whole life insurance
, a type of permanent life insurance, generally features fixed premiums and a cash value component. Although the policy terms cannot usually be changed once it is active, the cash value component could be advantageous, providing a financial cushion over time. Additionally, certain whole life policies offer the potential to earn dividends. These dividends, which are not guaranteed, may be used to enhance the cash value, pay premiums or be withdrawn as cash. However, keep in mind that the cash value typically accumulates slowly, so it’s important to assess whether this feature aligns with your long-term financial goals.
Universal life insurance
Another form of permanent life insurance, , is known for its flexibility. The premium and death benefit can be adjusted as needs or lifestyles change. It also has a cash value component with earned interest based on a fixed rate or how indexed accounts perform, depending on the policy.
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