Q: What are the differences between whole life insurance, universal life insurance, final expense insurance, and term life insurance?

A: Whole life and universal life are types of “permanent” life insurance. The amount paid to your beneficiaries upon your death, known as the face value of the policy, remains the same throughout your life, and in most cases, the amount you pay each month, known as the premium, also remains the same.

You continue paying premiums until you reach a certain age, usually age 90, 100, or 121, or until you pass away.

A Final Expense policy is a whole life policy usually purchased later in life, with the primary purpose to cover a person's final expenses, such as funerals, medical bills, and perhaps household expenses for a survivor as they transition to life without their loved one.

These policies usually have a face value of between $5,000 and $50,000. Costs may be higher because they are usually purchased by or for seniors, who, obviously, have a shorter expected lifespan ahead of them.

As long as premiums are paid, final expense coverage stays in force for life, and, in most cases, the cost will stay the same for life.

A term life insurance policy is coverage for a certain period of time, usually 10, 20, or 30 years. These are the types of policies that you are likely to see advertised on television.

Term insurance is especially useful in helping provide income for families or other beneficiaries should the breadwinner die prematurely. A high face value on a term policy may be needed, for example, during your child-raising years.

Term policies do not build up cash value. After your term expires, you must apply for a new policy if you wish. That new policy will cost more because you are now 10, 20, or 30 years older.

There is no “best” kind of life insurance policy. Some people may be best served by having a universal life policy, while another would benefit most from a term policy, and yet another from a small final expenses policy. Some people may be best served by having more than one kind.

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