What are the two main types of life insurance policies?

Term and whole life insurance are indeed the two main types of life insurance policies available to consumers.

Term life insurance provides coverage for a specified period, usually ranging from a few years up to several decades. This type of policy pays a death benefit only if the insured passes away within the term of the policy. It is typically more affordable than permanent life insurance and is ideal for temporary financial protection needs, such as covering a mortgage or providing for dependents during their raising years.

Whole life insurance, on the other hand, is a form of permanent life insurance that not only provides a death benefit but also includes a cash value component that grows over time. The policy remains in force for the lifetime of the insured, as long as premiums are paid. Whole life insurance is often utilized as a long-term financial planning tool, providing both insurance protection and a savings element.

While other types of insurance policies like universal and variable exist, they are variations on the broader categories of term and whole life insurance. Universal life allows for flexible premiums and adjustable death benefits, while variable life includes investment options for the cash value. However, the foundational types of life insurance that most individuals will encounter and choose between are indeed term and whole life policies.