Why do we need life insurance? Well, the fact is, we don’t all need it. But if you have a family or people who depend on your income, it is definitely something you should consider buying in order to protect your loved ones. Life insurance can be difficult to grasp due to the different types that are available. This table lists some of the similarities and differences to help you figure out which way to go. Do consult a professional before you make your final choice.

There are three main types of insurance and two variations. The basic policies are term life, whole life and variable life. Variations are universal life and variable universal life.

Term - Least expensive - Pays beneficiary lump sum when you die - Policy limit and death benefit one and the same - Premium likely to go up periodically

Whole - More expensive than Term - Offers low-risk cash value account so money is invested to grow over time - Insurance company manages account - May not invest or split money into separate accounts - Premium is fixed, not flexible - Some policies have option to receive dividends or apply dividends to premium payments - May withdraw money - Pays either death benefit or cash value, not both (cash value is the amount available if you surrender a policy early or borrow against it)

Variable - More expensive than Term - Also invests money into cash account - Pays death benefit - Low-risk, tax-free account - May be riskier than others because allows death benefit to vary in relation to fund returns of cash value account - May borrow from it during your lifetime - No guarantees regarding value of cash account - Premium fixed, not flexible

Universal - More flexible than whole or variable - Low risk cash value account - Tax deferred accumulation of funds - Market rate of interest on cash account - Borrow or withdraw during lifetime - Premium flexible - Face value flexible - Like whole life, may not invest or split money into separate accounts - May not move money from one account to another

Universal Variable - Most flexible and expensive - Low-risk, tax-deferred cash accounts - You have more control of cash value accounts - Offers separate investment accounts, like money market, stock, and bond funds - Requires you to manage your own accounts - Value rests on your investments - May withdraw or borrow money during lifetime