UNIVERSAL LIFE

Universal Life Insurance is a cash value policy similar to Whole Life, but it offers more options. Part of your Universal Life premiums pay for pure insurance protection, while another portion is invested to build cash value. With Universal Life you earn market interest rates on your cash value.

Universal Life offers you more flexible premium payment options, including additional payments to build up your cash value. This allows couples to cut back on their premium payments when they buy a home, have a child, or need income for their children's college tuition. Later, when their income increases or expenses decrease, they can pay more.

VARIABLE UNIVERSAL LIFE (VUL)

Variable Life Insurance is similar to Universal Life but differs because you are in control of your investments. You have a choice of investing your cash value in a common stock fund, bond fund, or money-market fund.

If your investment increases over the amount of the interest rate, your death benefit rises. If your investments perform poorly, you may have to increase premiums to keep the policy in force.

A Whole, Universal, or Variable Life policy may be your best option if you think you'll need help financing your children's college education or want to build up retirement funds.

Besides these four basic types of life insurance, you can also buy optional policies and riders.

First-To-Die Policy covers both husband and wife and costs less than two separate policies. When the first spouse dies, the surviving spouse will receive the death benefit.

Second-To-Die Policy is the opposite of the First-To-Die Policy. Death benefits are paid after both spouses die to help cover estate taxes.

Whole Life with Family Rider combines the advantages of Whole Life and Term Life. If a spouse dies, the surviving spouse gets a lump sum death benefit from the Whole Life portion and a monthly income for a specified time from the Term Life portion.