Side by side
Compare the five main coverage types
The honest version: each of these solves a different problem, and the expensive mistakes happen when someone buys one to do another one's job.
| Type | How long it lasts | Relative cost | Cash value | Best for | Main risk |
|---|---|---|---|---|---|
| Term | 10–30 years, then expires | Lowest | None | Mortgage, young kids, income replacement | Outliving the term with a need still in place |
| Final expense | Entire life | Low premium, high cost per dollar | Small, builds slowly | Ages 50–85 covering funeral costs | Graded benefit period on guaranteed-issue policies |
| Indexed UL | Entire life, if adequately funded | High, and flexible | Index-credited, floor and cap apply | High earners who've maxed retirement accounts | Underfunding plus rising charges can lapse it later |
Relative cost compares premium per dollar of death benefit for the same applicant. Actual pricing depends on age, health, tobacco use, state, carrier, and policy design.
The shortcut
Start from the need, not the product
One question resolves most of the confusion: is the thing you're protecting against temporary or permanent?
Has an end date
Temporary needs → term
Once you reach the end date, the need is gone.
- A mortgage that will be paid off
- Children who will become financially independent
- Income replacement through your working years
- A business loan with a defined payoff
Never expires
Permanent needs → lifelong coverage
These don't expire, so the coverage shouldn't either.
- Funeral and end-of-life costs
- Coverage that stays in place regardless of age
- Tax-advantaged cash value you can borrow against
- A legacy amount for your family
Many people need both. A common structure is a term policy covering the mortgage and child-rearing years, plus a smaller final expense policy for burial costs later on. Term handles the temporary need cheaply; a permanent policy is there for the expenses that never go away.
Questions to ask any agent
- Are you captive to one carrier or independent? How many carriers can you quote?
- How are you compensated on this policy compared with the alternatives?
- What does the illustration look like using guaranteed values only?
- What happens if I miss a payment or fund it at a lower level?
- What would term cost for the same death benefit?
- Which values here are guaranteed by contract and which are projections?
- Coverage amount
- Debts + mortgage + years of income to replace + education costs − existing savings and coverage
- Timing
- Rates are set by age and health at application. Waiting rarely makes it cheaper
- Existing coverage
- Check whether employer coverage is portable — most isn't
- Second opinions
- For an IUL, a fee-only advisor who earns no commission can review the illustration and funding
Not sure which one fits?
That's what the questions are for. Tell us what you're protecting and a licensed agent will tell you which coverage matches — including when the cheaper option is the right one.
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