Life insurance is one of the most common employer-provided benefits. This covers the basics of life insurance and the different types employers can offer to employees.

Types of Life Insurance

Life insurance is divided into two categories: term and permanent (also sometimes referred to as whole).

1. Term life insurance

Term life insurance has a specified coverage period (term), but can usually be renewed or converted into a permanent policy at the end of the term.

2. Whole life insurance

Whole life insurance is a type of permanent insurance that offers life-long coverage combined with a cash-value savings component. This type of policy has higher premiums than term life.

3. Universal life insurance

Universal life insurance is another type of permanent insurance policy that combines term insurance with the ability to earn interest on the cash value, paying a market rate of return. Cash value grows tax-deferred, and can be withdrawn or borrowed from the policy.

4. Variable life insurance

Variable life insurance is similar to universal life insurance in terms of flexibility and an investment aspect. However, instead of simply earning interest on the accumulated cash value, policy owners have more control over how to invest that cash.