Which type of life insurance generally has lower premiums?

Term life insurance is known for its generally lower premiums compared to whole life, universal life, and variable life insurance. This is primarily because term life provides coverage for a specified period, such as 10, 20, or 30 years, without accumulating any cash value. The insurance company is only required to pay a death benefit if the insured passes away within the term of the policy.

Since the coverage is temporary and does not include any savings or investment component, the cost of premium payments is significantly lower. In contrast, whole life and universal life policies involve a savings component and are designed to last a lifetime, factors that contribute to higher premiums. Variable life insurance typically carries investment risks, and its premiums can also be higher due to the cost of managing the investment account.

This distinction helps individuals select the type of policy that best fits their financial situation and insurance needs, with term life being a more economical option for those seeking straightforward coverage without additional costs associated with cash value accumulation or investments.