LIFE INSURANCE TYPES WITH EXAMPLES & ASSOCIATED RISKS:
1. 📌 *Whole Life Insurance*
- Lifetime coverage
- Guaranteed death benefit: $100,000
- Cash value: grows to $50,000 over 20 years
- Premium: $500/month
- Risk: Low investment risk, stable returns
- Example: John buys whole life insurance at 30, pays $500/month. At 50, he can borrow $20,000 from cash value.
2. 📌 *Term Life Insurance*
- 20-year term
- Death benefit: $200,000
- Premium: $100/month
- Risk: Coverage risk (ends at term expiration), no cash value
- Example: Sarah buys term life insurance at 25, pays $100/month. If she dies within 20 years, her family gets $200,000.
3. 📌 *Universal Life Insurance*
- Flexible premium: $200-$500/month
- Death benefit: $150,000
- Cash value: grows based on interest rates
- Risk: Interest rate risk, premium payment risk
- Example: Emily pays $300/month, can adjust premium and death benefit. Cash value grows to $30,000 in 15 years.
4. 📌 *Variable Life Insurance*
- Invests in stocks/bonds
- Death benefit: $250,000 (varies with investment performance)
- Cash value: $40,000 (after 10 years, depends on market)
- Risk: Market risk (investment performance affects cash value and death benefit)
- Example: David invests in stocks, cash value grows to $40,000. If market performs poorly, it might drop to $20,000 😊