Chartered Life Underwriter Practice Exam 2025 - Free CLU Practice Questions and Study Guide

The main categories of life insurance are term life insurance and whole life insurance. Term life insurance provides coverage for a specified period, typically ranging from one to thirty years, and pays a death benefit only if the insured passes away within that term. This type of insurance is often more affordable and straightforward, making it an appealing option for individuals seeking temporary financial protection for their beneficiaries.

Whole life insurance, on the other hand, is a form of permanent life insurance that provides coverage for the entire lifetime of the insured, as long as premiums are paid. In addition to the death benefit, whole life policies accumulate cash value over time, which can be borrowed against or withdrawn by the policyholder.

Both term and whole life insurance form the foundational structure of life insurance products, offering distinct features and benefits that cater to different financial planning needs. Recognizing these two categories helps individuals understand their options when selecting life insurance coverage that aligns with their financial goals and needs.