There is more to life insurance these days than just your grandmother s old whole life policy. Besides the venerable term and traditional whole life variety, insurance products such as universal life and variable life — and even a combination of the two — offer you plenty of life insurance options.

Here is a quick overview of the kinds of life insurance available.

What is the most popular? A study by LIMRA, an insurance market research organization, shows these results for market share (in terms of premium sold) in 2000:

• Universal life, 17 percent.
• Term life, 22 percent.
• Whole life, 24 percent.
• Variable universal life, 34 percent.

Universal life is designed to be flexible life insurance. As long as you pay enough in premium to keep the insurance part of the policy in force, you can vary the frequency and amount of your premium payments and, as a result, vary your death benefit. For instance, you can decrease your coverage to coincide with your declining mortgage. If you want more insurance, you might need a medical exam, even if you had one when you originally bought the insurance. It depends on your age and the amount of coverage you are buying.

You can also put excess money into your universal life policy. The amount is held in a cash-value accumulation fund. You will usually get a minimum interest guarantee from the insurance company, while the actual performance of the fund is tied to insurance company investments. Because of this risk, your premiums can be lower than those of a whole life policy, plus you may be able to skip premium payments if there is enough in your fund to cover the premium bill.

Remember that any gain in your accumulation fund may be taxed upon withdrawal.

Your level of cash value can also influence either your premium payments or your death benefit. When you buy a universal life policy, if you choose a level death benefit, the insurance company uses your cash value to reduce the amount of risk it takes on your life. This allows the insurance company to reduce the mortality expenses of your policy and, in turn, reduces your premium payments as your cash value increases.

A second option is to have your cash value added to the death benefit of your policy. Your minimum premiums stay steady while your death benefit rises and falls with your cash value.

You are allowed to switch between the two options at any time during the policy, but it may not be easy.

If switching methods significantly increases your death benefit, you might have to take more medical exams and go through the whole medical underwriting process again, says Bill Schreiner, an actuary with the American Council of Life Insurers.

Although a universal life policy can allow you to earn somewhat better rates of return in your cash-value fund than in a whole life policy, you cannot transfer your cash value between possibly higher-yielding sub accounts as you can with variable life insurance. You are relying on the insurance company investment strategies, so be sure to check the company financial strength before buying.

You can make withdrawals from your cash value under terms that are defined in your policy. Many universal life policies carry back-end surrender charges that are deducted from the balance in your fund. They start out high in the early policy years, then slowly decrease until they disappear — possibly around years 15 or 20.

Because it is a hybrid insurance product, universal life s flexibility can be misunderstood. That is why it is important to make sure what you bought is what you were quoted. Check your policy for its guaranteed rate of return, fees, and charges, and how much minimum premium is required. If the policy is not issued correctly, you will usually have a "free look" period of generally 20 to 30 days during which you can reject the life insurance contract and get your money back.

Universal life can be an economical alternative to traditional whole life, and in some instances it costs less. If you are interested in buying whole life, you may want to look into universal life. As with any insurance product, it is important that you understand how a universal life policy works. It is up to you to figure out if you are getting your money s worth.