Final answer:
Level term insurance is the most affordable life insurance option for Phil who needs $500,000 in coverage for the next 20 years. It offers a fixed rate and death benefit, making it less expensive than whole life, universal life, or variable life insurance. Considering affordability and the need for a fixed period of coverage, level term insurance is the best choice for Phil.
Step-by-step explanation:
Phil needs $500,000 in life insurance coverage for the next 20 years, and given his age, the most affordable life insurance option for him would likely be level term insurance. Level term insurance would provide him with a fixed rate of payment and death benefit over the specified term, which in Phil's case is 20 years. It is typically less expensive compared to other options like whole life, universal life, or variable life insurance, which offer additional investment components and consequently higher premiums.Cash-value (whole) life insurance, while it has a death benefit and accumulates cash value over time that can be used as an account, would be more costly for Phil. Universal life insurance offers flexible premiums and the potential to build cash value, but the cost is also higher than term insurance. Similarly, variable life insurance allows for investment in various accounts that can grow tax-deferred, but the risks and costs can be substantial for individuals in their 50s.
In Phil's situation, where the concern is affordability and a fixed period of coverage, level term insurance is the simplest and most cost-effective choice. This aligns with the general advice that term life insurance is often the best option for pure insurance coverage when there is a specific timeframe for the need.