Types of Life Insurance

Term Insurance

This coverage is for a specified period of time or a term. There is no accumulation of value. The premium will buy protection in the event of the death of the insured and no other benefits. After the period ends, policies can be offered to continue coverage. This coverage can be continued at a much higher premium.

 Term insurance provides protection for level periods such as 5, 10, 15, 20, 25 and 30 years.It is the perfect solution for short-term or long term goals. It can be used for paying off a loan, such as a mortgage or can provide extra protection for young couples during their child rearing years.

Some policies offer conversion or renewal options at the end of the term of the policy. A guaranteed renewal policy guarantees that it will issue a policy of equal or lesser value without regard to insurability of the insured and the premium will reflective of the insureds’ age at the time of conversion.   Not all companies offer this feature and it is important to review options during the selection process

Permanent Life Insurance

This type of insurance does not expire, it remains active until the policy matures or if the owner does not pay premiums.  This cannot be cancelled for any reason except for fraudulent application.  This policy accumulates in cash value.  The owner can access the money in the cash value by withdrawing, borrowing or surrendering the policy.

Types of Permanent Insurance

• Whole Life: This insurance provides lifetime death benefit coverage at a level premium. Cash value accumulates during the life of the policy and the policy holder can access monies at any time by borrowing against the accumulation.The insurance pays a certain amount upon death of the insured.  The other component, the investment, accumulates cash. This type of insurance is a way of accumulating wealth as regular premiums pay the insurance costs and contribute to the savings where dividends and interest can be built up while being tax deferred.
• Universal Life: Universal Life was created as an alternative to whole Life. It offers more flexibility that Whole Life in that it allows the  policyholder to move money between the insurance and the savings components of the policy.  The premiums are variable and allow the owner to make adjustments based on their own investment needs. There are different types of Universal Life insurance –Traditional or fixed Universal Life or Variable Universal Life. Universal life combines permanent insurance with flexibility:  The cash values are increased with premiums and the cost of insurance including other charges can reduce the cash value in the policy.   This type of insurance is purchased to provide coverage for a lifetime.  It can be used for income replacement and depending on the option that one selects, it can be used to build cash value or having a guaranteed death benefit.

 When one is applying for Life insurance there are rate classes that determine premiums.

• Preferred Plus (for individuals with excellent health)
• Preferred (for individuals with very good health and family history
• Standard (for individuals with good health