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Term Life Insurance:
Term Life Insurance covers you for a specific term period of one
or more years.  The
policies are usually designed so that the Death Benefit and
Premium remain level throughout the Term period. Term Insurance
pays a death benefit if you die while the coverage is in force.
Term Life is generally the least expensive way to purchase Life
Insurance coverage.
Most Term Life
Insurance policies can continue beyond the initial term period;
however the premium rates are subject to change. A popular use
for Term Life Insurance is to cover a mortgage or other type of
loan. Most Term Life insurance policies also include an option to
convert to permanent life insurance at some point in the future
without having to go through underwriting.
There are also
several carriers that offer Return of Premium (ROP) Term policies
that will return all premiums paid at the end of the term period
so long as the policy remained in force and no death benefit was
paid.
Permanent Life Insurance
Whole Life
Insurance
Whole Life policies are designed to provide permanent
protection throughout a person's lifetime. As long as the policy
remains in force, the death benefit will be paid, regardless of
when the death occurs. Whole Life policies build up a “cash
value” over time that can be used to offset future premium
payments. Most Whole Life policies offer fixed premium amounts
throughout the life of the policy which must be paid to keep the
policy in-force. The insurance carrier typically invests a
portion of your premium so that it can build the cash value within
your policy. The policy also allows the Policyowner to borrow
against the cash value of the policy at an interest rate specified
in the contract. Generally, we recommend Whole Life Insurance to
those clients who are willing to pay higher premiums in exchange
for longer guarantees and higher cash value accumulation.
Universal Life (UL) Insurance
Like Whole Life
Insurance, Universal Life Insurance is designed to provide
permanent protection throughout a person's lifetime. As long as
the policy remains in force, the Death Benefit will be paid,
regardless of when the death occurs. Like Whole Life Insurance
policies, Universal Life plans also generate an accumulation of
“cash value” that can be used to offset future premium payments.
Universal Life
differs from Whole Life in that the interest rate credited to the
“cash value” changes regularly however most plans do provide for a
guaranteed minimum interest rate. Accordingly, policy premiums
can go up or down depending on changing market conditions and
mortality rates. Universal Life is sometimes called Flexible Life
or Adjustable Life in that it allows for greater flexibility to
the Policyowner once a policy is in force. Universal Life is
generally less expensive than Whole Life Insurance and we
generally recommend Universal Life plans for those who want to
secure life insurance protection for periods longer than those
guaranteed by Term Life Insurance but are not as concerned with a
high build-up of cash value.
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