Permanent Life Insurance

Term Life

Term Life Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from 10 to 30 years. Most term policies have no other benefit provisions. So, if you seek life insurance for a limited time – long enough to meet your anticipated responsibilities to those who depend on you, but not longer – term insurance may make sense for you; it is generally less expensive than permanent insurance and is often more affordable during peak liability years.

Term Life Basics

• Provides coverage only for a specified period (typically 10 – 30 years)
• Affordable way to obtain maximum death benefits
• Becomes considerably more expensive after the specified term period
• You build no equity – i.e., no cash value accumulation

Permanent Life

Permanent Life Insurance pays a death benefit whenever you die and can last your entire life as long as the policy remains in force; if you are still living beyond a certain age (age 120 with most insurance companies), then the policy pays you the death benefit. Many permanent policies also have level premiums that do not increase with age or health changes. There are three major types of permanent life insurance – whole life, universal life, and variable universal life, and there are variations within each type. So, if you value added security, flexibility, cash value, and lifetime coverage, some form of Permanent Life Insurance may be the option of choice, though it generally has higher premiums than term life insurance.

Permanent Life Basics

• Protection for your whole life, as long as the premiums are paid
• Can build equity in the form of a separate cash value account
• Offers flexibility and many options to choose from
• Initially higher premiums than Term, but generally more cost-effective in the long run

Whole Life

This is the most common type of permanent insurance policy. It offers a death benefit along with a savings account. If you select this type of life insurance policy, you are agreeing to pay a certain amount in premiums regularly, a portion of which covers the cost of the specified death benefit. The remaining portion of the premium paid is allocated toward the savings element (cash value account) that grows at either a guaranteed or non-guaranteed interest rate, depending on the option you select.

Universal Life

This type of policy offers greater flexibility than whole life insurance, such as the option to increase the death benefit if you pass a medical examination. The savings component to this policy type (called a cash value account) generally earns a money market rate of interest. After money has accumulated in your account, you also have the option of altering your premium payments, provided there is enough money in your account to cover the costs. This can be a useful feature if your economic situation has suddenly changed. However, you need to keep in mind that if you stop or reduce your premium payment and the savings accumulation is exhausted, the policy might lapse, and your life insurance coverage will end.

Variable Life

This policy type combines death protection with a savings account that you can invest in stocks, bonds, and money market mutual funds. The value of your policy may grow more quickly, but you also assume more risk. If your investments do not perform well, your cash value and death benefit may decrease. Some policies, however, guarantee that your death benefit will not fall below a minimum level.

Variable Universal Life

If you purchase this type of policy, you get the features of variable and universal life policies all-in-one. You have the investment risks and rewards characteristics of variable life insurance, coupled with the ability to adjust your premiums and death benefit that is characteristic of universal life insurance.

Blending Term and Permanent Life Insurance Together

In case you’re wondering, you're not limited to one or the other; you may find that a combination of Term and Permanent Life insurance meets your needs best. For instance, the foundation of your life insurance plan can be Permanent Life, supplemented by Term Life during your family-building, mortgage-paying years when financial risk exposures are typically higher. Some term policies also let you convert to permanent life insurance later as your needs change in the future.

Why You Need Protection

Life insurance is an act of love and kindness that can help protect your family financially. Life insurance offers many unique benefits that, when structured properly, can provide considerable financial leverage to your family that is received both income tax-free and estate tax-free. In the event of your passing, life insurance provides money directly to your beneficiaries. They can use the money for whatever they want, such as:

• Make up for your lost income, so your current lifestyle can be maintained
• Fund your children's education, including college
• Pay off mortgage and consumer debt
• Create a source of tax-free funds to provide a comfortable retirement
• Fund estate taxes to prevent liquidation of your estate due to estate tax obligations, and provide a predictable inheritance if structured correctly
• Pay for your funeral and other related final expenses

With life insurance, you can accomplish your promises to yourself, your family, your charity, and your business.

Get the protection you need tomorrow, today

To learn more about our Life insurance products, speak with one of our experienced professionals today.

(1) Properly structured and funded inside an Irrevocable Life Insurance Trust (ILIT).