Types of Life Insurance

 

When it comes to life insurance there are 3 types which include the following:
Term Life Insurance   |   Permanent Life Insurance   |   No Exam Life Insurance

Term Life Insurance

Typically the most affordable type of life insurance policy with level premiums for an initial period such as 10, 20 or 30 years.  Most of our term policies may be converted to a type of permanent insurance such as whole life or universal life.  Generally used to cover a short term insurance need (10-30 years) rather than lifetime.

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Term insurance is often a good choice for families in earlier years, especially if the budget is tight, because it allows for affordable, yet high levels of coverage, when the need for protection is often greatest. Term insurance is also a good option for covering needs that aren’t permanent. For instance, paying for college is a major financial concern for many families, but if you don’t need life insurance coverage after the kids graduate, then it might make sense to buy a term policy that’ll get you through the college years.

Term life insurance provides low-cost coverage for a specific period of time (the “term”) —most likely during an individual’s peak earning years when death can cause the greatest financial hardship. Term life is generally the most affordable type of insurance when initially purchased and it’s designed to meet temporary needs. It provides protection for a specific period of time and generally pays a benefit only if the insured dies during the term period. This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage.

Term Levels
5, 10, 15, 20, 25, 30 Year Guaranteed Level Term

If you buy a term policy and then later realize that you still have a need for life insurance, you can either renew your term policy or (depending on the insurance policy’s rules about conversion) convert it to a different type of policy. If, in ten, 15 or 20 years you’re still healthy according to the company’s standards, you might re-qualify at a reasonable rate. But if your health has deteriorated, you may find that it’s too expensive to renew your policy or you may not even re-qualify.

When considering a term policy, be sure you carefully consider your needs and how they may evolve, financially, down the road. If your needs will remain temporary, then term insurance may be right for you. But, if there’s a possibility that you might need the coverage for a long time, then remember that renewing your term policy after it expires or buying a new term policy at that time, may make coverage more expensive due to your age, health status or other factors.

Purchasing a life insurance policy is an important decision. We want to be able to provide financial security for our family in case we die unexpectedly. It’s a decision not to be taken lightly or delayed. Are you ready?

Uses for death benefits include:

  • Income Replacement
  • Personal Debt Repayment
  • Business Purposes
  • Mortgage or Rent Payment
  • Legacy
  • Funeral and Burial Expenses

Types of Term Policies

Many people shopping for term life insurance may not be aware that there are actually 5 different types of Term policies to choose from:

  • Level Term Insurance
  • Decreasing Term Life Insurance
  • Increasing Term Life Insurance
  • Convertible Term Life Insurance –convert to a Permanent policy, see Whole Life or Universal Life. 
  • Renewable Term Life Insurance

Contact us / (240) 461-0382 for more information on buying your policy.

Permanent Life Insurance

Permanent Life Insurance is designed to provide life-long financial protection.

Whole Life Insurance

A whole life policy designed to offer lifetime protection, with fixed premiums and guaranteed cash value accumulation.  This type of insurance typically costs more than any other type, but offers the most benefits.

Universal Life Insurance (includes various UL types)

Universal life policy offers a flexible plan, which may also provide coverage for life if cash values are sufficient to pay the ongoing cost of insurance.  It can also be structured to act like a term policy to age 95, 100, 105, or 120, essentially stripping away the cash value component and offering you the cheapest, long term coverage available within any type of insurance.

Permanent life insurance policies are designed and priced to keep over a long period of time, this may be the right type of insurance for you if you have a long-term need for life insurance coverage. “Permanent insurance” is generally a catchall phrase for a wide variety of life insurance products many of which include a cash-value feature. Within this class of life insurance, there are many different products, including universal life insurance, whole life,  and indexed universal life insurance.

Despite what many people may think, the need for life insurance often remains long after the kids have graduated college or the mortgage has been paid off. If you died, your spouse would still be faced with daily living expenses. And if your spouse outlives you by ten, 20 or even 30 years—would your spouse be able to maintain the lifestyle you worked so hard to achieve, without the death benefit of life insurance? Would you be able to pass an inheritance on to your children or grandchildren? These are questions to consider carefully when determining what type of life insurance fits your needs.

Types of Permanent Life Insurance

Whole Life Insurance

A whole life policy is designed to offer the insured a  lifetime protection, with fixed premiums and guaranteed cash value accumulation.  This type of insurance typically costs more than any other type, but offers the most benefits.

Universal Life Insurance

Universal life policy offers a flexible plan, which may also provide coverage for life if cash values are sufficient to pay the ongoing cost of insurance.  It can also be structured to act like a term policy to age 95, 100, 105, or 120, essentially stripping away the cash value component and offering you the cheapest, long term coverage available within any type of insurance.

Which is better? Whole life or Universal life

Roughly ninety-nine percent of the permanent insurance I sell is a variation of Universal lie insurance called Index Universal Life (IUL) with something called a no lapse rider.  This policy guarantees not to have a lapse in coverage as long as you (insured or policy owner) pay the minimum premium as stated in your policy.  What I like about Index universal life is its cash value account component attached to it. I also like that it’s guaranteed to age 100 or 120 and it’s easy to understand.  Universal life policies are similar to term life insurance policy, but unlike term where the term ends and you are out of coverage, universal and index universal life insurance is for the rest of your life. I don’t think whole life insurance is a bad, I just like the various types of universal life because it has more to offer and its more flexible.

Don’t get me wrong! Whole Life is a great alternative for some high income earners and many financial advisers may, in some specific circumstances, recommend that these policies are advantageous, but not for most of you.

Contact us / (240) 461-0382 for more information on buying your policy.

No Exam Life Insurance

 

A no exam life insurance is just as it sounds. It requires no medical exam to obtain a policy however, the rates or premiums paid by the policy owner or insured tends to be higher. Only a handful of insurance companies offer “no exam” insurance. Of those which do, their policy limits vary by your current age, health history, and income.

Other Types of Life Insurance


Business Life Insurance
Describes plans available for business needs such as key person, buy sell, and executive compensation.

Guaranteed Issue Life Insurance
For individuals with severe medical conditions, or have been declined for life insurance.

Contact us / (240) 461-0382 for more information on buying your policy.