LIFE INSURANCE


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Life insurance is not something we want to think or talk about, but is very important for our loved ones.  In general there are two types of life insurance, Term and Permanent.  There are several types of permanent life insurance and we will go over a few.

Term Insurance provides protection for a specific time period.  Once the term, or specific time period, is over the availability ends.  It is there in case of a premature death.  The term is the length of time the policy is in force.  The death benefit or face value is the amount of money your loved ones receive if you die prematurely.  Beneficiary(ies) receive the death benefit and you choose who and how much they receive.  The cost or premium stays the same throughout the policy.  Sometimes term life insurance can be obtained without a medical exam and generally is more affordable.

Permanent Life Insurance is a category of life insurance policies that are permanent insurance plans that stay in effect as long as you make payments.  Permanent Life policies have a face value that can be borrowed against if needed.  The death benefit is reduced by the amount borrowed until it is paid back to the insurance company.  So if you borrow $10,000 against your death benefit of $500,000 and you pass away, then your beneficiary(ies) receive $490,000*.  Typically you will be required to complete a health examination and the premium can change as a result of the exam.  Types of Permanent Life Insurance include: whole life, variable life, and universal life.

Whole Life Insurance premiums stay the same and has a cash value that grows.  Cash value is the amount of money you receive if you decide to surrender or cancel the policy.  The cash value can also be a loan source if needed or can be used to pay the policy premium if needed.  It is important to note the cash value earns a modest rate of interest and accumulated earnings are tax deferred.

Variable Life Insurance is similar to whole life with the additional ability to put your cash value into an investment account managed by the insurance company.  This policy has the potential for a higher growth rate than Whole Life policies and will not go below the insurance company’s guaranteed minimum death benefit*.  If your investments do well you can add to the death benefit or skip some payments if you choose, but a minimum level of premium payments need to be made yearly.  What’s the downside?  If your investments don’t do well there is less money available to borrow from, or put towards premiums.

Universal Life Insurance is permanent life insurance with an investment savings option and lower premium than other permanent life options.  It also gives more flexibility to pay premium and a flexible death benefit.  These options give you flexibility as your life changes.  There is a minimum premium needed to keep the policy active.  The policy has the ability to earn higher interest rates than the guaranteed minimum.  The company can credit your policy with the excess interest if additional interest is earned and is tax-deferred*.

*This is not a guarantee of specific coverage.  Check your policy for details of your policy for exact coverages.

Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services.

This website does not make any representations that coverage does or does not exist for any particular claim or loss, or type of claim or loss, under any policy. Whether coverage exists or does not exist for any particular claim or loss under any policy depends on the facts and circumstances involved in the claim or loss and all applicable policy wording.