Life Insurance

Term Life Insurance provides protection for a limited period of time, generally 10, 15, 20, or 30 years. If the insured passes away during this period, a predetermined amount will be disbursed to the beneficiary. Although term life policies do not normally accrue cash value, many do offer features that allow you to convert to a permanent policy within a certain amount of time. This feature can be advantageous if choose to buy a permanent life insurance policy but your budget does not allow it right now, or you would like to retain the option of converting to a permanent policy in the future.

Term Life Insurance is the simplest form of life insurance. It provides reasonably priced protection for a specified period of time at a planned premium level. Insurance premiums may go up at the end of the term. With a Term Life Insurance policy you choose a coverage level, a term and name a beneficiary, that is, the person you want to take delivery of the benefit if you die. If you die while your term life insurance policy is in force, the beneficiary you chose with receive the death benefit payment.

How much life insurance do you need?
The easiest way to determine how much life insurance you need is to think of life insurance as replacing your income if you were not here. Your income pays for all of your family expenses including mortgage, college funding and retirement funding. Take your income and (x) it by the number of years your family would need it. The average is 8-12 times your income. This may be less if you have additional assets or more if you want to pay off your mortgage, debt, etc.

Term insurance, the most affordable type of insurance when initially purchased, is designed to meet temporary needs. It provides protection for a specific period of time (the “term”) and generally pays a benefit only if you die during the term. Terms are usually 10 to 30 years, with 20 being the most common. Some policies can be automatically renewed at the end of the coverage period, and some can be converted to permanent insurance without need for a medical exam.

How Term Life Insurance Helps You Meet Personal and Business Needs
  • When life insurance is essential but your budget won’t allow
  • For a distinct period of time
  • To protect your family (insurance benefits can help put a child through school or pay a mortgage)
  • To protect your business (by helping to cover business expenses insurance benefits can ensure business continuance)

You can renew your coverage, often at a higher premium, at the end of the term without having to make available evidence of good health. You can also choose to convert your term life insurance policy to a permanent life insurance policy which builds cash value and may even earn dividends.

Types Of Permanent Life Insurance
Whole Life

Whole Life Insurance is probably the most common type of permanent life insurance. It has become popular as a form of retirement investment because it builds cash value over time. Whole life insurance can be more costly than other forms of life insurance, but it can also provide many more additional benefits. Some insurance companies may even offer what is called a dividend option, where any excess premiums you’ve paid get returned.

Universal Life

Universal life insurance is oftentimes referred to as adjustable insurance and is comparable to whole life. These life insurance policies have a savings vehicle similar to that of whole life, but it allows you to borrow against its cash value. This flexibility can allow you to take a loan out against your policy or even pay smaller premiums if your cash value can cover the costs.

Remember, if you take out a loan and fail to pay it back, you risk losing your insurance policy completely.

Variable Life

In addition to having a death benefit, a variable life insurance policy’s investment options are different and are typically managed professionally. Whatever cash value you have accrued can be used to invest in stocks, bonds, and mutual funds to earn a greater return. Of course, you always run the risk of losing money through these investments. Also, just like with universal life insurance, you can borrow against or withdraw from variable life policies.

Variable Universal Life

Variable universal life insurance policies combine several of the aspects involved with variable and universal policies. You have the different investment options for your money of variable life insurance as well as the risk that comes with them. Also, similar to universal life insurance, you can also adjust your premiums if your cash value can cover the difference.