by Albert Cohen
There are many types of Life Insurance: Whole Life, Universal Life, Final Expense, and Indexed Universal Life, and I will be touching on each of them in future writings. However, today I would like to talk about Term Insurance the most affordable and sometimes the best choice to handle your Life Insurance needs.

Term Insurance is just what the name implies. You buy a Life Insurance Policy for a specific amount of time, usually 10, 15, 20, and 30 year increments. If something happens to you during that specific time period your beneficiary gets the face amount of your policy. The primary disadvantage of this kind of Life Insurance is obvious, if the time period ends and you are alive the policy ends and you no longer have insurance and you are out all of the money you paid for premiums.

There are things you can do to mitigate this disadvantage, and I will cover that later. But first all of the advantages:
1. The price: for the most part a Term Life insurance policy is the least expensive of all private Life Insurance with the exception being accidental Life Insurance.
2. Solves a problem in a specific time frame: worried about paying off your 30yr mortgage, or the kids college tuition in the next 20 years, or maybe replacing an income while you save for retirement. If tragedy strikes these problems can be solved by a Term Policy using the least amount of resources.

If everything works out according to plan you will still be alive when your term policy ends. If the problem the policy was meant to solve no longer exists the reason for Life Insurance may no longer exist either. However, you have paid premiums for up to 30 years and now have nothing to show for it. This situation can be addressed in two ways.
First, some term policies can be converted into permanent life insurance sometime after the issue date. Your agent will be able to explain when and how this can be accomplished.

Second, you can opt for a Return of Premium (ROP) rider on your Life Insurance Policy. Simply put, after you have made all of your premium payments on your policy and the term is over, the Insurance Company will refund all of your money to you. This coverage is usually more expensive than a simple term policy but some companies offer an ROP rider that is more affordable than others and once again your Insurance Agent can guide you to a policy which meets your needs and budget.

Every person who needs Life Insurance is different and a good agent will tailor a policy which fits your needs, but do not overlook the simple Term Policy, the workhorse of the Insurance world.

Protective Life Insurance

Choose Protective Life Insurance Company to Help Safeguard Your Family’s Future
Life insurance can be the cornerstone of your family’s financial security. So choosing a life insurance company is not something to be taken lightly. At Protective Life, it’s an honor when someone chooses us to safeguard their family’s future. It’s why we work tirelessly to offer our customers truly affordable rates, innovative policies and the very highest standard of service. It’s why we provide online tools to help you understand what and how much you need.

Protective Life Insurance

Our knowledgeable, licensed representatives are always happy to help. They are committed to guiding you through the complex process of understanding and buying life insurance. Our representatives have a passion for doing right by you and want to work with you to meet your current and changing needs so you are satisfied and comfortable with your purchase.

This passion is also why within all our life insurance products we offer you the ability to customize your policy even further with riders. Talk to us today and you’ll find we offer powerful customization options within all our products: Term Life, Whole Life, Universal Life, Variable Universal Life, Survivorship Life, Single Premium Variable Life and Retirement Annuities.

Source: Protective Life Insurance Website

There are two major types of life insurance—term and whole life. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. In 2003, about 6.4 million individual life insurance policies bought were term and about 7.1 million were whole life.

Life insurance products for groups are different from life insurance sold to individuals. The information below focuses on life insurance sold to individuals.

Term

Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions.

There are two basic types of term life insurance policies: level term and decreasing term.

• Level term means that the death benefit stays the same throughout the duration of the policy.
• Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policy’s term.

In 2003, virtually all (97 percent) of the term life insurance bought was level term.

Whole life/permanent

Whole life or permanent insurance pays a death benefit whenever you die—even if you live to 100! There are three major types of whole life or permanent life insurance—traditional whole life, universal life, and variable universal life, and there are variations within each type.

In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy. The cost per $1,000 of benefit increases as the insured person ages, and it obviously gets very high when the insured lives to 80 and beyond. The insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than what’s needed to pay claims, investing that money, and then using it to supplement the level premium to help pay the cost of life insurance for older people.

By law, when these “overpayments” reach a certain amount, they must be available to the policyholder as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional, benefit under the policy.

In the 1970s and 1980s, life insurance companies introduced two variations on the traditional whole life product—universal life insurance and variable universal life insurance.

How to find coverage that meets your needs and budget

Life insurance can form a vital part of your family’s financial stability and well-being but, if you’re like most people, you may find the thought of shopping for the right type of coverage a little daunting. Fortunately, these eight simple steps can guide you along the way.

1. Determine whether you actually need life insurance

Most people do, but not everyone. If no one depends on you financially, if you have no debt and would leave an estate with enough cash to pay its own taxes and expenses, you probably don’t need life insurance. If you do not meet these criteria, you probably will need individual life insurance.

2. Calculate how much life insurance you need

There are two important questions to ask:

• What financial resources will be available to survivors after your death? For simplicity, consider three categories of resources: (1) Social security and other retirement-related survivor benefits; (2) group life insurance; and (3) other assets and resources. It is also important to know when these resources will become available—for example, social security survivor benefits are payable immediately to a surviving spouse with dependent children, but only after age 60 if there are no children.
• What financial needs will your survivors have after your death. For simplicity, consider three categories of requirements: (1) final expenses; (2) debts; and (3) income needs.

Then subtract your survivors’ financial resources (step #2) from their financial needs (step #3) to determine how large a policy to buy. Many people are underinsured, often because they skip these steps or take a shortcut (such as simply buying a multiple of annual income). For more help in determining the right amount of life insurance, see: How Much Life Insurance Do I Need?

3. Consider other objectives you may have for your life insurance

Some types of life insurance policies include a savings feature that can be used for purposes other than paying death benefits.

4. Determine what type of life insurance best meets your needs

Essentially, there are three types of life insurance policies—term life, whole life and universal life. If you need the insurance for only a specific period of time, or are on a limited budget, a term policy, which has lower premiums, may be a good fit. If, however, you need the insurance for as long as you live and want to accumulate savings, a whole or universal policy may be a better choice.

5. Find out if you need to add any “riders” to the policy

There are two that you should consider—waiver of premium and guaranteed insurability. Some policies come with one or both included with the basic contract but, if not, it is generally a good idea to add them. Waiver of premium pays the life insurance policy premium for you if you are disabled. Guaranteed insurability permits you to add to the death benefit without providing additional evidence that you are in acceptable health.

6. Shop around

There are many ways to save money when buying life insurance, but they don’t always entail paying a lower premium immediately. That said, life insurance is a very competitive business so quotes can vary significantly between companies.

7. Decide whether to pay premiums annually

In most cases, it is better to pay annually rather than in installments because there is often a relatively large additional charge for paying smaller amounts more frequently.

8. Tell your beneficiaries about your life insurance policy

Once the policy is issued, inform your beneficiaries the company that issued it, where to find the paper copy of the policy and any specifics about what you want them to do with the death benefit. While is rare for people to be unaware they are the beneficiary of a life insurance policy, it does happen and you want to make sure that the benefit will not go unclaimed. And store your documents so that they can be easily accessed by your beneficiaries.