While there are many insurance companies, offering various kinds of policies, there are essentially three types of life insurance:

With term coverage you are paying for the simple protection of the coverage without having an investment savings associated to the policy. It is similar to the concept of purchasing home or auto insurance - there is no additional money being contributed to the policy, you are only paying for the actual cost of insurance. For this reason, term insurance is the least expensive of the three types. Term insurance is purchased for a predetermined length of time ie: 5, 10 or 20 years and can be renewed by the policyholder as the chosen term comes due. Companies cannot cancel the coverage; only you as the policyholder have that option. The term coverage can continue to be renewed at your attained age until the expiration of the term chosen, which is often the insured’s age 70 or 80 depending on the company selected. With each renewal ie: 5, 10 or 20 years, the coverage can be renewed using the rates in effect at your current age, regardless of your health.

 

With permanent coverage, as long as you continue to pay the premiums, the coverage stays in effect. There is no expiration date with permanent coverage, and no renewals. There is usually a built in savings component attached to the coverage. The premiums collected are used to cover the cost of insurance as well as to contribute toward the savings component within the policy. You can elect to have an increasing death benefit with a level cost of insurance, which essentially means that the price of the insurance remains level; there is never an increase in your premium for the life of the policy. The savings portion within the plan can be used in several ways, it can be taken out of the policy after a predetermined number of years, it can be used to off-set future premiums or if left to grow in the policy would be paid out to the named beneficiary in addition to the amount of life insurance purchased. Permanent coverage is significantly more expensive than term insurance in the early years however can result in lower overall premiums if compared to keeping term coverage in effect throughout your lifetime.

 

This coverage combines term insurance and permanent insurance, offering flexibility while maintaining the features of both plans. Combining coverage allows you the opportunity to obtain more coverage in the earlier years when maximum protection is required, without having to pay the higher cost associated with the entire plan being permanent coverage.

The term portion of the coverage can be renewed or discontinued based on your changing needs, and the permanent coverage will remain in effect for the duration of your life.

 

 

Depending on your current stage in life, the need and type of life insurance coverage will change. Some aspects to be considered are: lifestyle, health, age, whether you have dependents, the length of time the insurance coverage is required and if the need is temporary or permanent. Each of these variables will be factored into the decision making process. 

 

It is important to work with your financial advisor to determine if life insurance would be beneficial to you and your family. I would be pleased

to assist you by providing the details and features of the options available and offer recommendations suitable to your personal needs.