Term life insurance pays a death benefit if the person insured dies within a specific period of time or before you reach a certain age. Most term life contracts expire at age 80.
The length of your coverage can be either for:
If you die while the policy is in force, your beneficiaries will be paid the death benefit. Once the term ends, the coverage ends and your beneficiaries don’t receive any payment or cash value.
If you don’t pay your premiums, your insurance company will cancel your policy after a 30 day grace period.
Term life insurance premiums are generally less expensive than permanent life insurance premiums when you first buy the policy because they expire prior to life expectancy. This plan is meant to cover a risk for a short period of time.
Cost is based on the age that you apply and never changes. No need to manage the investment, that’s done for you by the insurance company. Think of it as a pension plan, very conservative, safe and steady growth. There are alot of moving parts with whole life that aren’t always easy to understand. Make sure you know the limitations as well as the long term benefits before making the commitment to premiums amounts. This type of plan is often used in more complicated business insurance arrangements that include leveraging.
Universal life insurance is a type of permanent life insurance that combines life insurance with the same tax sheltered investment account as whole life. The investment account has a cash value but you have to manage the investments. Results are usually best when you ask your investment advisor or portfolio manager to make recommendations.
The death benefit and cash value of your investment account may increase or decrease depending on the types of investments you choose to hold in your account or the returns on those investments. Neither are guaranteed.
