Basic Types of  Life Insurance

 All life insurance  policies are not the same. Some give coverage for your lifetime and  others cover you for a specific number of years. Some build up cash values and  others do not. Some policies combine different kinds of insurance, and others  let you change from one kind of insurance to another. Some policies may offer  other benefits while you are still living. There are two basic types of life  insurance: term insurance  and permanent insurance.

Term Insurance

 Term insurance generally has lower premiums in the early years, but does not  build up cash values. You may combine cash value life insurance with term  insurance for the period of your greatest need for life insurance to replace  income.
 Term insurance covers you for a term of one or more years. It pays a death  benefit only if you die in that term. Term insurance generally offers the  largest insurance  protection for your premium dollar. It generally does not build up cash  value.
 You can renew most term insurance policies for one or more terms, even if  your health has changed. Each time you renew the policy for a new term,  premiums may be higher. Ask what the premiums will be if you continue to renew  the policy. Also ask if you will lose the right to renew the policy at some  age. For a higher premium, some companies will give you the right to keep the policy in force  for a guaranteed period at the same price each year. At the end of that time  you may need to pass a physical examination to continue coverage, and premiums  may increase.
 Term life insurance may be more desirable for people who are starting out,  on a budget or have a fixed time period when their objectives call for life  insurance.

Permanent Insurance

 Permanent insurance (such as universal  life, variable  universal life and whole  life) provides long-term  financial protection. These policies include a death benefit and, in  some cases, cash savings. Because of the savings element, premiums tend to be  higher.
 Whole life plans have level premiums which means they do not increase as you  age. These policies are designed and priced for you to keep over a long period  of time. If you don’t intend to keep the policy for the long term, it could be  the wrong type of insurance for you. Whole life insurance policies develop “cash  values”. The cash value is one of the guarantee provisions of the policy. Whole  life policies may be more desirable for people who need coverage for their  entire life.


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