Life Insurance

Download this Special Report: Risk Management Review.

The comparison chart below gives you the basic facts and pros and cons of the four standard types of individual life insurance. Contact us to discuss these differences and to determine if your current coverage still meets your needs.

Policy Type

Temporary

Permanent

 

Term

Term 100


Whole Life(participating or “par” policies)

Universal Life

Coverage Period

Temporary, often expires at age 70 or 85, depending on the term in the contract.

Lifetime coverage.

Lifetime coverage.

Lifetime coverage.

Premiums

Premiums renew (increase) at each
speci­fied term (e.g. 10 years, 20 years, etc.)

Premiums remain the same for the entire contract.

Premiums remain the same for the entire contract.

Flexible. Premiums can be increased or decreased within certain limits.

Death Benefit

Does not change and is guaranteed.

Does not change and is guaranteed.

Does not change and is guaranteed. Dividends may be used to increase the face amount.

Flexible. May increase or decrease due to fluctuations in cash values.

Cash Values

Usually no cash values.

Usually no cash values, but guaranteed values are available in some contracts.

Guaranteed in contract.

Some guarantees. May increase or decrease due to investment returns and deposit levels.

Advantages

Suitable for short term needs, or a specific debt like a mortgage.

More affordable. Initially less expensive than permanent insurance.

Can be converted to permanent insurance without medical evidence up to age 65 or 70 (if contract has a convertibility option).

Provides protection for your entire lifetime - if kept in effect.

Premiums usually stay the same, regardless of age or health.

The cash value can be used to continue coverage if premiums are missed or it can be withdrawn.

Participating policies receive dividends that can be taken in cash, left to accumulate with interest, or used to purchase more coverage.

Growth on additional deposits is not taxed unless withdrawn from the policy.

Disadvantages

At each renewal, premiums will increase and become more costly as you get older.

Coverage usually expires at age 70 or 75.

With no cash value, if premiums are not paid, the policy will terminate.

Initial costs may be too high for a sufficient amount of protection for your current needs.

May not be an efficient way of covering short-term needs.

Cash values tend to be small in the early years. You may have to hold the policy for a long time (at least 10 years) before cash values will accumulate signi­ficantly.