Life Insurance

Life insurance provides a way for individuals, families and businesses to manage risk against financial loss. Life insurance is a contract between an owner (often the insured person) and a life insurance company that guarantees the payment of a stated amount of money on the death of the insured.  Policies can be customized to meet individual needs of the owner.

The two basic types of life insurance are term insurance and permanent insurance:

Term life Insurance is usually the least expensive form of life coverage, at least initially.  Term life insurance is life insurance coverage for a specified period of time. This can be at a guaranteed rate or in some cases a guaranteed rate for a period of time and then a projected rate.

  • Term periods can be for 1 year, 5 years, 10 years, 15, 20 and even 30 years. 
  • After the initial term period of years, 5,10,15, 20, 30 etc. the policy could terminate or it can renew at a higher premium.

Permanent Life Insurance is any form of life insurance except term; generally insurance that builds up a cash value. Universal life and whole life are types of permanent life insurance.

  • Whole life insurance has a guaranteed level premium for the rest of one’s life with no increases in premium, with a guaranteed cash value. There is participating whole life insurance usually issued by a mutual life insurance company where one participates as an owner of the company and there is non-participating whole life insurance issued by a stock life insurance company.
  • Universal life insurance is permanent life insurance with premiums that are not guaranteed. Universal life insurance often can be set up with a lower premium initially than whole life insurance. Premiums and values are based on projections of assumed interest rates, the cost of insurance (also known as mortality cost) and the insurance company’s expenses. To a certain degree one can “design” a premium and “customize” the investments held on this type of policy.