Life Insurance Products

Plan ahead to protect your loved ones and family, understand the various life insurance options.

Life Insurance Explained – What to Know About Your Choices

Our life insurance experts explain the differences between term, permanent, whole, universal and final expense life insurance. We can help you make an informed decision about your life insurance needs.

Life Insurance

Think about it, what if you were to die today? It is undeniable, but no one likes to contemplate his or her own final day. For some, death seems a very distant future event. Others are simply "too busy" to think about it. Whatever the reason, delaying this part of planning can result in expensive, unintended, even tragic consequences for your loved ones and those who will now live without you.

What is Life Insurance and How Is It Used?

In very simple terms, a life insurance policy is when an insurance company agrees to pay your beneficiary a specified amount of money when you die. Anyone can be named as your beneficiary including family, friends, charities, business partners, etc. You may have multiple beneficiaries.

The amount of premium you pay depends on several factors like age, health, gender, tobacco use and the type and amount of insurance you need.

For the most part, life insurance fits into one of two classes: permanent life insurance and term life insurance. There are many variations within these classes.

What is Final Expense Insurance?

Final expense or burial insurance is typically for people with health conditions that might not qualify them for term or permanent insurance, or for people who need less than $15,000 of insurance. The underwriting is typically less strict for this type of insurance, however, the cost for this insurance is higher than if you got a fully underwritten policy.

There are some companies that offer guarantee issue plans. It means that regardless of your health, you can get a policy. These policies have graded death benefits. If you pass away in the first 3 years of the policy, your beneficiary will receive the premiums you paid plus 5-10% in interest. After the first 3 years, your beneficiary will receive 100% of the death benefit.

What Is Term Life Insurance?

Term life insurance provides life insurance for a limited period. It is for a specific term or number of years. If the insured dies within that period, the beneficiary receives the death benefit. However, if the insured survives the specified term of the policy, the policy simply stops, and no death benefit is paid.

Term life insurance generally offers the largest protection for your premium dollar. The reason is that term life insurance policies do not build up cash value. Most term policies are "level term" policies, which means that the death benefit and premium remain the same for the entire length of the contract.

What is Permanent Life Insurance?

Unlike term life insurance, permanent life insurance remains in force for the full life of the insured if the premium payments are made in accordance with the policy provisions. Typically, permanent life insurance accrues a cash value. The two primary types of permanent life insurance are whole life and universal life.

Whole life insurance provides coverage over the insured's lifetime, not just a portion of the insured's life. Since most whole life companies charge premiums based on the assumption that everyone would be dead by age 121, the company pays the policy face amount to those who attain age 121.

A very important aspect of whole life policies is that they have a cash value. This means that a whole life insurance policy has a savings aspect for the insured. A portion of each premium payment goes into the cash value. Cash value can be considered an asset and used as collateral in a loan.

Universal life insurance is a flexible premium adjustable life insurance policy that has an initial premium and flexible premiums afterwards. The policy holder can select the future amount and the frequency of his premium payments, within limits, and can stop and start premium payments. It is important to be aware of the account value in these policies to be sure there is always enough there to keep the policy in force.

Universal life insurance policies can be written in such a way that specified premiums will guarantee a specific death benefit very much like whole life but at a lower premium. The difference is that in this case, the universal life policy will not build as much cash value as the whole life policy. If you are not using your life insurance as a savings vehicle, then a large cash value may not be important to you.

Evaluate Your Coverage

It is important to periodically reevaluate your life insurance to ensure it still accomplishes what you need it to do. Our situations change as we age, and our insurance needs may change as well. There is only one final question, "if you died today, would your family and final needs be taken care of?" Imagine Insurance Advisors can help you ensure you have the proper plan in place to give you and your family peace of mind.

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