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Life Insurance

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Overview FAQs Glossary

Life insurance is a product designed to protect your family and loved ones due to the loss of their primary bread winner. In the event of your passing, your Life Insurance policy will provide your named beneficiaries with the amount of money specified by your policy, paid in either a single lump sum or regular, periodic payments.  There are two primary forms of Life Insurance:  Term Life and Permanent Life (also known as Whole Life Insurance).

Term Life Insurance is the most cost effective way to provide maximum protection to your beneficiaries for a set period of time.  The policy has a specified end date at which time the coverage can only be continued at the discretion of the insurance company and at escalating premiums.  Term Life is ideal for healthy people with young families who want to make sure their loved ones are protected for a specific time period, such as until their children graduate from college.  There is no cash value accumulation or building of equity and continuing the policy after the specified end date can be prohibitively expensive.

Permanent Life Insurance is ideal for people who want protection over their entire lifetime with a premium that is guaranteed to never increase. However, Permanent Life policies pay much less money to beneficiaries upon the death of the policyholder than would a Term Life policy with a similar monthly premium. The policy generally has a guaranteed cash value settlement that grows over the life of the policy as premiums are paid in and invested. Payments into the policy are tax deferred and can later be withdrawn while the policy holder is still living in order to supplement 401K and other retirement benefits.  There are many types of Permanent Life Insurance plans such as Whole Life, Universal Life, Variable Universal Life, and Survivorship Life. 

  • Do I need Life Insurance?

     

    Are there people in your life who depend on you as a primary bread winner?  If you answered yes then you should look into purchasing some form of Life Insurance to protect your loved ones.

  • How does smoking affect life insurance?

    Typically, a smoker should expect to pay more on a life insurance policy than a non smoker.  Life insurance providers may view you as more riskier to insure, resulting in a higher rate.

  • Is Life Insurance a good way to save for retirement?

     

    Yes.   Certain Permanent Life Insurance plans can serve as an effective vehicle to store tax deferred income for later in life – in conjunction with other retirement plans such as 401K and IRA.

  • What kind of Life Insurance is right for me?

     

    This depends on a variety of factors including you income level, age, and health, as well as the needs of your loved ones.  Click on our glossary of terms for a more detailed description to help determine if you would be better served with a Term Life, Universal Life, Variable Universal Life, or Whole Life Insurance policy.

  • When can I take money out of my Life Insurance policy?

     

    All Life Insurance policies pay out when you pass away.  However certain Permanent Life Insurance policies include provisions for taking money out of the plan while you are still alive.  Ask your insurance agent and read the fine print of your policy for details.

  • Beneficiary

     

    The person or persons named in the Life Insurance policy who receives payment upon the death of the insured.

  • Cash Value

     

    The amount the insured can loan or withdraw from the policy during the life of the insured.  Loans reduce the death benefit of the policy by the loan amount plus a stated interest.  Withdrawals reduce the death benefit by the amount withdrawn plus any applicable surrender charges.

  • Convertible Term Insurance

     

    A form of Term Life Insurance that can be converted to a Permanent Insurance Policy at the discretion of the insured without the need to provide evidence of insurability.

  • Death Benefit

     

    The sum paid to the beneficiary (ies) at the time that the insured passes away.

  • Face amount

     

    The guaranteed death benefit stated on the policy.  It does not include any additional amounts that can be added to Permanent Life Insurance plans.

  • Insurability

     

    A determination by the insurance company that they are willing to accept an applicant for insurance.

  • Insured

     

    The individual on whose life the policy is issued.

  • Permanent Life Insurance

     

    Life Insurance that remains in effect until the insured passes away.  This type of policy may build up a cash value that the insured can access during their lifetime. 

  • Premium

     

    Regular payment to the insurance company by the insured.

  • Term Life Insurance

     

    Life insurance that provides coverage for a specific period of time.

  • Universal Life Insurance

     

    A form of Permanent Life Insurance where a portion of the paid premium can go towards increasing the Face Amount.  The Face Amount grows at a varying interest rate, but guaranteed to never drop below a stated amount.

  • Variable Universal Life Insurance

     

    A type of Universal Life Insurance where the premium is invested in various instruments such as stocks and bonds.  There is no guaranteed minimum and the payout is determined by the performance of the underlying investments.

  • Whole Life Insurance

     

    A form of Permanent Life Insurance which guarantees a level premium, death benefit, and cash value.  Most Whole Life policies can pay dividends.

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