Term Life & Whole Life

Types of Life Polices

1. Term Life 'or Permanent Life' , 2. Whole Life, 3. Variable Life 4. Universal Life and 5. Endowments

Whole Life Example

As i9nsured ages the cash value of whole life increases. At age interval the cash value increases. If insured dies, the insurance pays out the cash value accrued plus the balance of the face value to beneficiary. At 100 the entire face value is mature and paid out to policy owner.

Whole Life Maturity or Endowment

At age 100 the cash value will equal the face amount of the policy and this amount will be paid to the policy owner. When this happens, all coverage under the policy ends.

Policy Loan

Because whole life has cash value an advance of money is available to the policy owner as a Policy Loan.

Universal Life

Universal life is not a whole life policy. Universal life is a type of Permanent policy.

Life Paid-Up @ 65

Unlike single premium, 10 Pay and 20 Pay, at 65 the policy is paid up. Premiums are payable up to age 65, regardless of age at policy issue date. after 65 policy continues cover and cash value grows as long as insured is alive and matures at 100.

Policy Loan Provisions

1. interest accrues 2. interest rate specified in policy 'fixed or variable' 3. No fixe time for repayment and 4. Outstanding loan and accrued interest deducted from death benefit. and 5. Insurer will never allow policy loan to exceed available cash value.

Decreasing Term-Mortgage Insurance

Known as Mortgage Redemption Insurance, 2. Mortgage Life Insurance or 3. Mortgage Insurance

So Many Names: Insurance Two Broad Categories

Life insurance can be broken down into two broad categories - Term and Permanent

Graded Premium Whole Life

Like Modified Whole Life premiums on Graded Premium Whole Life start out substantially lower. However, premiums on Graded Premium Whole Life increase annually over a period of 5-10 years, after which premiums will remain level for remainder of policy's life.

Continuous Premium Whole Life Policy

Policies with premiums payable for whole life of policy or through age 100 when policy matures.

Decreasing Term

Policy face amount decreases according to some schedule continued in policy. Unlike the Increasing Term, decreasing term usually have premiums that decrease in conjunction with the decreases in face amount. Great for mortgages.

Increasing Term

Policy have increasing death benefits. The face amount or death benefit increases periodically according to some schedule. Offers Face Amount increases, Level premiums. No additional evidence of insurability is needed.

Term Premiums

A 1-Year term and a 5-year term both having the same face amount do not have the same premium amounts. 5-Yeat term premium start out higher than 1-Year term policy premium. For term policies the Longer the term, the Higher the premium.

Term Life

Simplest and most basic kind of life insurance. Term coverage is temporary. May or May not be Renewable. No Cash Value. 1,5,10,15,20,25 and 30 year term are some term life terms.

Term Life Cash Value

Term policies have no cash value. No cash value is accumulating in term policies.

Term Premiums Examples

The Longer the term, the Higher the premium. Some term policies will guarantee the initial and renewal premiums.

10 Pay Life

A Limited pay whole life policy that is paid-up after the premiums are paid for 10 years. Policy matures at age 100 if insured is still living.

Convertible Term available with Whole Life or Universal Life

A Term policy that contains a term conversion provision. A term conversion provision is a contractual provision that allows the policy owner to convert to a permanent plan with out need to provide any type of evidence insurability.

Single Premium Life

A Whole Life policy that is paid-up meaning no more premiums are due, after only one payment. The single premium would be very large compared to continuous premium whole life policy premiums. Policy still matures at age 100.

Modified Whole Life

Modified Whole Life premiums start out substantially lower, up to 50% lower in some cases than comparable regular whole life policy. Somewhere between the 3rd and 5th policy year there will be a one time adjustment which will increase premium and the premiums remain level for the remainder of the policy's life.

5-Year Level Term

On a 5-Year term the premiums will start out higher than a 1-Year term. Policy stated $$$$ face amount stays the same. The premium will increase and then be fixed for another 5-Year period. Also there is an maximum age at which the policy will end. Policy may or may not be renewable. Premium increases when policy is renewed.

Limited Pay Whole Life

Policies offer premiums that are limited to either a specified number of years or a specific age. Policies provide some options for insured that would rather pay premiums until they are 100 years old. Policy still mature at age 100 if insured is still living and cash value will equal face value.

Whole Life Maturity

Premiums are based on the insured's age when policy is originally issued. whole life policy does have an age where coverage does end -- age 100. If the insured is still alive at age 100, the whole life policy will mature or endow.

Whole Life: Level Premium Concept

Whole Life 'overcharges' in earlier years so premiums can remain level in the later years.

20 Pay Life

A limited pay whole life that is paid-up after the premiums are paid for 20 years. Policy matures at 100 and pays out the cash value if insured is still living.

Policy Issue Age

Premiums for whole life are based upon insured's age when originally issued. The younger the insured, the lower the premium that will be paid thru out life of policy.

1-Year Level Term

The 'level' in Level Term insurance refers to the policy's death benefit or face amount. the $$$ purchase amount never changes as long as policy is in force. The term is 1-Year. The premium payment amount stays level for the term

Whole Life Premium Comparison 10 Pay, 20 Pay and Life @ 65

The issue age is very important piece of information. The older age of the issue date, it could be possible for the premiums to be higher at Life @ 65.

Modified Whole Life and Graded Premium Whole Life

Both of these whole life policies work exactly like a regular whole life policy, except that premiums are not level. Both are ideally suited for the person who cannot initially afford the high premiums associated with whole life insurance.

Whole Life Premium Comparison Continuous Premium

Compared to Whole Life Policy premiums, the Continuous Premiums would be the lowest because premiums are paid all the way through age 100.

Whole Life Guarantees: Premium

2. Policy's premium is guaranteed to never change. Note-remember the level premium concept.

Whole Life Guarantees: Cash Value

1. Cash Value, from the day policy is issued, the cash value at any point in time is known. At '100 years' maturity is insured still alive policy endows.

Three Main Types of Term Life Policies

1. Increasing term, 2. Level tem and 3. Decreasing term

Special Whole Life Policies

1. Modified Whole Life, 2. Graded Premium Whole Life 3. Several types of Limited Pay Whole Life, and Whole Life policies for Two

Premium in order of Insurance Type

1. Single Pay Limited 'highest', 2. 10 Pay Life next, 3. 20 Pay Life next, 4. Life at 65 next and then 5. Whole Life last with lowest premium payment amount.

Life Insurance Permanent Category

1. Whole life falls under Permanent category and is also a subset of the Permanent category. 2. Permanent Life and 3. Ordinary Life also Universal Life.

Policy Paid Up

The policy premiums are paid up, no more pemiums are due. It has nothing to do with coverage terminating.

Term Policy Premiums-Indeterminate Premiums

The policy will set forth a schedule of 'current premiums' and 'maximum guaranteed premiums. The insurer can never charge more than the maximum guaranteed premiums stated in policy

Life Paid @

These types of policies can be designed to be paid up at other ages such as 55 and 75.

Renewable Term Life

Type of term life policy that gives the policy owner the option to renew policy at the end of its term for another term without evidence of insurability. Some maximum age is stated in policy.

Whole Life Premium Breakdown

When premium is made on Whole Life a portion of premium funds policy cash value. This cash value belongs to policy owner and will part of death benefit if insured dies while policy is in force.

Face Amount

Face amount or death benefit is the amount of insurance provided by a life policy.

Happy 100th

For all whole live policies the cash value equal face amount at Age 100.

Term Policy Premiums-Indeterminate Premiums: Opportunity

Insures have the ability to offer term policies with premiums that are lower than those for term policies with premiums guaranteed for the life of the policy.