Types of Individual Life Insurance 1

Term Insurance provides what is known as pure death protection

-If the insured dies during this term, the policy pays the death benefit to the beneficiary -If the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term -There is no cash value or other living benefit

Term Insurance

Term Insurance is temporary protection because it only provides coverage for a specific period of time. It is also known as pure life insurance. Term policies provide for the greatest amount of coverage for the lowest premium as compared to any other form of protection. There is usually a maximum age above which coverage will not be offered or at which coverage cannot be renewed

Whole Life Insurance

Permanent Life Insurance is a general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid. The most common type of permanent insurance is whole life.

Adjustable Life Policies that actually can be either term or whole life. The insured chooses the amount of coverage they need and how much premium they can afford. The policy can be adjusted as the insured's need change. Usually the policy owner can:

-Increases or decreases premium -Change the premium paying period -Increase or decrease the face amount of coverage -change the period of protection

There are 3 basic types of term insurance available, based on how the face amount (death benefit) changes during the policy term

-Level -Increasing -Decreasing

The following are key characteristics of whole life Insurance

-Level premium: the premium for whole life policies is based on the issue age; therefore, it remains the same throughout the life of the policy -Death Benefit: The death benefit is guaranteed and also remains level for life

Increasing Term Insurance

Increasing Term features level premiums and a death benefit that increases each year over the duration of the policy term. The amount of the increase in the death benefit is usually expressed as a specific amount or a percentage of the original amount. Increasing Term is often used by insurance companies to fund certain riders that provide a refund of premium or a gradual increase in total coverage, such as the cost of living or return of premium riders. This type of policy would be ideal to handle inflation and the increasing cost of living. It is also often added to another policy as a rider, such as with return of premium policies

Annually Renewable Term

Is the purest form of term insurance. The death benefit remains level and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age, as the probability of death increases.

Level Term Insurance

Level Term Insurance is the most common type of temporary protection purchased. The word level refers to the death benefit that does not change throughout the life of the policy

Adjustable Life Policies that increase the death benefit or change to lower premium payments will

Require proof of insurability. Adjustable Life Policies offer a lot of flexibility to the policy owner, including converting from term to whole life or vice versa.

Return of premium

Return of premium life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid. The return of premium is paid if the death occurs within a specific period of time or if the insured outlives the policy term

Single Premium Whole Life

Single Premium Whole Life is designed to provide a level death benefit to the insured's age 100 for a one time, lump sum payment. The policy is completely paid up after one premium and generates immediate cash

Convertible provision

The Convertible Provision provides the policy to a permanent insurance policy without evidence of coverage insurability. The premium will based on the insured's attained age of the time of conversion.

Traditional term Policies

Traditional term policies offer a low cost, simple death benefit for a specified term but have no investment component or cash value. When the term is over, the policy expires and the insured is without coverage.

The three basic forms of whole life insurance

-Limited-Pay whole Life -straight Whole Life -single premium whole life

The following are key characteristics of whole life Insurance

-cash value: the cash value, created by the accumulation of premium, is scheduled to equal the face amount of the policy when the insured reaches age 100 and is paid out to the policy on a regular basis and have a guaranteed interest rate. -living Benefits: the policy-owner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered. The cash value also called non forfeiture value, does not usually accumulate until the third policy year and it grows tax deferred.

Features of interest sensitive Life Policies

-varied premium -cash value that can be greater than whats guaranteed in the policy

Decreasing Term

Decreasing Term policies feature a level death premium and a death benefit that decreases each year over the duration of the policy term. Decreasing Term is primarily used when the amount of needed protection is time sensitive, or decreases over time. Decreasing Term coverage is commonly purchased to insure the payment of a mortgage or other debts if the insured dies prematurely. The amount of coverage thereby decreases as the outstanding loan balance decreases each year. A decreasing term policy is usually convertible, it is usually not renewable since the death benefit is $0 at the end of the policy term

Whole Life Policies offer

Level Premium based on the issue age, guaranteed, level benefit, cash value that is scheduled to equal the face amount at the insureds age 100, living benefits, which include policy loans.

Level Premium Term

Level premium term provides a level death benefit and a level premium during the policy term. Example: A 100,000 10 year level term policy will provide a 100,000 death benefit if the insured dies during the 10 year period. The premium will remain level during the 10 year period. If the policy renews at the end of the 10 years, the premium will be based on the insured's attained age at the time of Renewel

Limited Pay Life

Limited Pay Life is designed so that the premiums for coverage will be completely paid up well before age 100. Limited Pay Life are 20 Pay life whereby coverage is completely paid for in 20 years and life paid up at 65, whereby the coverage is completely paid up for by the insured's age 65. This type of policy has a shorter premium paying period than straight Life Insurance, so the annual premium will be higher. Cash value builds up faster for the limited Pay policies.

Adjustable Life Policies have most of the features as whole life Policies such as

Loan Provision, non forfeiture option and others. The difference is that the cash value of adjustable Life grows only when the premium that are paid in are more than the cost of the policy.

Ordinary (straight) Life

Ordinary straight Life is the basic whole life policy. The policy owner pays the premium from the time the policy is issued until the insured's death or age 100. Of the common whole policies, straight will have the lowest annual premium