Term Life Insurance vs. Whole Life Insurance
What types of Life Insurance products does LifeQuote sell?
LifeQuote sells Term Life, Universal Life, Whole Life and Survivor Estate Life.
What is Term Life?
Term Life Insurance is only a death benefit. If you pay the premium, in the event of death while covered by the policy, the insurance company will pay the policy death benefit. When considering Term Life Insurance, you should first determine the length of time you need the coverage and then look at the total cost over those years. Term insurance premiums may be based on annual renewable, 5, 10, 15, 20, 25, 0r 30 year level premium arrangements. For short term needs such as to cover a bank loan or business obligation, annual renewable, 5 or 10 year level premium policies are often the cheapest. For longer periods of time, 15, 20, 25, or 30 year level premium policies are often the best buy. Consumers with long term needs should be aware that if they keep a level premium term life insurance policy longer than the initial level premium guaranteed period, their premiums will increase substantially or may not renew.
Note that in some states level premium term life insurance may be limited in the number of years of coverage, or it may not be available above a certain age. If the type of term insurance policy you request is not available in your state, LifeQuote will provide you with a quote for a plan available in your state that is closest to what you requested.
When is Term Life Insurance the right choice?
If the lowest dollar outlay is your main concern, and your life insurance need is for a few years or for a certain time period, term life insurance may be the best option. If you need lifetime coverage, an affordable Universal Life policy or other permanent policy may be a better solution.
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Is Term Life Insurance the only type of policy I need?
Determining how long to keep your coverage in force is the key to deciding if you need a policy other than term life insurance. For example, some needs exist for a limited time such as your mortgage, or the time until your children are grown and are self supporting. On the other hand, suppose you need coverage to replace your income in the event of your death. Perhaps you need insurance to pay estate taxes. These two needs are examples of needs that can last a lifetime. If your needs extend more than thirty years, there are different types of permanent policies that can meet your needs. Initially, the premiums on these policies are more expensive, but they may prove useful to you. Check with LifeQuote for these policies.
Universal Life Insurance
Is a flexible permanent policy that allows a policy holder to customize their own policy. Within certain limits set by the life insurance company, you can adjust your premiums from year to year, increase or decrease your death benefit, and still accumulate cash values. Because of it´s flexibility, Universal Life Insurance is a popular first time permanent policy for budget minded young families with changing needs. This life insurance policyis often used as an inexpensive level premium alternative when coverage is needed for many years.
A Universal Life Insurance policy can have a level death benefit (like most term insurance policies), or it may provide an increasing death benefit which includes net policy cash values as an added death benefit. The increasing death
benefit option usually requires a higher premium.
Term life insurance will eventually have increasing premiums after the level premium period expires (example: year 21 on a twenty year level term insurance policy) as a result of this, over time, your term costs will ultimately become very expensive.
On the other hand, universal life insurance will give you the security of an inexpensive death benefit that can last for many years. Some life insurance companies offer special features that provide for extended premium guarantees on universal life insurance policies. For example, the guarantee may be in the form of a "rider" or supplemental benefit which guarantees that if you pay a specified minimum premium each year, the death benefit will be guaranteed to
continue for a specified number of years (similar to level premium term life insurance). These guarantees can sometimes last as long as fifty years. The length of the extended premium guarantee varies from state to state. Each company has it´s own guidelines regarding these extended guarantees.
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Whole Life Insurance
Whole Life Insurance Provides a lifetime guaranteed death benefit, a guaranteed fixed premium, and guaranteed cash values. These policies may share in the excess earnings (if any) of the insurance company. These earnings may be credited to your policy cash value either as dividends or as excess interest.
Dividends or excess interest may be used to add to your policy´s total death benefit, or to reduce future premiums. Similar to Universal Life Insurance policies, your cash values can be used to pay future premiums, supplement retirement and college education, and provide emergency cash reserves. Consumers should be aware that while the cash values in a life insurance policy have many uses, they should not be considered as a pension or savings plan.
In summary, whole life insurance is for the person who wants guaranteed permanent coverage with a guaranteed premium for the rest of their life.
Survivor Estate Life Insurance
Also known as "second to die" life insurance is a special policy covering two lives, typically a husband and a wife, or business partners. These policies are designed to provide cash to cover estate taxes or business liability which have to be paid after both people have died. The survivor policy premium is often much less than if individual permanent coverage was purchased on each life. We suggest that if you are considering survivor life insurance you should talk to a LifeQuote agent and shop the rates since these policies are highly customized to fit your personal needs. Please speak to your professional tax or estate planner regarding the effectiveness of a Survivor Estate Life Insurance policy as a part of your planning.
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