Whole Life, Universal Life, and Term Policies 101
Whole Life policies are policies that typically have a fixed death benefit and are have fixed monthly payments based on the age and health of the applicant. The premium paid will depend on the company for the same death benefit so check with one of our agents to find one that fits your budget.
Universal Life policies are policies give you the flexibly to decide the amount of life insurance and premium payments depending on the policy minimums. These can be complicated so talk to one of our agents to see if a Universal life is right for you.
Term Life policies are set for a pre-determined time, 5, 10, 20, 30 years. There are different types of term policies, level, decreasing, and increasing. Term policies are great for covering a need for certain period. For example, you buy a home. Over your 30-year mortgage you are paying down the loan so the amount of insurance needed would be as much to cover the cost of that asset in year 25 than it would be in year 5. A decreasing term could be used in this case to help offset that cost of that asset as the loan amount decreased over time. An increasing term policy is just the opposite, when more kids are added, more assets added, etc... then a increasing term policy can help cover increasing costs and needs to be covered. A level term policy is the most common. It has a fixed death benefit and a fixed premium for a set period. This type of term policy is for getting additional coverage during a period that coverage needs stay very similar. If needs arise, they can always get more coverage.
Lastly, there are Convertible Term policies. These can be a feature of any term policy that allows the applicant to then choose if they want to convert the term policy into a whole life policy at the end of the term period. The cost of insurance will jump up to their current age but typically you won't have to prove insurability and get it underwritten again