Life Insurance is purchased for many different reasons including Income Replacement, Asset Protection, Estate Planning and more. The type of protection needed or tax planning purpose helps determines the type of coverage needed. The cost is determined by the plan you choose, the Face Amount of coverage and the rate class qualified for. Rate class is based on factors including, Age, Sex, Smoker/Non-Smoker, Height, Weight, Medications Taken, Medical Conditions, Family History, Financial underwriting and more. Not every carrier underwrites every applicant the same way.
Whole Life and Universal Life are commonly called “Permanent Insurance” coverage and are designed to stay in force for the lifetime of the insured as long as the planned premiums are paid when due. While permanent insurance is more costly, it usually includes an investment return, in the form of either dividends or interest, and builds cash value. Cash value may be available to borrow against at some point in time.
Term Life Insurance is available today in 10, 15, 20, 25 and 30-year terms (subject to the age of the applicant), providing a fixed premium and Face Amount during the term selected. Regardless of the term selected, at the end of the term, the policy will convert to an annually increasing premium term policy, and costs can become extremely prohibitive if the insured is unable to re-qualify for the same Medical Underwriting Class and a new fixed premium term. Term Life insurance generally offers a period of time in which the insured/owner can convert the policy to a permanent insurance policy at the then current age, without medical underwriting.