Understanding Life Insurance
Whole Life Insurance
Whole life insurance is designed to be more of a 'permanent' Protection. Often has lower policy values in comparison to term insurance, but with the benefit of having protection for the clients whole entire life unlike expiring in 10,15,20 or 30 years.
Whole life is designed to replace or cover:
Bills left by the death of the person who was insured
Short Term Debts and needs
used as supplemental retirement income
Term Life Insurance
Term life insurance is the most straightforward form of protection. You generally pay premiums on a monthly or annual basis and your family is protected for that "TERM." whether it be for 10,15,20 or 30 years.
mainly for the younger 18-60 generation that are in the 'very healthy' bracket.
Term life is designed to replace or cover:
a family's loss of income
short-term debts and needs
additional insurance protection during the child-raising years
longer term protection to help your family pay off a mortgage or to help pay for a college education
as a mortgage term policy
in protecting temporary debts being paid by the head of household
What’s the difference between whole life and term?
Benefits: Whole life policies have a living benefit (cash value), and a tax-sheltered cash account that builds up inside of your policy. You don’t pay taxes on the interest you build each year from it, and that money can be used in retirement to supplement retirement planning. No such benefit is available with term insurance. Term insurance only has the actual life insurance coverage; there is nothing but a death benefit. In order for the benefit to be paid, somebody has to pass and within the 'term' the policy is active under. (10,15,20 or 30 years)
Buyers can also add riders to whole life policies, such as accelerated benefits riders, which enable someone who has a terminal illness to be able to access as much as two-thirds of the benefits while still alive. This is something that can’t be done with term insurance.
Longevity: Term life policies are sometimes referred to as temporary life. There is a fixed period of time when the premium is level, but after that time, either the premium increases yearly to the point where it becomes unaffordable or the policy terminates. The premium can eventually get so high that people have to terminate it, so the product may not be around at the very time it is needed — death.
Whole life on the other hand has a level premium. Theoretically, this policy can be around forever because the policy premium is never going to increase. If people can afford the first-year premium, they typically can afford it in the future. It’s similar to a mortgage payment — the first is always the worst, but people get used to it eventually.
Dividends: A whole life product has dividends, and the dividends are paid out much like they would be to a stockholder of a company. Those dividends can be used to reduce the premium, or they can be used to build up the cash inside the policy and the face amount. Term Life insurance has little or no dividends
Education is key: Once you acquire those key pieces of information, you must educate yourself about the options available. Many of us purchase life, homeowners and car insurance, but we don’t completely understand the policies’ purpose. This is especially true when it comes to life insurance. Many think it is simply to protect their mortgage, car loan and any current debt, but it is foremost to protect the income our families are anticipating from us.
When we don’t understand the value of life insurance, we don’t believe our life insurance need is quite as high as it actually is. The life insurance need does not always vanish as we get older. Help yourself understand that a term life policy will solve your current problem, but your need must be reviewed regularly to make sure your family remains well-protected. This should all be understood at the beginning of the relationship in starting .
"Two young men stopped out at my house and let me know all the details about my existing life insurance. They answered all my questions and walked me through the best policy. Thank you so much! Now my daughter is protected when that time comes."
Samantha T - Piqua, OH
"Jaylin Stopped out and was very flexible with my schedule. He showed me everything i needed to know. Because of him my family is set!"
John R. - Fairborn, OH