Traditional Life Insurance

You have a choice of two traditional types of
life insurance: Term or Whole Life.
Term Insurance
A “term policy” involves coverage purchased
for a specific time period and pays a death
benefit only if the policyholder dies during
the time for which the policy is written and
premiums are paid.
A term policy:
Provides more life i XX nsurance coverage for
your premium dollar in the early years.
XX Pays benefits only if the insured dies
during the coverage period.
XX Does not usually accumulate cash value.
XX Is suitable for large amounts of coverage
for specific periods (i.e., one, five, 10 or 20
years, etc.) or to age 60 or 65.
Useful for:
XX Parents of young children
XX People with large financial obligations and
home buyers
With term insurance, coverage ends after
the specified term in your policy is reached,
unless it includes a provision allowing you to
renew your policy without providing evidence
of insurability, such as passing a physical
exam. However, your premiums will increase
as you age.
A term insurance policy may be convertible.
This means you can exchange the policy for
a whole life policy without providing evidence
of good health. Although the premium for the
whole life policy will be higher initially, it will
remain the same for the rest of your life.
Whole Life
Whole life insurance, a “whole life policy,” or
“permanent insurance” involves coverage
effective for the entire life of the policyholder.
A whole life policy pays a death benefit when
the policyholder dies, regardless of his or
her age.
Key Characteristics:
XX Provides a fixed amount of life insurance
coverage and a fixed premium amount.
XX Benefits are payable upon the death of the
insured or on the maturity date—often the
policyholder’s 100th birthday.
XX Coverage can increase only with the
purchase of an additional policy, or, if
available, through additional riders
or dividends.
XX Policy coverage is provided for life.
XX Premiums are paid at a fixed rate
throughout your lifetime, if the policy
remains active.
Life