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The Different Types of Life Insurance

Understanding Made Easy
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TERM LIFE

HOW IT WORKS: The Basics

  • When Term Life is purchased the initial term length, benefit amount, and premium are determined. 

  • Term policies are only designed to last for a portion of your life, after they expire one of three things happens...

    • Premium Increases ​(Only if Renewable Option available)

    • Benefit Decreases  (Only if Renewable Option available)

    • Policy Terminates  (No Renewable Option available)

WHAT IS THIS BEST FOR?

  • Loss of Income Protection

  • Mortgage Protection​

  • Key Person Insurance

WHOLE LIFE

HOW IT WORKS: The Basics

  • Coverage is good for your entire life.

  • Coverage amount never decreases.

  • Premium amount never increases.

  • Builds Cash Value 

WHAT IS THIS BEST FOR?

  • Final Expenses

  • Legacy Creation

  • Cash Value Accumulation

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UNIVERSAL LIFE

HOW IT WORKS: The Basics

  • Works like a hybrid between a Term and Whole Life and can be tricky if not structured properly due to the Cost of Insurance (COI).

  • The payor always pays the same premium, so initially when you a Universal policy the company charges you more than the current COI and you build up a cash value. After some years the COI will exceed the premium payment (peak in green line on graph) and the cash value will now have to help supplement that payment.

  • Once the cash value expires the premium needs to be paid in full or policy expires.

WHAT IS THIS BEST FOR?

  • Cash Value Accumulation

  • Death Benefit

  • Provides permanent coverage with flexibility 

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GROUP LIFE

HOW IT WORKS: The Basics

  • Most common life insurance provided by work, typically Term coverage.

  • You are part of a group that has the same characteristics, usually employer or age.

  • You are not in control of policy or rate changes.

  • Should not be relied upon as your only life insurance  coverage.

WHAT IS THIS BEST FOR?

  • It is an inexpensive way for adding extra coverage.  

Are you an Employer?

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ACCIDENTAL LIFE

HOW IT WORKS: The Basics

  • Life insurance that only pays out if you die in an accident.

  • It does not last your whole life, usually cut short by and age or term limit, whichever comes first.

  • Very common to add onto a traditional policy as a Rider.

WHAT IS THIS BEST FOR?

  • On its' own it is best for those who have dangerous jobs or travel a lot.

  • Otherwise typically best to add on as a Rider.

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