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Life Insurance ABC
Before you decide which policy is good for you, here is a brief and easy to understand policy comparison chart.
Life Insurance Policy Comparison Chart
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Term Insurance |
Permanent Insurance |
Universal Insurance |
| Overview |
Temporary coverage. |
Lifetime coverage. Provides tax-deferred savings. |
Lifetime coverage. Flexible deposits that provides tax-deferred savings. |
| Coverage Length |
Coverage ends at a specified age. |
Lifetime protection. |
Lifetime protection. |
| Benefit Amount |
You choose the benefit amount when you purchase the insurance and it won't change. |
You choose the benefit amount, with ability to increase coverage. |
You choose the benefit amount, with ability to increase coverage. |
| Cost |
The lowest premiums when purchased, but premiums will increase over time and become very expensive in your older years. |
Some products have adjustable premiums, and others have a guaranteed premium. Premiums may be higher when you're young and then become lower as you age. |
Premiums vary depending on the policy. Some products have level premiums, others have premiums that increase. |
| Cash Value |
No cash value |
A cash value may accumulate and be paid to you upon cancellation (depends on policy and coverage) |
A cash value may accumulate and be paid to you upon cancellation (depends on policy and coverage) |
General Guide To Life Insurance Plans For Different Life Stages
| Life Stage |
Primary Need |
Life Insurance Product |
| Young and Single |
Asset creation |
Wealth creation plans |
| Young and Just married |
Asset creation and protection |
Wealth creation and mortgage protection plans |
| Married with kids |
Children's education, Asset creation and protection |
Education insurance, mortgage protection and wealth creation plans |
| Middle aged with grown up kids |
Planning for retirement and asset protection |
Retirement solutions and mortgage protection |
| Across all life-stages |
Health plans |
Health Insurance |
Cash Value Life Insurance Policies
Some life insurance policies accrue a cash value over the years. This is accomplished in a variety of ways by different kinds of policies. Some, called mutual policies, are issued by mutual companies and accrue dividends. Others accrue interest or earnings from investments. Once a death occurs, the company does not have to pay any of the cash value, only the face amount of the policy. However, if you decide to cancel your policy, you are entitled to receive the cash value you have accrued so far. You can also borrow against the cash value while keeping your life insurance in full force and effect.
Annuities
Some policies are primarily designed to pay benefits during the life of the insured rather than waiting for him or her to die. These policies are called annuities. Sometimes annuity payments terminate upon the death of the insured and sometimes they do not.
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