Term:
Term or temporary life insurance is designed to satisfy a need for life insurance that will not always exist. Some people take the money they save on lower premiums of term insurance and invest it figuring that once they have saved enough they will no longer need life insurance. Term insurance has no cash value ever and cannot be cashed in or have a loan against it. Most term insurance has a face value that does not change during the term. Typical terms are 1, 5, 10, 15, 20, and 30 years. Some of the longer terms only guarantee the rate for 10 years and then the rate will vary depending on how much insurance costs in the future. Most term is renewable beyond the term period, but gets very expense after the term period. Term insurance is the least expensive type of life insurance.

Whole Life:
Whole life is a type of permanent life insurance as opposed to term. It has two parts. The first is the insurance policy and the second is a cash accumulation account that has a fixed rate of return. It is designed so that if you want to cash in your policy after retiring and no longer need life insurance you can. It is very predictable and you can figure out what you will have when you decide you want to cash in the policy. The rate of return is usually low since the policy invests in safe investments. You can also borrow against the cash value, provided cash has built up in the policy, without cashing in the policy if you need cash.

Universal:
This is the most flexible type of life insurance. It has a cash accumulation account that generally pays higher rates than a whole life policy. You can decide how much you want to put into the policy each year, even though the insurer will have a target premium to keep the policy in force. If you put more in the first few years the investment gains should allow you to put less in later years. Some policies can be designed to pay for a specific number of years and then pay for themselves from the investments. Usually the policy has a guaranteed rate of return. So even if the investments do poorly you are guaranteed a minimal return on your cash accumulation. Some universal life (U/L) policies, that are called Variable U/L, allow you to invest in mutual funds, which can have the potential for a better rate of return. You can also borrow against this type of policy if you need cash.

If you want more information or a quote on life insurance please fill in the extra section for life insurance on the information form.

For additional information on Whole Life Insurance go to my links page and click on Blue Cross. Click on Mature Individuals and scroll down the page and click on Whole Life insurance. This gets you to the Whole Life Insurance page of my Blue Cross web-site.

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