Types of Life Insurance

Term Life Insurance

Term Life insurance is the lowest cost option of all 3 types of life insurance.  It provides coverage for a predetermined amount of time or “term period.”  The policy is an agreement between the insured and the insurance company to pay a death benefit if the insured passes away during the plan period.  In return, the insurance company requires premium payments to keep the contract in force.  Premiums are fixed for the term period and can adjust after should the insured continue to want the coverage.

Buyers—-typically want coverage for debts such as mortgages, funeral costs, maintaining a standard of living, providing for kids education expenses or in the sense of business for buy sell or key man agreements.

No Medical Exam Life Insurance

No Medical exam policies allow a client to buy life insurance without having to complete any medical tests.  No medical exam policies can be Term Insurance, Universal Life and Whole Life.  The costs associated with this type of life insurance are often slightly higher than that of a fully underwritten policy due to the insurer not knowing your cholesterol or blood pressure among other things.  Policies are often issued in 1-5 days vs. a fully underwritten policy taking 3-6 weeks.

Buyers—-those with immediate needs or those that have an aversion to medical exams or simply do not want to go through the standard waiting process.

Whole Life Insurance

Whole life Insurance is a simple form of permanent life insurance coverage.  Whole Life coverage offers premium and coverage guarantees as well as cash value guarantees within the policy should all premiums be paid on time.  The cash value account in a Whole Life Insurance policy can be used for a variety of purposes such as a supplement to retirement, funding college costs but the main reason buyers of Whole Life buy the coverage is for the tax deferred earnings to be accessed later in life.  The guarantees of Whole Life insurance come as the highest cost insurance of the 3 main types of coverage; Term, Whole and UL.

Buyers—–people that have maxed out their contributions to tax advantaged accounts that want both permanent life insurance coverage as well as tax deferred earnings to be accessed in later years of life as a supplement to retirement.

Universal Life Insurance

Universal Life Insurance is characterized as a flexible premium permanent life insurance policy.  The policy can be structured to provide similar guarantees as whole life insurance but remains flexible in the hands of the policy holder.  Like whole life insurance, UL accrues a cash value and is accessible for liquidity but accessing cash value in a UL policy can have negative effects on the death benefit guarantee.

Buyers—- higher net worth clients that need to protect against estate taxes, people that want a tax advantaged investment vehicle or people that are supplementing a retirement plan.

Graded Benefit Life Insurance

Graded benefit life insurance is a policy designed for people with less than perfect health.  It offers coverage with no medical exam, limited health questions and often no questions at all.  There are limitations on this coverage such as maximum coverage amounts, state approvals and 2-3 year elimination periods depending on age and state of residence.

Buyers—- people that have been declined by traditional carriers for conditions such as cancer, heart disease, diabetes or strokes.

Final Expense Insurance

Final Expense insurance is an inexpensive way to obtain minimal coverage at low rates without the hassles of a medical exam or medical tests.  Final expenses often include the costs associated with funerals, flower arrangements, and ultimately a quick liquid asset a beneficiary can use to take care of proper burial.

Buyers—- people with all their debts paid and want their final expenses to be prefunded and not passing the burden on to their surviving members or heirs.