Life Insurance

Life insurance covers your family’s needs in the event of your death, from funeral expenses to ongoing financial requirements. There are several types of life insurance that offer different coverage and payment options. Before you decide which works for you best, you should know:

How Life Insurance Is Typically Used:

For any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes. For funds for a readjustment period, to finance a move, or to provide time for family members to find a job. For ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement

What are the principal types of life insurance?

Term

Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions.

Term insurance is the least expensive insurance and is the best option for most families.

* Level term means that the death benefit stays the same throughout the duration of the policy.

Whole Life/Permanent/ universal life

Whole life or permanent insurance pays a death benefit whenever you die—even if you live to 100! There are three major types of whole life or permanent life insurance—traditional whole life, universal life, and variable universal life, and there are variations within each type.

In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy. The cost per $1,000 of benefit increases as the insured person ages, and it obviously gets very high when the insured lives to 80 and beyond. The insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than what’s needed to pay claims, investing that money, and then using it to supplement the level premium to help pay the cost of life insurance for older people.

By law, when these “overpayments” reach a certain amount, they must be available to the policy owner as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional, benefit under the policy.

In the 1970s and 1980s, life insurance companies introduced two variations on the traditional whole life product—universal life insurance and variable universal life insurance.

How much life insurance do I need?

The Philleo agency can help you determine how much coverage you and your family will need. Contact us for more information.