Types of Life Insurance

There are really only two types of policies – term insurance and cash value insurance. All life policies are variations or combinations of these two basic types of policies.

A term insurance policy refers to a period of time. A term policy may be purchase for one year at a time or for a period of up to thirty years. The policy is based on your age at the time of purchase and is not intended to last forever. You buy the policy to cover yourself for a fixed period of time. Term insurance is great for providing lots of life insurance at a low cost for younger people. If they chose to buy term insurance, almost anyone can afford to buy an adequate amount of coverage.

A cash value policy is intended to be a more permanent form of insurance. The policy will build up internal cash values that the policyholder owns. This cash value build up is designed to allow the policy to continue in force by adding interest earnings to the future premiums. With this contribution of interest, the policy can usually continue for as long as the client wishes to maintain coverage. And at the time, the policy is canceled by the policyholder, the cash value is returned to the insured. The net cost of this type of insurance may be less than term insurance over a long period of time. However the initial premiums are more expensive and this makes buying adequate coverage more difficult in some situations.

And of course there is no rule that says you have to buy one or the other type of policy. Lots of people buy one of each in order to provide an adequate amount of protection.

Our first emphasis is making sure that you have an adequate amount of life insurance. We seldom sell less than $100,000 in coverage and prefer to quote larger amounts of financial protection. Once we have agreed with you on the amount of protection you need, we will try to tailor the different policy types so to make the insurance affordable for you. We have no problem with providing just term insurance if that is what it takes to provide adequate protection for your family.

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