Just as their are various reasons for owning life insurance, there are many main types of coverage. There are essentially two types of coverage, term and permanent. To explain, life insurance can be bought to satisfy a transient need like shielding children until adulthood or satisfying the requirements of a personal loan. On the other hand, permanent coverage is generally used to protect a partner, maximizing an annuity or for estate planning.
Let’s have a look at permanent coverage. If you’re a baby boomer or older, permanent coverage is generally synonymous with whole life insurance. Whole life insurance quotes were something you received while sitting with you local agent who told you all the benefits of whole life without any alternatives. Also, comparing whole life insurance quotes between carriers is very complicated and doesn’t lend itself to a comparison as does term insurance. Comparisons are tricky as the premiums and cash value are tied to both current and guaranteed IRs over many years. Predicting these rates always leaves potential cash value to chance.
Another sort of permanent coverage appeared several years back. Known as “guaranteed premium universal life”, it quickly became the choice of many of us with a real requirement for permanent life insurance. Because this coverage has little monetary value but guarantees the annual premium and death benefit, comparison of policies is very easy.
When I talk with clients who currently own whole life, many are surprised to learn the their beneficiary only receives the face amount and not the cash value. Additionally, any loans that are outstanding on the policy will be subtracted from the face amount.
While there are both benefits and downsides to all types of permanent insurance policies, your first concern ought to be to decide what your insurance has to do for you. Once that is accomplished, consult a professional independent agent to help you decide on a type and amount for your policy, and then steering you thru the underwriting process.
Leonard Robbins can research permanent life insurance from most major carriers. You may contact him to see if permanent coverage is right for you.
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