ABC's of Insurance

Term Insurance:
Term insurance will insure you for a specified period of time. You pay a premium, and in the event of death of the insured during the term of the policy, a death benefit is paid to a beneficiary. Term policies may have a renewal or conversion privilege. With term insurance there is generally no cash accumulation.

Benefits of Term Insurance:

1. Lower premiums.
2. Most term policies can convert to a permanent policy with no additional proof of insurability.
3. Death benefit can be level or decreasing. One form of decreasing term can cover an outstanding mortgage balance.
4. Death benefits are generally received federal income tax free.

Permanent Insurance:

1. Whole Life - Is designed to insure you for your lifetime and gradually will accumulate a cash surrender value and has level, fixed premiums.
2. Universal Life - Gives you flexibility in deciding the timing and size of the premium and amount of death benefit of the policy.

Benefits of Permanent Insurance:

1. Permanent insurance may insure you for a lifetime, with cash values available to the policy owner.
2. Cash values that may be used for future needs such as college education or retirement.
3. Loans can be made on the cash surrender value in emergencies.
4. Death benefits are generally received federal income tax free.

Glossary of Terms