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 mostly linked 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 choices. Also, comparing whole life insurance quotes between carriers is terribly difficult and doesn’t lend itself to a comparison as does term insurance. Comparisons are tough as the premiums and cash value are tied to both current and guaranteed interest rates over many years. Predicting these rates always leaves potential benefits to chance.
Another type of permanent coverage appeared a few years ago. Known as “guaranteed premium universal life”, it very quickly became the selection of many people with a need for permanent life insurance. Because this coverage has little or no cash value but guarantees the once a year premium and death benefit, comparison of policies is quite simple.
When I discuss their coverage with clients who currently own whole life, many are amazed to find out 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 kinds of permanent insurance policies, your number 1 concern must be to decide what your insurance must do for you. Once that is accomplished, consult an experienced independent agent to help you choose 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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