Life insurance is simply a contract between you (the insured) and a life insurance providing company (the carrier).
But first, let’s get some fundamental terminology out of the way.
Insurance Terms
Policy Owner
A person who owns the life insurance contract. A person can be a singular human being or a legally created entity, like a trust or a company. This person does not HAVE to be the Insured or the beneficiary.
Insured
A person whose life is insured must be a human being or two human beings.
Beneficiary
The person or entity that receives the proceeds of the policy.
Premium
This is the amount paid to keep the contract in force. Depending on the type of policy, it can be a contractually agreed upon price, variable, or range with a set minimum.
Face Value
The amount of policy purchased at inception.
Cash Value
If the policy has a cash value provision, this amount grows and can be accessed as a savings mechanism inside the policy. The Cash Value can either be an ancillary benefit or increase the death benefit.
Next, the question we need to answer is, how long do you want the policy to last? Are you only wanting something good for a few years, do you want something that can last forever, or do you want the CONTRACTUAL GUARANTEE?
Here is your “Why?”
It is YOUR Legacy of Love.
Life insurance can be a source of funds for your spouse, children, business partners, or other beneficiaries during an extraordinary time of change.
Are you looking for a GUARANTEED Policy?
This is probably a more expensive policy, but it has a cash accumulation account and adds the benefit of the guarantee. When you buy it, it is secured, and the price will NEVER change.
This is the original form of life insurance.
As our founder’s grandfather says, “quality, price, service. Pick two; you can’t have all three.”
Would you like to stop paying for life insurance at a certain point but still have the policy in force? Then this is what you are looking for.
This is a little cheaper, but the price may change over time, and the death benefit is NOT guaranteed. However, it is a permanent policy, meaning that as long as you keep up with your premiums, you will have an “in-force policy.“
This is the newest form of life insurance. It started in the 1980s when interest rates were at all-time highs. It is the baby of term and whole; think of it like an annually renewable term. Each year the insurance cost gets a little more expensive, but the investment portion is hopefully earning some really great returns that negate the extra expense.
Note: we said hopefully…this is why it is permanent but NOT guaranteed. The cost can rise and price itself out of your pocket book.
Are you looking for a PERMANENT Policy?
Are you looking for a PERIOD CERTAIN policy?
Another way of describing this kind of policy is to call it a term policy. This is usually the cheapest of the options and can range from five years to forty years, depending on the company you buy the policy from.
This is WHOLE life’ little brother—all the guarantees, without it being permanent or having cash value.
You can find them with “return of premium” provisions, perfect for saving for college or a vacation home.