Life Insurance can be categorized into 3 distinct groups, Whole life, Universal Life and Term Life. All the variations in life insurance are essentially from the Whole life Policy, which came into existence in this country in the early 1800’s.   Whole life is a policy that has a guaranteed cash value, premium, and death benefit. That is important to understand, as the other forms of coverage simply do not have the same type of guarantees.

Whole life also is designed to be payable as a death benefit anytime you die not to just a specific age or time period. The policy builds up an internal cash value, which can be borrowed against in the future. Whole Life is also the most expensive in initial outlay, but may be more cost effective over many years.

Term life, is Whole life without the savings aspect, and without the guarantee of death benefit for your life expectancy. Term polices after have 5 to 30 year guaranteed premium and Death benefit period. After the guarantee premiums rise dramatically, often putting the cost of continuing coverage out of reach of the policyholder it was meant to protect. Term policies can also be a decreasing benefit policy, see your agent for details and available as there are many variations.

Universal Life is a combination of the above two types of coverage. It is more expensive than Term coverage but less expensive than Whole Life. It usually has a guaranteed Death Benefit for a number of years as well as a guaranteed premium, however the guaranteed prices are far above the current price, and can this makes the policy an easy target for deception. Universal Life is the most popular permanent product on the market today.

Always use an agent to buy coverage, he or she is in a unique position to offer their expertise to you as to your needs and wants with insurance, and always use an agent that is a CLU, (Chartered Life Underwriter) or the equivalent, and is currently active with a Professional Organization, such as The Society of Financial planning Professionals, or The Independent Insurance Agents of New York, etc.

Anthony C. Pepe, CLU