Life Insurance Middletown Ohio

What is the Right Kind of Life Insurance?

All policies are not the same. Some give coverage for your lifetime and others cover you for a specific number of years. Some build cash value and others do not. Some policies combine different kinds of insurance and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. Your choice should be based on your needs and what you can afford.

There are two basic types of life insurance: term and permanent. You may combine cash value life insurance with term insurance for the period of your greatest need for life insurance to replace income. Term insurance generally has lower premiums in the early years, but does not build up cash value that you can use in the future.

Term Life Insurance

  • Term life insurance provides protection for a certain period of time, usually ranging from one to 30 years. One of the biggest advantages of term is that it is lower in cost than other types of insurance because you’re only paying for the death benefit should you die during the term of the policy.

    You can renew most term policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premium will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical exam to continue coverage, and premiums may increase.

    You may be able to trade many term insurance policies for a cash value policy during a conversion period-even if you are not in good health. Premiums for the new policy will be higher than you have been paying for term insurance.

    Term life insurance is a good choice for people who:
    • Are in their family-formation years, as it allows them to buy high amounts of coverage – even on a tight budget – when the need for protection is the greatest.
    • Need to cover needs that will disappear in time, such as paying for college tuition.

Permanent Life Insurance

  • Permanent life insurance provides lifelong protection. As long as you pay the premiums and no loans, withdrawals or surrenders are taken, the full face amount will be paid upon your death. Because it is designed to last a lifetime, permanent life insurance accumulates cash value on a tax-deferred basis and is priced for you to keep over a long period of time.

    Permanent life insurance is a good choice for people who:
    • Are retired, as the policy’s cash value may be used to supplement retirement income.
    • Want long-term life insurance coverage.

    Two types of permanent insurance include universal life and whole life.

    • Universal life insurance provides flexibility through adjustable premiums that give you the option to make higher premium payments when you have extra cash and lower premium payments when money is tight. After your initial payment, you may pay premiums at any time, in virtually any amount. Most Universal Life policies will also provide a guaranteed rate of return on your cash values, with one important exception. It is possible that you will not accumulate any cash value if any, or all, of the following circumstances occur: administrative expenses increase, mortality assumptions are changed, the insurance company's investment portfolio underperforms or premium payments are insufficient.
    • Whole life insurance offers predictability with guaranteed premiums and death benefits. Some may even allow you the opportunity to earn dividends. When you first take out a whole life policy, premiums can be several times higher than you would pay for the same amount of term insurance. However, they are smaller than the premiums you would eventually pay were you to keep renewing a term policy until your later years. Some whole life policies let you pay premiums for a shorter period such as 20 years or until age 65. Premiums for these policies are higher since the premium payments are made during a shorter period.
  • Other important definitions
    • The face amount of a life insurance policy is the money that will be paid at death or the policy’s maturity.
    • Cash value is the amount available to you should you surrender (cash in) a policy before its maturity.
If you have questions about our life insurance products, please contact us. We'd be happy to answer any of your concerns.

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