It’s generally the most affordable type of life insurance and delivers a fixed amount of death benefit coverage for a specified number of years (which is known as the “term”). Term Life Insurance is ideal for covering temporary needs like paying off a mortgage or other debts in the event of an untimely death.

Term Life insurance can be the best option if your budget will not allow you to purchase more expensive permanent insurance, yet you need to cover certain debts and expenses in case of your untimely death. Many term policies have the option of “conversion” which allows you to convert the term policy into a permanent policy at a later date.

Term Life Insurance Basics

• Provides coverage for a specified period
• Easy to understand
• Affordable way to get maximum coverage
• Becomes expensive after the specified period
• You build no equity

While Term Life can be described as a base model of life insurance, Permanent Life insurance provides flexibility along with coverage for longer-range goals. In addition to covering current debt and expense or replacement of income Permanent Life Insurance is a great tool to help provide coverage for college funding, supplemental retirement income, charitable giving and leaving an inheritance for your heirs.

Also, Permanent Life insurance offers the opportunity to build tax-deferred cash value that you can access for future use.

Permanent Life Insurance Basics

• Protection for your whole life, as long as sufficient premiums are paid
• Can build equity in the form of a cash value
• Offers flexibility and many options to choose from
• Initially higher premiums than Term, but generally more cost-effective in the long run

The two most common types of Permanent Life Insurance are Whole Life Insurance and Universal Life Insurance.

Whole Life Insurance is the simplest form of permanent life insurance. It features lifelong protection with guaranteed premiums, death benefit, and cash value.

You should consider Whole Life Insurance if you want:

• Guaranteed Death Benefit
• Fixed Premiums
• Cash Value Guaranteed to grow each year
• Dividends to be used to increase policy value

Some aspects to consider when thinking about Whole Life Insurance:

• Premiums are initially more costly than Term Life, but are guaranteed not to increase
• Dividends are not guaranteed
• Loans and withdrawals can reduce the death benefit payout

Universal Life insurance has more features than Term Life that allows for great flexibility than Whole Life Insurance. For example, Universal Life Insurance has features like flexible premium payments and allows you to change death benefit.

You should consider Universal Life Insurance if you want:

• Protection that can last a lifetime
• The flexibility to choose between two structure of policy:
• Protection plus cash accumulation
• Affordable guaranteed protection

Some aspects to consider when thinking about Universal Life Insurance:

• Cash value growth is based on periodically-declared fixed interest rates. If the interest rates fall, your cash value could suffer, and higher premiums may be needed
• Changing your policy's premium or death benefit can affect your policy's performance and guarantees, possibly requiring higher premiums later.

Variable Life Insurance combines the protection and tax efficiencies of life insurance with the investment potential of market gains. The life insurance aspect provides death benefit coverage, while the variable aspect allows the policy’s cash value the opportunity to increase as it participates in investment sub-accounts. A sub-account acts similar to a mutual fund, except it's only available within a variable life insurance and annuity policy

It is important to note that because Variable Life Insurance is subject to market returns and investment risk your principal is not guaranteed.

Beneficiary Type	Sample Wording
One beneficiary	Jane Smith, spouse
Two beneficiaries	John Doe, brother and Mary Doe, sister, equally or to the survivor
Three or more beneficiaries	John Doe, father, Mary Doe, mother and Jane Doe, sister, equally or to the survivors or survivor
Per capita(1)	To all children of this marriage and to the survivors of a deceased child, per capita
Per stirpes(2)	To all children of this marriage and to the survivors of a deceased child, per stirpes
Unnamed children born of the insured	Lawful children of the insured, equally or to the survivors or survivor
Unnamed children born of a particular marriage	Children born of the marriage of the insured and Mary Doe, wife, equally or to the survivors or survivor
Unnamed children, including legally adopted children	Children born of the marriage of, or legally adopted by the insured and Mary Doe, wife, equally or to the survivors or survivor
Joint tenants with rights of survivorship(3)	John Doe and Jane Smith as joint tenants with right of survivorship
Irrevocable beneficiary(4)	John Doe, Irrevocable Beneficiary
Accidental death benefit to someone other than named beneficiary	Proceeds of the Accidental Death Benefit, if any, shall be paid to John Doe, son, if living; otherwise Mary Smith and Nancy White, sisters of the insured, equally or to the survivor. Any balance of the proceeds of the policy shall be paid to John Jones, partner of the insured
AKAs (also known as)	Veterans of Foreign Wars, a.k.a. VFW
Bank loans(5)	First Savings Bank, as its interests may appear under loan #9999999, dated 01/01/00, with balance, if any, to Jane Doe
Buy-Sell agreement	Trustee of the Buy-Sell Agreement between John Jones and Jane Smith under the agreement dated 01/01/00
Common disaster clause(6)	Jane Doe, wife, if she survives the insured for a period of __days; otherwise, children born of the marriage of the insured and said wife, or the survivors equally, or the survivor
Individual creditor	John Doe, creditor, under a line of credit (or revolving loan), balance, if any, to Jane Smith
Estate of the insured	Estate of the insured
Split dollar beneficiary(7)	The greater of the sum of the premiums paid or the cash accumulation account to ABC Corporation; balance to Jane Doe, wife of the insured
Uniform Gifts/Transfers to Minors (UGMA/UTMA)(8)	John Doe as Custodian for Jane Doe, minor, under the (state) Uniform Gift to Minors Act -or- John Doe as Custodian for Jane Doe, minor under the (state) Uniform Transfers to Minors Act
Trusts(9)	Trustee of the John Doe Trust Agreement dated 01/01 /OO -or- Trustee of the John Doe Irrevocable Trust under Trust Agreement dated 01/01/00 -or- John Doe for the benefit of Jane Doe and John Doe (informal trust arrangement) -or-Trustee of the John Doe Living Trust under Trust Agreement dated 01/01/00

1. If one of the children dies but has children of his own, that person's share would be divided among his children
2. If one of the children dies but has children of his own, that person's share would be divided among his children
3. On the death of one joint tenant, the tenant's share of the property goes automatically to the survivors or survivor
4. The beneficiary's interest in the policy cannot be changed or reduced without his or her consent
5. At death, the bank will receive payment for the outstanding balance, with the rest going to the named beneficiary
6. Applies when two people die under conditions where it is Impossible to determine which one died first. This clause can be for any number of days under six months. Most companies will try to discourage longer periods
7. Always according to the actual split
8. Under either of these options there may be restrictions as to who can be named owner or beneficiary
9. The trust should be signed prior to the date on the application and the policy issue date in order to avoid inclusion of the proceeds in the estate of the insured. Consult the issuing company for specific handling directions