How To Explain Life Insurance To Your Mom

Life insurance can be a helpful resource in planning for one's family and future.  But which kind is right for you?

There are many kinds - Whole, Term, Universal, Guaranteed; and some even require special licensing of your insurance professional.

Let's simplify the basics of life insurance:  Whole life insurance is like a home you own; while Term life insurance is like an apartment or flat you rent for a time.  

Whole Life Pros

• It is permanent - once you have a whole life plan in force and consistently pay premiums, the policy can last for your entire lifetime.
• Most plans offer a "cash value option" which behaves like a savings account; as premiums are paid, a portion is placed toward the cash value.  The cash value usually starts a couple of years after the policy is started, and grows much like a bank savings account. 
• You can take a loan out against your cash value.*
• Your death benefit and premium remains the same over your lifetime.  (One item to note -- is after not smoking for 12+ months, you may be eligible to change from smoker to non-smoker as long as your health has not declined.) 
• Some plans offer coverage for people with diabetes or other hard-to-place health issues.
• The younger you are, the less expensive the cost of life insurance.  (Many companies write life insurance policies on infants!) 

Term Life Pros

• It offers life insurance with level premiums (premiums that do not increase) for a temporary time span. (To protect home mortgage(s); young families with/without children.)
• You may be eligible for a higher death benefit protection.
• Affordability.
• Easy to understand. 

Whole Life Cons

• *If you take a loan against your cash value and do not pay it back prior to your death, your death benefits will be reduced by the outstanding loan balance. 
• Depending on the plan, you may not have a choice where the life insurance company invests your cash value.
• Your budget may not allow for high death benefits, like $1,000,000 dollars; a revisit/ or re-analysis of your life insurance needs may be required.
• The older you are, the more expensive the cost of life insurance.  
• Many companies have a maximum age to be eligible for life insurance.  

Term Life Cons

• Determining how long of a term (10, 15, 20, or 30 years) you will need the life insurance.  (If we could see into the future, this would be considerably easier to determine!) 
• Once a policy term expires, there is no option to "renew" coverage. (Depending on the type of term insurance plan, there may be an opportunity to continue the policy plan as a non-level term policy, however the annual premium can significantly increase year after year.)
• There is no cash value option; no saving account feature within a term insurance plan.

Let Us Help! 

There are pros and cons to most everything we come in contact with, including life insurance.  Determining which plan or a combination of both plans is best for you can be quite easy, simply by working with a licensed life insurance agent. 

With Consultative Insurance Group, we work with you to determine a plan that works for you, your family, and your future.  Give us a call, drop by one of our office locations or complete an "I want a Consultation" option to schedule an in-person or virtual appointment with one of our life insurance sales associates.