Life Insurance

Simply stated there are only 2 types of life insurance policies:

  • Temporary (Term) and
  • Permanent (Whole Life and Universal Life).

The simplicity often ends at this point. There are many types of each of these insurance policies. How do you decide? Generally speaking, if you're looking for coverage for a short period of time, term life makes more sense as it provides death-benefit protection for a specified period of time. But, if you are looking to have a policy for the rest of your life, or you have investment goals, permanent insurance is a better fit. All life insurance policies will require that you meet certain medical criteria.

Term Life Insurance

All term insurance policies have a specified period of time for which they are initially issued.  After the initial time frame, most policies are renewable or have some sort of conversion feature. In all cases, you would be better off re-qualifying for a new policy! If you were to become uninsurable, your renewal or conversion options would be quite unattractive.

Here are some of the different types of term insurance:

  • Yearly Renewable Term (YRT): This policy starts out with the lowest 1st year premium.  The cost rises each year and after 10-15 years often becomes cost prohibitive.

  • Time Specific Term: These policies have time frames ranging from 5 years to 30 years, and the premium stays level for the intended time frame.  After the initial time frame, these policy costs SOAR.  The reason for the huge price increase is that only uninsurable people renew the contracts.  Policyholders in good health simply re-apply for coverage elsewhere and get a MUCH better price. 

Note:  Be sure that your policy is guaranteed for the intended time frame.  For example, some 30-year level term policies are only guaranteed for 10 years. 

Permanent Life Insurance

Unlike term insurance, permanent insurance is intended for the long haul.  Permanent insurance builds cash value that can be assessed in times of emergency or used to supplement retirement.  If the cash is used, it can alter the original intent, so please evaluate all of your options carefully. 

Whole Life 

As the name implies, this type of policy is intended to last for the entire life of the insured.  The issuing company normally guarantees that regardless of economic conditions, there will always be a death benefit. To obtain this guarantee, the premium is also paid for the whole life of the insured, and these premiums are often quite high.  If the insurance company does well and pays dividends constantly, the policy can become what is called a "paid up policy." With this type of policy, however, the inflexibility of premium payments could become a burden if your expenses increase or if you lose your job. These policies have become less attractive since the advent of Universal Life policies.

Universal Life

This type of policy allows greater flexibility than whole life or term life.  You may reduce or increase the amount of your death benefit after our initial payment.  To increase the amount, you may have to give the insurance company medical proof of good health. After your initial payment, you can pay premiums any time, in almost any amount within the policy's required minimums and maximums. These policies must be actively managed to maintain sufficient funding because the insurance company is allowed to increase charges.  Be careful when choosing a company because your insurance company invests part of your premium.

Disability Insurance

What greater asset do we have than our ability to earn money?  Though this is our primary asset, studies show it is our most often neglected when it comes to insurance.  What would happen if you could not work for 6 months do to an illness or injury? Let's say you could not work for 5 years, could your family survive?  This is where disability insurance becomes important. 

Disability premiums are small compared to their potential benefit.  At Employer Concepts, we can design a plan to fit your needs.  By extending the elimination period, we can reduce premiums.  Employer Concepts can do an analysis of which plan best fits your needs. Please feel free to contact us for a quote. You will be surprised at the type of plans we can offer!