Level Premium Term Insurance
When an individual knows exactly how long they will need a life insurancebenefit, level premium term life insurance may be a suitable alternative. Levelpremium term insurance provides a specified death benefit and level annualpremium for a fixed period of time.An individual can choose to insure their life for 5, 10, 15, 20, 25, 30 years.Premiums are guaranteed to remain level throughout the initial level termperiod. One of the advantages of level premium term life is that it is a low costalternative when compared to permanent life insurance. However, levelpremium term life polices do not accumulate cash value.At the end of the guaranteed level term period, the policy will generally switchto annual renewable term life with premiums increasing each year according theage of the insured. It is important for the policy owner to be aware of the expirydate of the level term period. In many instances an individual will choose toextend the level term benefit with a new level premium term policy or, if eligible, convert the policy to a permanent plan of insurance.
Whole Life Insurance
Whole life insurance is a permanent form of life insurance that offersinsurance protection in the form of a death benefit, as well as “living benefits”in the form of cash value.Advantages of whole life insurance include guaranteed death benefit,contractually guaranteed cash value, and accumulation of non-guaranteedcash values such as dividends for participating polices. This “living benefit“builds within the policy on a tax deferred basis and can be used for a variety of different applications including offsetting premium costs, increasing the faceamount, retirement funding, college funding, estate planning, emergencies, orwhatever the policy owner needs it for.Whole life insurance is more costly than level premium term life , and it is forthis reason that many choose term life insurance instead. Insuranceprofessionals argue that whole life is a valuable asset to have in ones portfoliodue to the guarantees provided, and the buildup of tax deferred cash value .