Term Insurance
Yes it is less money for much larger face amounts.
Yes it is widely purchased for younger families to cover the working spouse, or both, to protect the family in the event of a death.
Yes it is purchased for many business situations like bank loans, key man coverage, business buy sell agreements in partnerships and corporations with more than one owner, as well as sole proprietors.
You are renting your insurance for a short to much longer time, for example, 1, 10, 15, 20 , 25 , 30, 35 and 40 year periods of time.
Some policies are renewable and convertible to permanent insurance. It is best to have both options.
Absolutely no equity after years of paying, and you must die for someone to collect the benefit.
Insurance companies know statistically that a high majority will lapse their policies or let them run out.
Now you are much older so new term premiums are much higher and you could be uninsurable or highly rated for change in your current health if coverage is needed in later years.
Personally I recommend to my clients to buy a smaller amount of permanent insurance and put a ten times plus term rider on top of it.
Don’t be fooled by the saying we hear “I will buy term and invest the difference “. Most term buyers never invest the difference for the long haul. Just ask them how much they have saved since they started working or have saved since buying their term policies.
Permanent Insurance
You will hear many names for this type of coverage, like whole life, universal life, variable life, current assumption life, permanent.
Each of these varies as to how they perform, but the connecting factor is they are guaranteed in some way and permanent in nature. Be sure both you and your customer know how the plan works.
There will be equity and it is not like renting a term policy with no equity.
You will hear the words cash value accumulating as the policy ages, guaranteed, and projected returns, which in the long run will be less expensive than term insurance.
Richard W. Stolz, CLU, ChFC, RHU, LUTCF
President
Diversified Insurance Brokers, Inc.