Permanent Life Insurance

Permanent life insurance can provide continuous lifetime protection as long as premiums are paid when due. Permanent policies also provide you with the opportunity to build cash value, so you can take a loan on your policy--or withdraw1 a portion of its value--to help pay for a child's education, supplement your retirement income or funds for a major purchase. There are three basic types of permanent insurance:

• Traditional whole life insurance, which offers a guaranteed death benefit, cash value and a fixed premium.
• Variable life insurance, which offers three types of death benefits, a cash value that can fluctuate based on the
• Performance of an underlying portfolio of investment options, and a flexible premium structure
• Universal life insurance, which offers the security of lifetime protection, a choice of three guarantee periods against lapse, three death benefit types, premium flexibility, and a competitive interest crediting rate.

Permanent insurance is right for you if you want your life insurance to provide:

• Lifetime coverage.
• A generally tax-free death benefit (according to IRC Section 101(a)) for your family, to help pay off debts, funeral expenses, probate costs, estate taxes, and to help maintain the lifestyle and financial goals of your loved ones. The death benefit can be advanced in some cases to provide funds for nursing home care and medical expenses for terminal illness, thanks to the Living Needs riders that can often be added to your policy at no cost. In some states, death benefits can be advanced also to help pay for organ transplants.
• The opportunity to accumulate cash value (generally tax deferred) that you can access1 in the future for emergencies or opportunities.
• The potential for coverage to grow with you as your needs change over time.
  

Term Life Insurance

Term life insurance provides protection for a limited period of time and pays a death benefit only if you die during the term. For this reason, it is commonly referred to as temporary insurance. While term policies do not accumulate cash value, most offer conversion privileges that allow you to convert to permanent policies--without the need for a medical exam--within a specified time period.

Term insurance is right for you if you:

• Want life insurance coverage to help cover a short-term need, either to pay off a loan or business debt, or to provide a death benefit during your peak earning years while your children are young.
• Can't afford a permanent policy now but need protection until you can convert to a permanent plan.
  Need to add a large amount of coverage to complement your existing permanent policy at the lowest possible cost.
• Are willing to pay premiums that may increase if you extend coverage past the initial term period. (Note that some types of term coverage increase annually.)

Combining Permanent and Term Insurance

Another option is to combine permanent and term insurance policies to obtain the advantages of both. This can help ensure that large debts and obligations are attended to in the event of your premature death. For example, a combination of coverage can be used to help ensure funds for a mortgage or a child's education while providing for your final expenses and your family's financial security.

Combined coverage might be right for you if:

• You need permanent insurance protection, but must start with a more affordable premium.
• You already own a permanent policy but want to increase your death benefit to pay off a second mortgage in the event of your death.
• Your employer provides a term policy in a multiple of your annual salary. You can purchase your own permanent policy to meet your additional insurance needs and to help ensure coverage exists even if you leave your employer.