When selecting life insurance, most clients just want a simple explanation. They are not looking for a complex analysis of all the features, riders, and insurance speak.

Here are some simple basics that can be of assistance:

1. There are 3 types of different types of life insurance- Term life, whole life, and Universal Life (Each one has many variations).
a. Term life is like a renting insurance for a period of time at a level rate (for example 10 year, 20 year, or 30 year). No equity is built and you have a death benefit only as long as you pay.
b. Whole life insurance is designed to last for your whole life (permanent insurance). It is a level premium that starts off much higher than term, but remains level for the life of the contract. When term rates go way up after the level period, they will surpass what is being paid on the whole life. Whole life builds equity (cash value) that can be used and borrowed against during the course of your life. Unlike the concept of renting with term, this is like owning/buying your insurance.
c. Universal Life is another permanent insurance like whole life, but with much more flexibility. The premium is flexible and allows the policyholder to pay the premium that best allows them to achieve their goals. For example, a guaranteed universal life is just enough premium to have a death benefit for the rest of your life. On the guaranteed universal, you have no cash value build up to speak of. If you fund the policy at the maximum level, you can create a large cash value for retirement use. The premium level paid can be adjusted at anytime to meet the owners objectives. Like whole life, it is owning your insurance, but with more flexibility than whole life.

2. Which one is right for you? Everyone is different and has different goals. The main thing is to decide what the goal is of the insurance and then to maximize based on your goals. Often times our clients will use a blend of more than one to achieve multiple goals. For a free analysis, email vince@paramountlifeinsurance.com.

There are several riders that you can typically add to your life insurance policy.  Most of them have a small monthly fee associated with them and some are more worthwhile than others.

Waiver of Premium-This is a very valuable rider and highly recommended if you can afford a few dollars more a month.  This rider waives the premium for the primary insured if they were to become totally disabled.

Children’s Insurance Benefit Rider- This provides term coverage for all children of the insured including stepchildren, adopted children, and natural children.  Usually the rider is convertible to permanent life insurance for the individual children with no proof of insurability.  This is a good rider, but not a necessity.  Often it can save on other policy fees.

Critical Illness Accelerated Benefit Rider- This rider is great and usually is included for free with life insurance policies.  It pays a benefit amount that usually has a cap to the insured and their family if they become diagnosed with a critical illness.  This can really come in handy as the medical costs can be catastrophic to a family dealing with a terminal illness.    Of course the insurance company has strict language on this and how it pays.

Additional Insured- This is different than the Children’s rider as it allows the primary insured to add an additional insured to the policy.  Usually the rider must be for the same term as the primary insured’s term and for no more than their face amount.  This rider typically will cost more than a straight term policy on that person.  It is easier though.