March 29th 2017 Wednesday Morning Podcast. Today I answered some questions about the differences between Whole or Permanent Life polices and Term or Temporary Life policies.
A Whole life policy is permanent insurance. And once you lock in your price rate you are at that rate for the life of the policy. Most policies will cover you to age 101. Another great benefit of a whole life policy is that they have the ability to incur funds in a side account that you can use for different purposes. You can choose to have that account pay your premium if you have a hardship, you can use it to borrow against for a loan, or you can not use it at all and your loved ones can get more money than just your original face amount.
A Term policy is temporary insurance. Depending on the company there are several different types of term policies you can choose from. We offer a 10-year, 20-year, and 30 year policy as well as a decreasing term policy. The 10,20, and 30 year policies lock your premium rate in for the set amount of years. At the end of that time you have the option to renew the policy at a new rate based on your age or just let the policy go. Here at Farmers we also offer the option, once you have a term policy, if you want to convert it to a whole life policy you can do so at any time during your term. We also offer a decreasing term policy or what some call a mortgage life policy. This is a type of term policy you get if you are making a big purchase or have a large debt you know will be paid off in a certain time period. So if you are buying a house and financing it for 175,000 for a 20 year mortgage you take out a 20 year decreasing term policy for 175,000 so that the term policy will cover you for the length of your mortgage. The amount of coverage goes down each year just like the amount you owe the bank.
I hope you all learned a little about the different types of life insurance today. However, that is just the tip of the iceberg when it comes to the types of life insurance you can get. So if you are looking to add some life protection for yourself or your family member please give our office a call, we would love to have an informative conversation with you about all your options and find the policy that best fits your needs and budget.
Until next week, be safe and be happy!