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Sam Said:

What is the difference between term life insurance and cash value life insurance.?

We Answered:

Term Life Insurance is insurance that pays the 'sum insured' in the event of the death of the 'life insured' to a designated beneficiary, if the death occurs during the Term of the insurance contract. In other words, you are only insured during the life of the contract. Typically, these Terms can be found for 1 Year, 5 years, 10 years, 20 years. Alternatively, depending on the jurisdiction, you may find terms that last until a certain age (e.g. Term 80, 85, 100). The longer the term, the higher the premiums.

Term insurance doesn't have any cash values (though some hybrids may include a rider that includes some additional benefits).

You cannot 'Cash in' a traditional term insurance policy. Should you outlive the Term (i.e. the insurance expires), you will lose all your premiums.

Some of the more interesting riders include: Guaranteed Renewable, and Convertibility. Renewability usually means that you won't have to pass a medical to be insured, though the premiums may be way higher. Convertibility means that you have the option to convert your policy to a different form of insurance (e.g. whole life). This may be an advantage if you initially were focused on low premiums, and then decided that you preferred accumulated cash values and an extended term. This may happen when you discover, later on, that you have a medical condition that would either raise your rates or render you uninsurable.

The advantages include: Low premiums, simplicity, convertibility.

Disadvantages: expiry of term (uninsured past a certain date), late premiums are not tolerated and leads to loss of insurance.

Insurance with cash values come in many forms.

Usually, Whole Life calculates cash values based on prevailing interest rates (very low right now). Whole Life has many riders including: Child rider, Disability (i.e. insurer pays your premiums while you're disabled), Accidental Death & Dismemberment, Dividend Participation Rider, Paid-Up insurance, Term rider (e.g. 100K whole life plus an additional $50 000 Term 20 years -- popular for those buying a home). You can rarely touch the entire cash value amount, but you could borrow against the cash value either directly -- through the insurer -- or through a third party like a bank. If borrowing from a bank, they will usually want the policy to be assigned to them and/or have the policy assign them as the beneficiary.

Universal Life is a modern Hybrid insurance model. It contains two components: Insurance Policy and Cash Values. The insurance portion is usually a Term Life policy. T100 or Term to 100 years old is a very popular choice. For the Cash Value portion, you could chose a mixture of Interest, dividends, and index instruments. Index instruments reflect a chosen Stock Market Index (e.g. S&P 500, Dow Jones 30, World Index). With these various investment options, it is possible to increase your rate of return and potentially accumulate high cash values.

For a Universal Life (UL) Policy, your premium has two components: the basic premium plus the optional contribution. The basic premium covers the insurance component. The Total Premium can never be lower than the cost of insurance. The optional contribution is the amount that you may decide to contribute over and above your basic premium. This will constitute your future cash values. Many jurisdictions have an Upper Limit on how much you may contribute in excess of your basic premium. The reason is that Payouts, upon death of the insured, are usually tax-free, therefore there is a huge incentive to pad your cash values for estate-planning and tax-free ccompounding reasons.

As for Advantages, for the above-mentioned reasons, UL is very compelling. You can: accumulate high cash-values, grow cash values with stock-market like returns, grow tax-free, etc. Also, many of the riders, but not all, of whole life policies may be available to you. You may also have many Terms in one UL policy, at the same time (T100 for estate planning, T20 for mortgage or business-life purposes). The premiums would lessen once the shorter term expired. Like Whole Life, you may be able to borrow against your cash values

Also, UL is flexible: Once you have accumulated some cash value, you may instruct your insurer to deduct any late premiums from your cash values. This is useful when cash is tight, and the business cycle is hurting your business. Furthermore, you may accumulate enough cash values, after a certain number of years, to self-finance your premiums. For example: if you put substantial amounts in cash values, you could stop paying premiums in 20 years or so.

Disadvantages: Less riders than Whole Life. Similar disadvantages as Term insurance depending on Term chosen for your policy. May face substantial tax penalties if you cash in some of your cash values. Cash values can decline when using indexed funds for cash values.


Note: Cash surrender values are not the same as Cash Values. Cash Values are the amounts, in addition to the Covered Amount, that will paid out to your beneficiaries in the event of your death. Cash Surrender Values are amounts that the insurer will pay you if you Cash In (stop the insurance) your policy. Cash surrender values are usually lower and increase with age.

Finally, consult your accountant. The biggest saving that you may enjoy is that of paying your premiums through your company, and having the beneficiary be a member of your family. This is a way of avoiding taxes. If you take money out of your company to pay your premiums, you will pay taxes on that money, and put the net amount towards your premiums. However, if your company owns the policy, you could pay the premiums directly from your company's cash, and then your estate or beneficiary will eventually receive the money tax-free. Combined with high 'Optional Contributions', this can be a way of reducing taxes and/or getting money out of your company tax-free. The rules and procedures of this strategy vary from jurisdiction to jursidiction; do ask a competent insurance agent or accountant how to proceed with your insurance premiums.

PS: I am not responsible for any and all Errors & Ommissions in this entire text. The terminology I used here is unofficial. I tried to use common explanatory words to illustrate your options. Your policy's terminology may differ. Consult your local expert before subscribing to any policy.

Lloyd Said:

Who offers cheaper and better term life insurance than Primerica?

We Answered:

Primerica may not be the cheapest term insurance, they are definitely not the most expensive. According to the IMSA and the Better Business Bureau, Primerica has excellent quality service. Check out this list of companies who are members of the Insurance Marketplace Standards Association (IMSA)http://www.imsaethics.org/Content/IMSAQu… While there are well over 1000 life insurance companies in America, only a small handful have strong financial ratings and excellence in customer service to qualify for membership of the IMSA.

Primerica is also member of the Better Business Bureau with accredited business standards since 1980 and has a rating of A+. Transamerica is also a member of the BBB with rating of B+, but fail to meet the accredited business standards.

Does cheaper really mean better? You may find companies that are cheaper, but how is their service? How do they handle their death claims? Primerica takes about 7-10 days to pay their death claims. In the year 2008, Primerica paid an average of $2.9 million in death claims every day. How to they handle refunds or exchanges? How is their customer service? How do they protect your privacy information?

Brittany Said:

Should Keep or Look into term Life Insurance Quotes?

We Answered:

lifeinsurance.awardspace.info - you can try this company. My parents have their life insurance.

Tammy Said:

How long should I get a term life insurance policy for?

We Answered:

a few questions for you one do you pay for your policy at work if you do then stop you do not want to pay for something now and then if you leave before you retire you are out of luck usually where that coverage would drop off so I would recommend instead just getting a term policy and using some of that money that you would have used for the premium at work and a little extra that you would already be paying
2 how old are you I would get as long as a term that you can afford because the fact that you cannot guarantee how healthy you are going to be in 5 year let alone 30 years
3rd I would tell you what I would do if I where you I would get a $100,000.00 UL policy plain and simple that rate would stay the same for the rest of your life, and then if I needed more then the $100,000.00 I would then get a term policy for the remainder in a term policy for the maximum amount of time that one the insurance company offers you and secondly that you can afford if you have questions and want to hear some rates IM me at rahnside and I can pull them up for you I or another Life Agent is Licensed in every state of the US and have over 20 AM Best A- or better companies
A Life Specialist
Rahn A. Sidebotham II

Tony Said:

What is the best company to buy term life insurance?

We Answered:

Any company having solid financial ratings (I recommend AM Best A+ or higher) is fine, as long as you are certain you'll only need term. Keep in mind that as your life situation changes, term may not be the entire answer. You need to consult with a financial advisor to determine the best solutions to your current situation, while keeping options open for the future. The key here is to do a proper analysis, and to ensure that the term you buy has adequate conversion options to secure your future insurability. The couple of bucks a month you'll save price-shopping term isn't worth risking your family's financial future.

Maurice Said:

Is it better to buy life insurance or term life insurance?

We Answered:

Term life.

Term life protects you for the period of time you need it most for the cheapest possible price without complicating (and expensive) add ons.

Financial theory (outside the insurance industry!) is that you need life insurance only to the extent that your family cannot live without your income, particularly during the adjustment period between your death and creating a new life without your income.

A single person, for example, does not need life insurance. Nor, in most cases, does a retired couple with pensions, SS, & paid off house.


In a practical example, a married couple would buy term life for the period their children are young until they are in high school or college. The amount of coverage would be some multiple of the salary that would be "missing" if one income earner died. The older the kids and the older the family the lower the multiple. A young family might want 3,5...10 times the salary to ensure that the other spouse would not have to be the primarily bread winner while the children needed full time care. On the other hand, a family with high school students might only need 2 or 3 years salary to transition to the new financial situation.

It is worth emphasizing, however, that you are FAR more likely to fall short in your retirement years than you are to die young. Meaning, large amounts of money should go to retirement planning, not life insurance.