Life Insurance

Their are many types of life insurance to fit individual needs and circumstance. The following are some of the basic types of life insurance available.

Term Insurance - The simplest form of insurance. You purchase coverage for a specific price for a specified period. If you die during that time, your beneficiary receives the value of the policy. There is no investment component.

Whole Life - Similar to term, but you purchase the policy to cover your "whole life" not just a set period. Premiums remain level throughout the life of the policy, and the company invests at least a portion of your premiums. Some firms share investment proceeds with policyholders in the form of a dividend. Many companies will offer "a relatively low guaranteed rate of return," but in reality pay at a rate in excess of the guarantee.

Universal Life - You decide how much you want to put in over and above a minimum premium. The company chooses the investment vehicle, which is generally restricted to bonds and mortgages. The investment and the returns go into a cash-value account, which you can use against premiums or allow to build.

• With some policies, sometimes called Type I or Type A, the cash account goes toward the face value of the policy on the death of the policyholder.
  
  
• With a second variety, sometimes called Type II or Type B, the beneficiary receives the face value of the policy plus all or most of the cash account.
  
  
• While Type II is meant to provide a partial hedge against inflation, it demands higher premiums as you get older than Type I.