Types of Illinois Life Insurance

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There are two main types of life insurance products, the "Term" family which includes plans such as 5,10,15, 20, 25 and 30 year policies and "Permanent" type plans which include Universal Life and Whole Life policies.

Term Life Insurance
Whole Life Insurance
Universal Life Insurance
Which Type of Life Insurance is Right for Me?

Term Life Insurance

Term life insurance is life insurance which provides coverage for a limited period of time. After that period, the insured can either discontinue the policy or pay annually increasing premiums to continue the coverage. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.

Whole Life Insurance

Whole life insurance is a type of permanent life insurance. In which the coverage and the premiums remain the same your entire life. As long as your premium payments are made as agreed, your insurance coverage lasts throughout your life, and the death benefit is a guaranteed amount.

When you pay the premiums on a whole life policy, part of each payment accumulates as a cash value. The insurance company typically invests the cash value, which continues to grow tax deferred as long as the policy is in force. You can borrow against the cash value, but unpaid policy loans and interest will be subtracted from your death benefit. You may also access your cash value by surrendering or cancelling your policy. Dividends are also typically paid on whole life contracts and can be used to either increase the death benefit or reduce the premiums.

Univeral Life Insurance

Universal Life Insurance is a flexible-premium, adjustable benefit life insurance policy that accumulates account value. The flexibility of this policy allows you to change the amount of insurance as your needs for insurance change. Universal life is similar in some ways to, and was developed from whole life insurance. The potential advantage of the universal life policy is in its flexibility and the potential for greater cash value growth during the insured's life.

Which Type of Life Insurance is Right for Me?

Term Life Insurance is normally considered a temporary form of life insurance which will be in force for a specific amount of time. The word "Term", meaning a specific term period of time. This form of life insurance is very popular due to the fact the term insurance plan is more cost effective than permanent plans such as Whole Life or Universal Life.

Permanent plans have their place when a person simply needs life insurance for the rest of their life and cannot place a specific period of time they will need the insurance.

A smart way to purchase life insurance is to have both a term and a permanent plan together. The term plan will normally be covering the most important years for life insurance coverage to protect the insured during the highest degree of financial liabilities such as home mortgages and college tuition for their children.

When the high liability times come and go the term plan will be timed to expire and leave the insured with a good permanent plan such as Universal Life which will cover them for the more basic expenses such as burial costs and general expenses most everyone has.

A good life insurance portfolio has to be planned carefully so the insured will not face any surprises later on down the road.