Life insurance can be an important component of your financial foundation at any age. It can provide benefits that your family and/or business can use after you're gone.
Choosing the right life insurance depends on a number of factors, including how long you need coverage, how much you can afford, your risk tolerance and how much flexibility you need. Once you've answered these questions, you will have a better idea of the type of life insurance that may fit your unique needs and goals.
To help you gain a better understanding of which type of insurance might be right for you, we've outlined the basic features of term life insurance and permanent life insurance coverage.
| TERM | PERMANENT | |
| Protection Need | Individuals with/without families, including business owners, who need financial support upon a death and/or have financial obligations to take care of. | |
| Anyone needing short-term protection due to temporary financial obligations, such as mortgage or car payments, or personal loans | Individuals who want premium dollars in an accumulation vehicle. | |
| Protection Period | Available for specific period of time. | Available for life.1 |
| Renewable Protection | Generally yes, for a specific period of time. | Coverage is for life, so not necessary.1 |
| Affordable Premiums | Premiums remain the same for the coverage period. If policy is renewable, premiums may increase based upon your age and health at renewal. | Premiums remain the same for life or for a certain number of years; may be flexible in time and amount.1 |
| Conversion Period/Credit | Generally yes, when you exchange your term policy for a permanent life policy. | Coverage is for life, so not necessary.1 |
| Cash Value | None | Yes and you can generally borrow against the cash value.2 |
| Tax Advantages | Proceeds paid to your loved ones upon your death may be fully excludable from federal income tax. Benefits are paid directly to your beneficiaries upon your death, so there should not be additional costs or delays in receiving the policy proceeds. | |
Your cash value earns interest on a tax-deferred basis. Can withdraw or take a policy loan on a tax-deferred basis.2,5 | ||
| Chronic or Terminal Illness Protection | Yes, if your policy includes the Living Benefit Rider.3 | Yes, if your policy includes the Living Benefit Rider3 or Daily Living Rider.4 |
While this chart is a starting point, the best way to figure out the amount and type of life insurance that makes sense for your particular situation is to meet with me.
It's also important to keep in mind that choosing insurance isn't necessarily a one or the other type of situation. Often, a combination of term and permanent insurance can be the right solution.
1You will need to pay enough into the policy to ensure your life insurance coverage remains in force. Premiums may vary within maximum limits set by tax law.
2Any loans from the cash value will reduce the amount of your insurance coverage if the borrowed funds, plus interest, are not repaid by the time of your death.
3The Living Benefit Rider is known as the Accelerated Death Benefit Rider in some states. It is automatically available on the policy at no additional cost. This rider is not available in Nebraska on the Choice Term life insurance policy.
4The Daily Living Rider is not to be marketed as a long-term care or health insurance policy, but can provide help with needs resulting from chronic illness. In most situations, canceling, reducing, surrendering or replacing a long-term care or health insurance policy for this rider would be considered unsuitable.
5Both the cash value and death benefit of a variable product are dependent upon the investment performance of the subaccounts you select and may decrease in value.
Neither the Company nor its agents give tax, accounting or legal advice. Consult your professional advisers in these areas. This material highlights information about life insurance. Not all products or features are available in all states. For more information about life insurance, contact your Farm Bureau agent.