Term Insurance provides protection for a specific period of time (5, 10, 20 years), and pays a benefit only if you die during that term. Often, this type of insurance can be renewed when you reach the end of the specified time period. The yearly premium usually increases as you grow older and continues as long as stated in the policy.
Permanent Insurance (unlike term insurance) enables you to accumulate a cash value while you are still alive. This cash value grows tax-deferred until withdrawal of the cash value during your life. Normally, permanent life insurance passes to your beneficiary as a tax-free death benefit.
Universal Life Insurance (a form of permanent insurance) is a flexible plan that has the added option of tax-deferred earnings on your accumulated cash value. Both the insurance and cash value components of Universal Life are designed to allow adjustments in contribution amounts as financial needs change.
Mortgage Life Insurance: Mortgage protection life insurance is simply insurance that is meant to pay off your mortgage in case of your death while the mortgage is not fully paid. The original type of mortgage life insurance followed the amount of the mortgage balance so, as your mortgage obligation decreased, so did the amount of insurance. Today it usually makes more sense to get mortgage life insurance equal to the original mortgage amount but instead of a decreasing amount of insurance, you simply get the most inexpensive level term insurance.
Return of Premium Life Insurance is term life insurance that gives you all your money back if you keep it? Yes, it's true. You are under no obligation to keep the policy for the entire term, but if you do, you are guaranteed to get your money back from the insurance company, tax free. Contact one of the professionals at Clark-Mortenson to learn more!
