Stephanie Chisolm: Hi! I'm Stephanie Chisolm a Wells Fargo team member. Today we're learning about the different types of Life Insurance and which one may be right for you.
Life Insurance pays a predetermined amount of money to the beneficiaries listed when the policy holder dies. The most common type and typically the least expensive type is called Term Life Insurance. The term in Term Life Insurance, refers to the period of time you want to keep continuous coverage without the risk of an increased premiums.
The full value of the Term life Policy is then pay to your beneficiaries only if you die during the plan's term. Once the term ends protection ends. The lower initial cost can make Term Life Insurance a good choice for young families.
On the other hand Permanent Life Insurance available in whole universal or variable policies provides coverage until the death of ensured, no matter their age. Assuming the policy is kept current. Permanent Life Insurance policies may also have cash value and many other benefits, such as providing a source of personal loans. This is why Permanent Life Insurance policies tend to cost more than Term policies.
With either Term or Permanent Life Insurance, you will have to go through an underwriting process to get coverage. Underwriting is the process insurance companies use to determine, if you are eligible for coverage and what it would cost.
Age, medical conditions, tobacco use and family history all play a role in establishing you're rating class in premiums. In most cases, you'll also have to undergo a brief medical exam with either Term or Permanent Life Insurance; you will also have the option to add certain features or riders to enhance the policy.
Examples of riders include adding benefit for a spouse or child, a cost waiver in the event of disability and more.
Riders vary by company and policy. There is also something called Simplified Term Life Insurance that typically does not require a medical exam and coverage generally begins immediately, if you qualify.
With lower coverage amounts and slightly shorter coverage terms Simplified Term Life Insurance is a convenient way to get immediate coverage. However, if you need more than $150000 of coverage you'll probably need to consider a Term or Permanent Life Insurance Policy.