Sherrie Littlejohn: Hi! I am Sherrie Littlejohn with Wells Fargo & Company. Today, we are learning about the different types of insurance and which one might be right for you. Life insurance pays a predetermined amount of money to the beneficiaries listed when the policyholder dies. The most common type of life insurance is called Term Life Insurance. Term Life Insurance is the least expensive type of life insurance. It's only in force for a specific number of years; the term. Once the term ends, protection ends. The lower initial cost can make Term Life Insurance a good choice for young families. Permanent Life Insurance available as whole, universal, or variable life insurance stays in force until the death of the insured as long as it is properly funded. This is why Permanent Life Insurance policies cost more than term policies.
Permanent Life has a cash value, and many other benefits such as providing a source of personal loans. 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 can get coverage and what it would cost. Age, medical conditions, tobacco use and family history all play a role in establishing your rating class and your premiums. In most cases, you'll have to undergo a brief medical exam. Riders enhance or add features to the Life Insurance Policy; examples of riders include adding benefits for a spouse or a child, a cost waiver in the event of disability, and more. Riders vary by company and policy.
In addition to regular term life, there is something called Simplified Term Life Insurance, that does not require a medical exam and begins immediately. If you qualify, Simplified Term Life Insurance is a convenient way to help protect your loved ones against the uncertainties of life. Simplified Term Life can provide coverage up to $150,000. If you need more coverage than that, you would need to consider Term Life or Permanent Life Insurance.