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The definition of insurance is to shift the economic risk of an occurrence to another party. Auto insurance shifts the risk associated with a car accident. Homeowner’s insurance shifts the risk associated with a fire, hurricane, flood or other home-related catastrophe. Life insurance shifts the risk of the financial devastation left by a person’s death.

In What is the Best Life Insurance Policy?, we briefly discuss the different types of life insurance: whole life insurance, universal life insurance, variable life insurance and term life insurance. Now, let’s look specifically at the advantages and disadvantages of term life insurance.

Term life insurance is the purest form of life insurance. Here’s the deal… if you die during the policy coverage period (or “term”), the insurance company will send a check for the contractually agreed upon death benefit to your beneficiaries. If you don’t die during this period, typically you receive no benefit (we’ll discuss an exception later). That’s it. It’s pretty simple.

However, there are different types of term life insurance (just to complicate things!). There is ten year term, twenty year term, thirty year term, annual renewable term, decreasing term and return of premium term life insurance. We’ll look at each type, but first let’s discuss how a premium is calculated.

Insurance companies use very bright people called actuaries to calculate the amount of premiums that must be charged so the insurance company can pay death claims and still make a profit. The actuary does this by using an enormous amount of data and statistical probabilities. If the insurance company knows the statistical probability of, for example, a 40-year-old healthy female dying in the next 10 years (and it is a very small probability), they can calculate a premium to meet their goals. Common sense would tell you that the probability of a 50-year-old dying would be higher than that of a 40-year-old, so logically, the premium would be higher for the older person wanting the same amount of insurance.

Ten, twenty and thirty year term life insurance policies are called “level term” policies because the annual premium is the same for the entire period of coverage. You can purchase a tremendous amount of insurance for very little premium if you are young and in good health. This works well for a young couple with small children where the death of either spouse would leave the surviving spouse with a stressful and difficult financial situation.

Annual renewable term life insurance is basically a “one year at a time” policy where the premium increases for each year of coverage. This is usually used for a short-term need (1 to 5 years) such as collateral for a loan. Usually, the policy allows for coverage to age 80 or 85, but the annual cost becomes prohibitive as you age.

Decreasing term life insurance is typically sold as “mortgage protection” insurance or with some other emotional marketing pitch. The death benefit decreases annually to coincide with your decreasing mortgage balance (that is, if you have an amortized loan). There is nothing wrong with this type of product, but typically a good agent will discuss the overall coverage needs of the family, rather than just a policy to pay off a certain item.

As stated earlier, there is typically no benefit paid for term life insurance unless you die within the term period. There is one exception to this rule, however. Many companies now offer “return of premium” term life insurance. This means that if you don’t die during the coverage period, the insurance company will refund all of your premiums at the end of the term. Obviously, this type of policy will cost more than a traditional term life insurance policy. But if the idea of paying premiums with little probability of a benefit bothers you, this might be an option.

Many agents will tell you that permanent life insurance policies are the only type to buy. However, there are many factors that come into play in determining what type of policy is best for you. If getting the most coverage for the least amount of dollars for a certain period of time is your goal, term life insurance is probably the way to go.

Use our free online quote to find out how much life insurance will cost you and let TERMdog’s professional insurance advisors help you choose the right insurance policy for your needs.

If you’re just starting to look into getting a life insurance policy or if you’re reviewing your life insurance portfolio, the myriad of choices can be confusing.

Man is Mortal. That makes life insurance a little unique and interesting, doesn’t it? We purchase things like health insurance, car insurance and home insurance, then hope we never have a need to use them. Life insurance is different, because it’s a unavoidable fact that sooner or later, each of us will die.

So many choices. When it comes to life insurance, there are many options. What is the best life insurance policy? You may have heard terms like “whole life insurance,” “term insurance,” “universal life insurance” or “variable insurance.” What does it all mean? And what are the differences?

Well, first let me point out what they have in common: all life insurance policies provide payment to a beneficiary in the event of your death. Except for that basic tenet, the differences between policies can be major.

Let’s consider the basic differences in the types of life insurance policies:

Whole life insurance. This type of insurance covers your entire life (not just a portion or a “term” of it). It is considered permanent life insurance which is used to cover you for your “whole life.” Whole life insurance policies tend to cost more than “term” policies. This is because they grow what is known as “cash value,” and because after a time, you will be able to borrow against, or withdraw from, your whole life benefits to supplement your retirement. Most whole life insurance policies have guarantees on both the cash value and death benefits.

Term life insurance. Rather than covering your whole life, “term” insurance covers a pre-determined portion of your life. Common terms are ten, twenty and thirty years. If you die within that term, your beneficiaries receive a death benefit. If not, you typically receive nothing. To put it simply, term life insurance allows you to purchase more coverage for less money. Basically, you are betting on the probability of your death occurring within that specified “term.”

Variable life insurance. Variable life insurance is a permanent insurance. However, unlike whole life insurance, variable insurance allows you to invest the cash value of your policy in “subaccounts.” These can include money market funds, bonds or stocks. Variable insurance offers a bit of control, as the value and benefit depend upon the performance of the subaccounts you select. However, that means there could be significant risk involved. since the performance of your subaccounts cannot be guaranteed.

Universal life insurance. With universal life insurance, it all comes down to flexibility. This is permanent life insurance that provides access to cash values that build up tax-deferred. You can choose the amount of coverage you feel is appropriate, and you retain the ability to increase or decrease that amount as needs change (subject to minimums and requirements). You also have some flexibility in determining how much of your premium goes towards insurance, and how much is used within the policy’s savings element.

So, which life insurance policy is right for you?

Many factors come into play when deciding what type of life insurance will best suit your needs. The best way to learn what policy is right for you is to give us a call at 630-393-6500. It’s very quick and easy, so let us assist you in looking at all the factors and help you to find the right life insurance policy at the right price for your specific needs.

Have you ever wondered how much life insurance costs? As an insurance advisor, I am asked this question on a daily basis. There are so many variables that make up the cost (or premium) of a life insurance policy that it’s hard to define what life insurance might cost without some explanation.

Factors that affect the potential cost of life insurance include the amount of coverage you are seeking, the length of time you want the coverage to last, your overall health, family history and age, and whether or not you are a tobacco user.

Other variables that are just as important but which most people are not aware of include your occupation, whether you are involved in any dangerous hobbies such as a flying airplanes, hang gliding or mountain climbing, and even your financial net worth and annual income. All of these considerations are taken into account when an insurance company is deciding what life insurance premium to offer you.

The most important component of the premium, however, is the purpose for purchasing the policy in the first place. Are you looking for maximum coverage to care for your family in the event of your premature death (I have often wondered how many deaths were right on schedule)?

Or are you looking for cash accumulation in addition to the death benefit to give yourself a tax-free retirement income?

Are guarantees important to you?

Are you funding an Irrevocable Life Insurance Trust or a Special Needs Trust?

Or do you just want your mortgage paid off?

All of these are questions your life insurance advisor might ask. As you can see, answering the question, “How much does life insurance cost?” isn’t as easy as it first seems.

That’s why we offer a personalized life insurance quote to make it easier for you! Take yours now to get a better answer to the question of how much your life insurance policy will cost. Start by completing the information in the yellow box in the upper right corner or give us a call at 630-393-6500.

Hi, I’m Michael Fry, Mike to my friends. As the owner of TERMdog.com, a service of  Steward Financial Services, I want to help you find the best price on the best policy that best meets your term life insurance needs.

As a financial & insurance advisor since 1987, I understand your need to find the easiest, most affordable and most reliable insurance solutions. My associates, David Bankston and Trent Davis, and I know the insurance field. We know your concern is to find term life insurance at the lowest price possible with no sales pressure and no hassles. That’s why we’re here.

As Top Dog in the term life insurance field, my goal is to be able to communicate complex insurance concepts to my clients using terms that the average person can easily comprehend. I want to  help you truly understand your insurance needs and how the proper insurance will provide you and your family with ongoing security.

And in choosing David and Trent to help me reach that goal, I believe I’ve added tremendously to TERMdog’s skillset and knowledge.

Dave Bankston CPA, is an experienced financial & insurance advisor with a heart for helping people better understand the complex language of life insurance, annuities, and other concepts through financial consulting and education. He and I have worked together for many years assisting our clients in this important area.

Trent Davis comes to TERMdog after having mentored hundreds of successful financial advisors, agencies and marketing companies with an understanding of the advisors’ need for a consumer friendly approach in our ever-changing economy. Trent sincerely believes that “If the consumer is happy, everyone is happy.” And his goal is to do what he can to ensure that happiness for TERMdog clients.

This understanding and experience is what makes TERMdog stand out from all the other term life insurance sites you may encounter.

Most other term life websites are owned by Internet marketers or entrepreneurs. Those sites simply collect leads that they, in turn, sell to insurance agents. And they’ll sell those leads to the first agent with cash, regardless of the client’s need. You, as a prospective client, could be “sold” to someone brand new in the business, or to someone you know absolutely nothing about.

When you deal with TERMdog, on the other hand, you know you’ll receive help from trustworthy, experienced insurance advisors. That’s a major distinction.

As insurance professionals, the TERMdog pack will counsel you and guide you all the way through the insurance buying process. And as the owner of TERMdog, I will do my best to ensure your questions are answered and your life insurance needs are met.

I want to do more than sell you insurance. I want to be your best friend for life.