of Life Insurance
NEW - Long Term Care Insurance
Baby Boomers reaching 50 are beginning to consider long term care insurance.
They’re seeing their parents and grandparents living well into their 80s,
90s and even to 100. They may wish to protect their resources to leave an inheritance
for their children.
more at Colorado State University
Ordinary, or whole life insurance, pays the face amount to your beneficiary when you die. You can name anyone, even a trust, as a beneficiary. Tax consequences to the beneficiary vary, depending upon who the policy owner is.
Defining Ordinary Life Insurance
What makes ordinary life insurance different from term life insurance? Ordinary life insurance premiums include what are known as non-forfeiture provisions that allow the policy owner to choose one of the following options, even if the insured doesn't die.
Receive some of the premium back in the form of a low-cost policy loan
Surrender the policy for cash
Receive a reduced life insurance benefit at death
Continue the current life insurance benefit for a reduced time period
Read more at the University of Maryland
The important thing to remember is that the death-protection-only element of term life insurance makes term coverage much cheaper than the same face amount payable under ordinary life-often 3 to 10 times cheaper. Anyone with a need to replace a large loss of income in the event of your death will most likely want a term life plan because it's cheaper.
The main advantages of the ordinary life plan are that it provides premium payments that stay the same and have the additional benefit of creating a savings. Term life insurance premiums increase as you get older and may become too expensive. If you have to cancel term insurance because it is too expensive, your heirs will be left without benefits.
Term life insurance has no non-forfeiture provision, but during the term chosen, it provides the face amount of the policy upon the death of the insured. If the insured does not die, then the term life insurance ends. It also may offer an option to renew up to a certain age, regardless of your health, but typically at a higher premium or lower face amount. Read more at the University of Maryland