TERM
Advantages:
- Initially premiums are lower than those for permanent insurance
- It allows a person to buy higher amounts of coverage, especially at a younger age
- This is a great product for young families that often have a limited budget, but a significant need for protection
- It can cover specific needs that will disappear in time, such as a mortgage or other types of loans
- Certificates are renewable
Disadvantages:
- Once term ends, if you purchase a new certificate the premium increases due to age
- Certificate premiums increase based on age of applicant
- Coverage terminates at the end of the specified term
- You may not be able to convert to permanent insurance because of health
- Does not accumulate cash values or dividends
WHOLE/PERMANENT
Advantages:
- Guarantees lifelong protection as long as premiums are paid
- Generally, premium costs are fixed
- Develops cash values, which can be borrowed against; loans must be paid back, otherwise death benefit will be reduced by the amount of the loan at time of death
- Cash values can be surrendered, in total, or in part, for cash or to convert to an annuity
- Cash values can be used to pay future premiums or provide paid-up insurance
- Generally dividend participating – can be used to reduce the amount of future premiums needed or purchase additional paid-up insurance
Disadvantages:
- High initial premium levels may make it hard to buy enough protection
May be more costly than term, especially if you do not keep it long enough
In most cases, a permanent plan may be the best type of life insurance to purchase. If the prospects are a young family with a home, cars, loans etc., and appear to need high amounts of coverage or if they wish to insure for a specific period of time, then term insurance may be the right plan.
3 questions to answer: Do you need insurance? How much? What type?
Contact your local PRCUA Sales Representative and complete a Needs Analysis to determine which plan will accomplish your goals.
