Term life insurance is typically less expensive and only covers a specific number of years (ex. 10, 20, or 30 years).    This is a good option for low-cost coverage during someone’s peak earning years, when a death would have the greatest financial impact.  Some choose this option because their life insurance needs are not permanent.  They may only want to be able to cover a mortgage or pay for their children’s education.  It is important to remember, once that specified number of years is over, the coverage ends.  At that time, the policyholder can re-apply based on their current age and health.

Whole life insurance is designed to address long-term life insurance needs.  Many

people still want to have life insurance long after the mortgage is paid off.  They may want to make sure their spouse can maintain the lifestyle they have worked hard to achieve or they may want to pass on an inheritance to their children or grandchildren.   A whole life insurance policy also gains cash value over the life of the policy, which can be accessed later in life to help supplement retirement funds if needed.  Any cash taken out can decrease the death benefit of the policy.

Final Expense is a type of whole life insurance.  Final expense policies generally have more lenient underwriting guidelines, making it somewhat easier to get coverage for someone with some health concerns.  The coverage amounts are typically smaller.  A policy can be graded or modified, which may reduce benefits for a non-accidental death in the first two or three years of the policy.

A funeral trust is a way to pre-pay future funeral costs.  A funeral trust can be funded through the use of an irrevocable life insurance policy.  Irrevocable life insurance policy is exempt from Medicaid look-back or spend-down rules. When the insured person passes away, the funeral trust pays the funeral home for services rendered.  Any excess funds are paid to the Estate of the insured.

Universal life insurance is similar to whole life in that is designed for long-term life insurance needs.  Universal life insurance also gains cash value over the life of the policy.  Premiums in a universal life policy can be flexible.  You can pay a minimum amount so that the policy stays in force or you can pay more and accelerate the cash value of the policy.  A universal life contract also states a minimum interest rate.  If the insurance company’s portfolio outperforms the minimum interest rate, the additional earnings may be applied to the cash value of the policy.

Juvenile life insurance is the type of life insurance policy that parents/grandparents can purchase for their dependent children/grandchildren.  There are options of term or whole life juvenile life insurance policies.  Juvenile life insurance can be seen as an investment and way to begin long-term planning.  Life insurance is generally inexpensive for a healthy child.  Depending on the type of policy, as an adult the face amount of the policy can increase with no additional premiums.