By AIG Direct
When choosing the right life insurance for you and your loved ones, the process often starts with deciding whether you'd like a term life or whole life insurance product. Here are the basic differences.
Term life insurance purchased through AIG Direct protects a person for a specific number of years. The coverage period is known as a term. Terms generally start at 10 years and go to 30, usually increase in 5-year increments. So you typically choose 10, 15, 20, 25 or 30 years.
With most term life policies purchased through AIG Direct, the premium is fixed and will not increase the entire time that the policy is in force. This means that, if you lock in a low premium while you are young and in good health, you can save a significant amount of money over the life of the policy. The death benefit generally stays the same as well. So if you choose $250,000, the death benefit will remain the same if your beneficiaries make a claim early during the policy term or at the end of the policy's lifetime. The funds they receive will be federal income tax-free, based on current tax laws.
With most term life policies, when the term ends, that's it. Coverage terminates, and there is no benefit paid... The exception is return of premium term life insurance. If you keep this type of policy in force for the entire term and pay the premiums on time, when the term ends, you receive a refund of the premiums paid, minus any fees or administrative costs.
For many, term life insurance purchased through AIG Direct makes sense when they are starting out and on a budget. The premiums can be affordable and they are fixed, along with the death benefit. But as time goes on, coverage needs can change. To accommodate this, it might be smart to consider term life insurance purchased through AIG Direct with the option to convert to a permanent policy.
A convertible term life policy purchased through AIG Direct will allow you to benefit from attractive rates, plus the ability to upgrade the policy to permanent coverage without another medical exam.
A popular type of permanent life insurance, whole life purchased through AIG Direct, provides coverage for your entire life, as long as the premiums are paid on time. Whole life insurance (and universal life insurance) accrues cash value. The policy can build cash value that can be available as policy loans or cash surrenders, subject to policy terms and conditions.
The premiums for whole life insurance stay the same, but they are typically more expensive than term life insurance premiums. Whole life insurance purchased through AIG Direct is potentially a sound choice if you are seeking a lifetime of protection to provide a death benefit for your loved ones while also generating cash value that can be accessible to you during your lifetime.
There are many term life insurance and whole life insurance options. Would you like some help in comparing them? Our licensed professionals are ready to help - you can reach AIG Direct at 800-294-4544.
1 Based on current federal tax laws.