Life Insurance Overview

Prepare for the Unexpected

Life insurance is not about protecting yourself, it's about protecting your loved ones. There are two main types of life insurance that provide financial protection for your family and dependents:

  • Term Life Insurance:  This type of policy is in force for a specific time and you specifiy a coverage amount when you purchase the policy.  In the event you die within the specified term, the insurance company pays the face value of the policy as a death benefit to your beneficiaries.
  • Permanent Life Insurance: A permanent life policy (including whole life, universal life and variable life insurance) is in force for your lifetime as long as you continue to make your premium payments.  This policy has an accumulating cash value.

Choosing life insurance plan requires many considerations and a little bit of math.  Contact an agent at Columbia River Insurance to discuss your life insurance needs and help you navigate the complexities of coverage decisions. 

Life Insurance Terminology

Here is an overview of some common terms used to talk about life insurance:

  • Accidental death insurance: Also known as accidental death and dismemberment insurance, or AD&D, this coverage pays you or a beneficiary a benefit if you are in an accident that results in your being killed or dismembered.
  • Annuities: An annuity is a type of insurance that either pays income after your initial investment (immediate annuity) or accumulates income (deferred annuity). Either of these types of annuities can be fixed (guaranteed) or assigned a variable rate that pays out based on the policy’s associated investments. Life insurance companies typically offer annuities to help people  obtain a stable income during retirement.
  • Critical Illness Insurance: While not a life insurance policy, critical illness insurance is often available through life insurance companies. You might buy critical illness insurance (or CI) if you have a family history of heart disease or cancer in order to ensure that you have the financial resources to pay for your care if you are diagnosed with a severe illness.
  • No exam life insurance: This is life insurance coverage that some companies offer without requiring a medical exam first. Typically, this option will be more expensive because without submitting the results of a medical exam to the insurance company, you are an unknown and potentially greater risk.
  • Term life insurance: This is a life insurance policy that provides a death benefit only. Your annual premiums are locked in for a set term, such as 10 or 20 years. In the event that you pass away during this period, a death benefit is paid to your beneficiaries.
  • Permanent life insurance: This is a long-term policy, such as universal life insurance or whole life insurance, that includes an investment component and can cover retirement expenses in addition to providing a death benefit.
  • Universal life insurance: A permanent life insurance policy with a “liquid” account that accrues cash value, as well as interest, with each premium you pay. You can take out loans as needed for unexpected expenses or opportunities, such as a home purchase. You also can pay more than the scheduled premium, or take breaks from paying premiums.
  • Whole life insurance: Whole life is a permanent policy with an investment component that provides for your financial needs similarly to universal life insurance, but without the liquidity of the funds. This life insurance policy accrues a cash value and pays out at the end of the policy, if it is kept current.

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