A little bit about life insurance

Term life insurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. This is in contrast to permanent life insurance such as whole life, universal life and variable universal life which do build a cash value.

Term life insurance provides coverage for a limited period of time. After that period, the policy can be dropped or the insured can pay annually increasing premiums to continue the coverage. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is often the most inexpensive way to purchase a substantial amount of coverage at the lowest possible premium. The premium can be fixed for a period of up to 30 years.

Because term insurance is a pure death benefit, its primary use is to provide for covering financial responsibilities of the insured. Such responsibilities may include, but are not limited to, mortgages, consumer debt, dependent care and college education for dependents, and funeral costs.

term and investing the difference is a concept involving term life insurance and investment strategies that provide individuals an alternative to permanent life insurance. Generally speaking, term insurance premiums are considerably less expensive in the short term than permanent life insurance for an individual for the same benefit amount. Permanent programs are more expensive because they typically combine some form of cash accumulation with the insurance program as a single package. Consumers making use of the "buy term invest the difference" concept, separate their investments from their insurance by setting aside money every month equal to the premium that a permanent plan would require, then use a portion of this money for the term premium and place the rest in a tax-deferred investment vehicle.

A NON-tobacco using 40-year-old male, in good health, can purchase $250,000 of term insurance for a 30 year term at about $35 per month, while a 30-year-old male in the same category can buy the coverage for about $23 per month. Yet, according to LIMRA International, 44 percent of American households either don't own life insurance and believe they should, or own life insurance and think they need more coverage.

Term life insurance is the most affordable way to protect you and your family from a premature death.

Alan Jenkins is an insurance professional with Montgomery Agency Inc. For more informaiton, visit www.montgomeryagency.us.