Key Terms:


  • Insured

    The person who the life insurance protection is on.

  • Beneficiary

    The person or people who will receive the benefit amount if the insured were to die.

  • Policy Owner

    The person who owns the life insurance policy. This can be the insured, the beneficiary, or a third party like a trust.

  • Life Insurance Company

    The companies which issue life insurance policies.

  • Policy

    The contract between the policy owner and the insurance company which lays out the terms of the agreement.

  • In Force

    Your policy is active and you are now covered.

  • Face Amount

    The amount of money paid to the beneficiary if the insured were to die. Also, know as the benefit amount or death benefit.

  • Premium Payment

    The amount of money paid by the policy owner to the insurance company to keep the policy in force.



Life Insurance 104


Types of Life Insurance Policies

  1. Term Life Insurance
  2. Permanent Life Insurance
  3. Guaranteed Issue Final Expense

What is Term Life Insurance?

Term Life is a life insurance policy designed for temporary life insurance needs.

Reasons to own Term Life

  1. Income Replacement
  2. Mortgage Protection
  3. Debt Repayment
  4. Dependents
  5. Court Ordered

How does Term Life Work

  • A Term Life Insurance policy typically has a term period from 10 - 30 years.
  • The Benefit Amount and Premium payment are guaranteed to stay the same for the term period.
  • Term Life Insurance is the least expensive life insurance option. The longer the term period is guaranteed, the more expensive the policy becomes.
  • After the term period expires, the premium payments increase substantially.
  • Most term policies can be converted to a permanent insurance policy (universal or whole life), with no questions asked or underwriting required.
  • 2% of Term Life Insurance Policies payout to beneficiaries on average.
  • Term Life Insurance is a tremendous value because policyholders pay pennies on the dollar when comparing premium payments to the death benefit.
  • i.e., a 40-year-old man who qualifies for a Standard Rate Class (4th Best) looking for a $500,000 10-year level term would pay $40 per month / $480 per year / or $4,800 over 10 years.
  • If this client passes away after making just one $40 payment, his family will receive $500,000 income tax-free, and that protection would only cost him only $4,800 over the ten years. That’s what we mean by “pennies on the dollar.”

Learn more about Term Life Insurance

What is Permanent Life Insurance?

There are many types and options for permanent life insurance. The three major subcategories of permanent life insurance are whole life, universal life, and variable life.

Permanent Life Insurance is significantly more expensive to buy than term insurance because the death benefit is usually guaranteed for life and these policies usually offer a savings or investment element.

Reasons to own Permanent Life

  1. You need coverage that is guaranteed for the rest of your life.
  2. You want to build up tax-free retirement savings.

How does Permanent Life Work

Whole Life

Whole Life is a permanent life insurance policy that remains in force typically for the insured’s entire life. The premium payments remain level and are required for the life of the policy. If the annual premium payment is not made, then the policy will lapse, and any cash value accumulation will be returned to you.

Universal Life

Universal Life is a permanent life insurance policy that offers flexibility. The death benefit, cash values, and premiums can be reviewed and altered as a policyholder's circumstances change.

Variable Life

Variable Life is a form of permanent life insurance that allows you to invest your cash value into various investment instruments and funds such as stocks, bonds, and mutual funds. This tends to be the most expensive type of permanent life insurance.

Learn more about Permanent Life Insurance

What is Guaranteed Issue Final Expense

Guaranteed Issue Final Expense are smaller policies with coverage amounts from $5,000 - $25,000. There is no underwriting with these policies, so everyone qualifies, even if you have health issues. Some of these policies come with a two-year waiting period before they take effect.

Reasons to own Guaranteed Issue Final Expense

  1. You need final expense coverage.
  2. You can not qualify for a fully underwritten life insurance policy.

What Life Insurance Policy is Right for Me?

If your need for coverage is temporary, you should consider a term life insurance policy. If you need coverage that is guaranteed for the rest of your life or would like to enjoy a tax-free retirement, then permanent life insurance is a better choice. Guaranteed Issue Final Expense policies make sense if prior health issues disqualify you from a fully underwritten life insurance policy, like term or permanent life, and you want to ensure your final expenses are covered so as not to leave a burden on your loved ones.

At Simple Term Life, our agents have been advising our clients for almost two decades and will be happy to discuss your life insurance needs, so you find the right policy at the lowest price.

Key Terms:


  • Insured

    The person who the life insurance protection is on.

  • Beneficiary

    The person or people who will receive the benefit amount if the insured were to die.

  • Policy Owner

    The person who owns the life insurance policy. This can be the insured, the beneficiary, or a third party like a trust.

  • Life Insurance Company

    The companies which issue life insurance policies.

  • Policy

    The contract between the policy owner and the insurance company which lays out the terms of the agreement.

  • In Force

    Your policy is active and you are now covered.

  • Face Amount

    The amount of money paid to the beneficiary if the insured were to die. Also, know as the benefit amount or death benefit.

  • Premium Payment

    The amount of money paid by the policy owner to the insurance company to keep the policy in force.