Life Insurance

Life insurance is one of, if not the only financial instrument that is based on caring and love. Even though there can be personal advantages to having life insurance, the real impetus is love for those one cares most about – to make sure they are taken care of. So, applaud yourself for taking the time to learn about this subject (and please follow up with action whether through us or the organization of your choice.)
Life insurance is insurance that will protect your family and/or specified dependents in the event of the policyholder’s death. In general, it is an essential component in planning for the future.
There are various types of life insurance but they all have some common attributes. You pay an insurance company what are called premiums. At your death, the life insurance company pays an amount to the people you named in your policy, called beneficiaries. Also it’s interesting that if you named a beneficiary(ies) they’d receive the insurance amount free of income tax.
Some types of life insurance have cash benefits available while you’re living. In these types, a portion of your premium goes into a cash reserve and builds on a tax-deferred basis. You can access this money, called cash value. Some people use it to help education costs, enhance retirement cash flow or for any reason. Two of the most common types of “permanent life insurance” are called whole life insurance and universal life insurance.

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Term life is the most basic, simplest and least expensive type of policy. It’s pure insurance with no cash value account. A term life policy has only one function: to pay a specific lump sum to whoever you’ve designated, upon a specific event – – your death. The policy protects your family by providing money they can invest to replace your salary, as well as to cover final expenses incurred by your death. This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage…
If you are still living at the end of the term, your insurance policy is over unless you can renew the policy. When you renew (assuming your policy has that feature) it will renew at a higher price reflecting your now older age. Term insurance has no buildup of cash as with whole life insurance. Some term life insurance policies do offer a return of premium. See section on Return of Premium
We are committed to making it as easy and convenient as possible for you to purchase quality, low-cost term life insurance for you and your family and to helping you make intelligent choices regarding your insurance choices.


Term life insurance is the most affordable and flexible life insurance option available – providing protection for either a 5, 10, 15, 20 or 30-year term. Discover how term life insurance can meet your needs:
  • Affordable – Permanent life insurance can be a costly investment, while term life insurance offers a low cost option to protect your family.
  • Simple – You select the plan that best suits your needs and pay a low monthly premium based on the length of the term and amount of coverage.
  • Flexible – Term life insurance is ideal for short-term needs. For example, buying a policy that expires after your children graduate from college or that matches the length of your home’s mortgage allows you to cover those expenses should anything happen to you. And, policies can always be converted to full protection or renewed for additional years.
  • Smart – Term life insurance provides an effective way to plan for retirement; the money you save by purchasing a term life policy can be wisely invested.
When evaluating life insurance options, consider your age, financial situation and health. You’ll want to provide coverage for your dependents until they can provide for themselves and for your spouse until he/she can access retirement income. Other considerations include funeral costs, medical bills, daycare expenses, outstanding debts, mortgage payments and education costs.

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In contrast, permanent insurance provides lifelong protection. This insurance policy provides protection for your entire lifetime, with an additional investment component for maximum return on investment. The value of permanent life insurance is that protection is ongoing – you never need to worry about the term of your policy ending or make decisions about what to do next, so your family’s security is always maintained. As long as you pay the premiums, and no loans, withdrawals, or surrenders are taken, the full-face amount will be paid. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep over a long period of time…


As mentioned above, the main benefit of a permanent life insurance policy is its longevity. It will be there for the duration of your life, earning value without your intervention. Along with this comes a stable premium that will never increase over the life of the policy.
Additionally, with the investment component of a permanent life insurance policy, the policy is building cash value – that is, money you can borrow against or withdraw for expenses such as a child’s college education, or money that provides additional value for your beneficiaries when you die.
The cash value growth of permanent life insurance policies are generally on a tax-deferred basis, meaning that you do not pay taxes on any earnings in the policy, nor do you pay taxes if you withdraw money from the policy.


There are four categories of permanent life insurance:
  • Whole Life: premiums remain the same through the life of the policy; offers death benefit along with a savings account
  • Universal Life: a flexible policy that allows you to adjust your premiums and the death benefit
  • Variable Life: combines insurance protection with investment in stocks, bonds and money market funds
  • Variable-Universal Life: a combination of the two types of policies
Permanent life insurance is best suited for people who:
  • Have a need for long term insurance coverage
  • Want a policy to earn cash value to fund education, retirement or other expenses
It’s impossible to say which type of permanent insurance is better because the kind of coverage that’s right for you depend on your unique circumstances and financial goals.

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Whole life


These types of policies share a number of common benefits, including:
  • A level premium throughout the policy
  • Coverage for as long as you live
  • Accumulation of cash value
  • Best suited for long-range goals


A whole life policy has a premium that stays the same for the entire policy. The higher premium cost results from balancing the rate throughout the life of the policy – in the beginning, the premium will be higher than it should be, but over time, the cost will take into account your aging status. The “overpayment” in the early years is generally used for paying claims and investing, as well as in the later years to help pay the cost as you age and have less income. Thus, when you are younger, the premium you pay for whole life will be greater than what you would pay for term, but when you are older, the premium will be much less than a term premium. Part of each premium goes into the cash value of your policy. Your cash value, which is actually an investment, is guaranteed to grow at a fixed rate. You do not have to pay current income taxes on the growth in the cash value—it is tax-deferred.


Plain and simple, a whole life insurance policy provides protection for your entire lifetime. Also, unless you change your policy, no future medical exams will be required.


As with all permanent life insurance, whole life insurance premiums are pricey. Over time, whole life insurance is considered to be more economical, since the premium never increases and the policy builds value. Whole life also has a cash component. This cash value can grow and interest is credited to the cash value. Interest growth in these policies is tax-deferred. You don’t pay taxes on the growth. If you die, your beneficiary also does not pay income taxes on the benefit received. If you cash in the policy and you receive back more than you put in, you pay income taxes only on the amount above what you put in.
Whole life policies yield a small rate of return when compared with other investments. Depending solely on the investment portion of a permanent policy is less desirable than making your own independent investment choices.
Dividend-paying whole life policies—termed “participating” policies—are usually offered by mutual life insurance companies. Mutual life insurance companies are generally owned by policyholders, while other insurance companies are owned by shareholders. The dividends are refunds of insurance premiums that exceed a certain level. They are paid when the insurance company does well during a quarter or a year. Of course, premiums for participating policies are usually higher than those paid for non-participating policies
It’s important to remember that if you’re not sure that you’re going to keep this kind of insurance policy then it’s probably the wrong type of insurance for you. In that case, you should look at term life insurance.
The biggest difference between whole life insurance policy and the different types of term policies is that whole life insures something that will unfortunately happen for certain – one’s death. Term insures the possibility of you dying during the term period, whether that is 1 year or up to 30 years depending on the type of term insurance you get.
Another type of whole life is Survivorship life insurance, which is a type that covers two people and pays the insurance amount when both people have died. This is used often in estate planning to create cash to pay the estate taxes.
TIP: You can borrow against your cash value at a rate that is usually better than the prevailing consumer lending rates. If you die with an outstanding loan amount, the loan amount, plus interest, will be subtracted from your death benefit.

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Universal Life Insurance

Universal life insurance is a flexible type of permanent life insurance, allowing you to make adjustments to the amount of your premium or death benefit at any time. A universal life insurance policy provides lifelong coverage and accumulates tax-deferred cash value over time.


The main benefit of universal life insurance is its flexibility. With a universal policy, you make decisions about the coverage you need, and can adjust the death benefit and change the cost of your premiums.

Flexible Premium Costs

Throughout your life, your circumstances will change. Generally during the income producing years, your financial ability is greater than during your retirement years. A universal life insurance policy allows you to make adjustments to the premiums as your life situation dictates – increase, decrease or choose to skip some premium payments. Similarly, you may elect to increase the death benefit or decrease it, depending on your needs. Many prefer this type of control to their policy, as opposed to the steady premium amount and set death benefit that represents a typical whole life policy.

Cash Value

Universal life insurance gains tax-free cash value that is available to you in the following ways:
  • If you cancel the policy, you can receive the cash surrender value
  • You can take a loan out on the policy
  • Cash can be used to pay premium amounts
  • Cash received at time of cancellation can be used to supplement retirement income

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Universal life insurance policy is designed to provide lifetime insurance protection.
This type of insurance policy is one type of permanent life insurance. With a permanent policy, the insurance is designed to last as long as you pay the premiums. Whole life insurance guarantees this lifetime protection. Universal life does not have these guarantees but there are now universal life policies where you can add a feature that guarantees that the insurance will last the rest of your life. We can tell you more about that and give you quotes for this by using the navigation for quotes on the left.

Permanent insurance policies are designed and priced for you to keep over a long period of time. If you don’t intend to keep the policy for the rest of your life, this may be the wrong type of insurance for you. If so, it may be better to consider term life insurance .

The two main types of permanent life insurance are whole life and universal life. These have a feature known as cash value or cash surrender value. Term insurance policies do not have cash values.
Universal life (or whole life) covers an event that’s certain to happen; one’s death, while term covers you for the possibility of you dying during the term period.
A term life policy is sometimes renewable (you can keep it but at a price that reflects your older age). At some point, as you get older term goes up in price and may become too expensive for you to keep.

The Difference between Whole Life Insurance and Universal Life Insurance

Here’s the difference in a nutshell:
Whole life guarantees the death benefit for life, guarantees the cash value and guarantees the premium – period.
Universal life insurance assumes an interest rate and the cost of insurance and comes up with a projected premium. If the insurance companies’ projections on their universal life policy do not come through, then you may have to come up with higher premiums later, have lower than expected cash values or even lose the policy.

A recent development on universal life

A recent development about is that you can now get universal life insurance and guarantee that the policy will last for a lifetime. It may lose its cash value but the insurance amount can be guaranteed for life. We can go over this with you and simplify it for you. There are differences in cost and benefits among companies. We’ll go over those questions with you and get you straight answers.

The Problem that is addressed

One of the problems with universal life insurance (a problem that can be overcome) is that the premiums paid may not be sufficient to keep the policy going. In other words, you could pay a premium and down the road the policy does not continue.
This is because of the flexible nature of universal life insurance or joint and survivor (survivorship) universal life insurance policies. Since there is flexibility on the premium paid, one takes a risk that the amount paid will be insufficient in later years. This is different than whole life insurance policies, which guarantee the premium for the life of the policy.

The Solution

Insurance companies have come up with a solution – to guarantee the insurance benefit on a universal life insurance policy even if the cash value in the policy goes to zero. This is known as a “secondary guarantee.” You agree to pay a premium, which is often less than a whole life insurance premium, and if you keep your payments up the policy’s death benefit is now guaranteed.
There are also new provisions where you can even pay a lower premium than the one that guarantees a policy, watch how it performs and thus possibly pay even a lower premium over time. If the policy doesn’t perform then you can make up the premium with what is called the “catch up provision.” You then deposit the back amounts that you would have had to deposit anyway.

Using this type of universal life insurance for Survivorship Life Insurance

These secondary guarantee policies are often used for estate planning where the crucial component is a guarantee of the death benefit and cash values become somewhat less important. In estate planning, survivorship life insurance (also called joint and survivor life insurance or second to die life insurance) is often used to create the cash liquidity to pay the estate taxes. This is often done through a legal vehicle called an Irrevocable Life Insurance Trust (ILIT) which, if set up correctly by legal counsel, can allow the life insurance proceeds to be received free of income and estate taxes.

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Variable Life

Variable life insurance is a type of permanent life insurance that provides lifelong protection. The difference between variable life insurance and other types of insurance is that variable life allows you to make choices about where the premium is invested. You can select from a variety of investment options within the insurance company’s portfolio.

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Survivorship Life Insurance

Also known as second-to-die insurance, survivorship life insurance covers two people on the same policy. In this scenario, the death benefit is not paid until the second person’s death.


Since this type of insurance covers two people, the premiums are much higher than a regular policy. Survivorship life insurance is often a consideration for those who want to provide protection for their heirs from excessive estate taxes when they die. Primarily for wealthy individuals who have a net worth in excess of $2 million, survivorship life insurance is an effective estate-planning tool to preserve the estate’s value.


Since survivorship insurance is designed for wealthy individuals, it is not suited for everyone. This type of policy also requires that the insured persons consult with legal and tax professionals due to the complexities of estate planning.
Again, since this type of policy is best suited for affluent people, it is generally not applicable to the general population. If your major consideration is cost, you will want to visit our term life insurance page for information on death protection for a low cost premium.


Survivorship life insurance is a valuable tool for people who need to protect their estate following their death. This is best illustrated in a description from the Mass Mutual insurance website:
“If you are married, your estate, within federal limits, will pass to your spouse free of federal estate taxes when you die. However, once your spouse dies, taxes can pose a serious problem to your heirs. The second-to-die policy death benefit proceeds can provide funds needed to pay estate taxes and reduce or eliminate the need for your heirs to liquidate your estate.”
From this excerpt, you can see how this type of policy protects the estate from the impact of excessive taxation. Estate taxes can reach as high as 55%, depending on the size of the estate. To assist your beneficiaries with these heavy taxes, survivorship life insurance protects the estate by allowing them to use the death benefit payout for the taxes. This type of protection is critical so that heirs are not strapped by heavy taxes and forced to lose a family estate or business.

Joint Life Insurance

As opposed to survivorship life insurance (also known as “second to die life insurance”), joint life insurance is intended to provide a benefit upon the death of the first spouse or business partner. Joint life insurance protects the widowed spouse upon death of a husband or wife. It also provides adequate protection for a business should a key executive or partner in the business pass away.


Joint life insurance is cheaper than survivorship life insurance because it only covers one person. Additionally, joint life insurance is cheaper than purchasing a separate life insurance policy for each spouse. The cost of joint life insurance will depend on a variety of factors, including the age of each spouse, their health, the length of coverage requested, and whether the policy is whole life coverage or term life coverage.


One major benefit of joint life insurance is that the underwriting requirements are easier to meet – especially if one of the spouses is healthy. One great feature of joint life insurance policies is that you have the choice of the style of life insurance policy that you want attached – whether it’s whole life or term life. You can also take out a loan on the cash value that a whole life policy would build up (if you choose to attach whole life to your joint life insurance plan).


Joint life insurance has one major difference with survivorship life insurance: Survivorship coverage is intended to pay the benefit only when the second policy-holder dies. Joint life insurance, on the other hand, pays out when the first policy-holder dies. Survivorship life insurance is ideal for those who want to provide estate tax protection from potential heirs, especially if the individuals who are covered have a net worth greater than two million dollars. Joint life coverage is ideal for couples who want to provide protection to their spouse – no matter which spouse dies first. It’s also a helpful tool when one of the two spouses finds it difficult to meet underwriting requirements.

Group Life Insurance

As a business owner, you need to have the best interests of your employees in mind when creating a comprehensive benefits package. Group life insurance plans are just one component of the package that can offer your employees so much at just a small cost to you.
Your role as an employer is to research a variety of insurance carriers to find the one with the best plans for your employee’s needs. Some of the more prominent companies include CIGNA, Aetna, and Minnesota Life Insurance.

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The following overview is compiled from information about Minnesota Life Insurance’s group life plans. Generally, group term life insurance is similar from one company to the next, with:
  • Guaranteed coverage amounts – either a fixed amount or based on salary
  • Basic coverage requires no health questionnaire or medical exam
  • Beyond the basic coverage, health questions and medical exam will be necessary
  • Rates are based on the group of employees, not per individual
  • Less paperwork is involved because insurance is designed for groups
  • Payment is made through electronic transfer or payroll deduction
  • Coverage can often be converted to an individual policy when employee leaves the company
Group life insurance policies provide the traditional offerings of term and permanent coverage, with most companies providing a basic level at no cost to the employee. Employees have the option of purchasing supplemental insurance in addition to the basic policy at their own cost. Additionally, any changes in family status (marriage, divorce, birth, adoption, etc.) provide an opportunity to update your policy. Note that increases in coverage often require evidence of insurability (including health questionnaire and medical exam).
Other types of policies include:
  • Group Universal Life Insurance – provides coverage and builds cash value
  • Variable Group Universal Life Insurance – provides flexible investment options


From your perspective as an employer, you can offer group life insurance to your employees at a minimal cost to you.
While both term and permanent life insurance policies are available, most employers choose to offer term policies that provide coverage for employees for the duration that they work for the company.


Since there are no medical exams required for basic coverage, there is only a determination of risk based on age, sex and salaries of your employees. Risk factors are averaged to calculate the premium.

Mortgage Life Insurance

One of the major expenses that you want to protect your spouse from after your death is the remaining mortgage payment. Following your death, the loss of your income can cause considerable financial stress, with mortgage payments topping the list of outstanding debts to pay. Life insurance is an effective way to plan for your family’s financial security. In the event of your death, your spouse and dependents will receive the death benefit, tax-free. This payout can be applied to a variety of expenses, including mortgage payments.

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“Mortgage life insurance” is designed specifically to provide financial security to the lender for mortgage payments after you die. With this type of insurance, you pay a premium that remains at the same rate during the life of the policy. In the event of your death, the policy pays off the remaining mortgage payment.
As with other types of life insurance, factors such as age, health and smoker/non-smoker are considered to determine the premium rate. An article from provides the following example and explanation: “A policy covering a mortgage of $100,000 will cost about $50 a month for a 40-year old non-smoker, depending on what state you live in. The “death benefit” in this case is the outstanding balance on your mortgage. So, if you take out a large mortgage initially, your premiums will be higher. As you pay your mortgage off, the amount your policy pays off goes down. Even so, your policy premiums remain the same because the payments have been calculated with the decreasing death benefit in mind.”


One downfall of mortgage life insurance is that it is very specific, meaning that the payout at your death can only be applied to the balance of your mortgage. Since your family will have a number of outstanding debts and expenses to pay for, you may want to consider a more flexible option. A standard life insurance policy may be a better alternative over mortgage protection insurance. You may want to consider a short-term term life insurance policy to provide adequate coverage to your family while allowing them the flexibility to make choices about where the proceeds are applied. There are likely to be additional expenses and debts that the death benefit can provide for – including education, childcare and saving for a college education. Visit the free online quote system for a comparison of costs for a variety of life insurance offerings.


No. Mortgage protection insurance and private mortgage insurance provide protection to your lender. Should you default on your loan, your lender will be protected by the insurance policy. However, mortgage protection insurance and private mortgage insurance do not protect you or your family in the event of your death. While private mortgage insurance is important because it allows lenders to offer you a loan even if you do not have the standard 20% down payment available, it does not protect you or your loved ones against repossession of your home should you be unable to make payments. In order to provide full protection for your family, you must purchase a mortgage life insurance policy.
Many lenders include the price of a private mortgage insurance or mortgage protection insurance policy in your monthly payments. However, you should not confuse this with protection for you or your family. When reviewing your loan policy, you should find out whether mortgage protection insurance is included, and even if it is, you should look into a mortgage life insurance policy to make sure your family is completely protected.

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Unifirst provides insurance, accounting and bookkeeping services.  Products, insurance terms, definitions, and other descriptions are intended for informational purposes only and do not in any way replace or modify the definitions and information contained in individual insurance contracts, policies, and/or declaration pages  from underwriting companies, which are controlling.


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