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How to Choose a Life Insurance Policy

All life insurance policies pay a specified amount of money if you, the policy holder, die. That said, not all policies are the same. The policy you buy may be term life, whole life, or a combination of both. Before choosing a life insurance policy, be sure you understand what type of insurance you are choosing and how it works.

Term Life Insurance

Term life insurance is insurance for a designated period of one or more years. Benefits are paid only if you die within that specified term. In general, this type of insurance pays the highest immediate benefit for your premium dollar.

Renewable Term Policies

Some term policies are "renewable" for one or more additional terms, even if your health changes. Each time you renew, premiums increase. Before choosing term life insurance, check premium rates for older ages and find out how long the policy can be continued. This is usually stated as "renewable until age _____."

Convertible Term Policies

Some term policies are also convertible. This means that before the end of the specified conversion period, you may choose to trade the term policy for a whole life or endowment policy—even if your health changes. Premiums for the new policy will be higher than the term policy rates.

Whole Life Policies

Whole life insurance provides death benefits for as long as you live. The most common type of Whole Life Insurance is "straight" or "ordinary" life. With this kind of whole life insurance, your premium rates never change. It is important to note that ordinary life premiums can be much higher than term life insurance premiums, but they are smaller than the premiums you’d eventually pay if you kept renewing term policies in your later years.

Some whole life policies allow you to pay premiums for shorter periods of time, such as 20 years, or until age 65. This usually results in higher premiums than with ordinary life, because the premiums are squeezed into a shorter time period.

Whole Life Policies and Cash Values

Although whole life premiums are initially higher than term premiums, whole life policies develop "cash values." Technically speaking, these are called "non-forfeiture benefits." That means you do not lose the cash value if you stop paying premiums. The amount of cash value depends on the kind of policy you have, the amount of the death benefit it pays, and how long you have owned it.

You may convert the cash value of your policy into actual cash, or you can use it to buy continuing insurance coverage. Cash value policies can also be used for collateral. The interest rate you will pay if you borrow from the insurance policy is printed on your policy. The loan interest rate in Gerber Life's policies is generally 8% per year. Any money owed in the form of a policy loan is deducted from the benefit paid when you die or from the total cash value if you stop paying premiums.

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Email us or call 1-800-704-2180. Remember, it costs nothing to apply and you have 30 days to review the policy. Let us help you choose a life insurance policy that is right for you.