Understanding Life Insurance

Term Life Insurance

Term life insurance provides coverage for a specific period — usually 10, 15, 20, or 30 years. If the insured person passes away during the term, the policy pays a death benefit to the named beneficiaries. If the term ends and the person is still living, the coverage expires unless it is renewed or converted.

Term policies are generally the most affordable type of life insurance and are commonly used to cover temporary obligations like a mortgage, income replacement during working years, or protection while children are young.

Many term policies include a conversion option; check your policy for the deadline. A conversion option allows the policyholder to convert to a permanent policy without additional medical underwriting, within a specific window. This feature can be valuable if health changes over time.

Permanent Life Insurance

Permanent life insurance is designed to provide coverage for the insured's lifetime, as long as the policy remains in force and premiums are paid as required. Unlike term insurance, permanent policies build cash value over time that the policyholder can access during their lifetime.

There are several types of permanent coverage:

Whole life insurance provides guaranteed premiums, a guaranteed death benefit, and guaranteed cash value growth when premiums are paid as required. It is the most predictable form of permanent coverage.

Universal life insurance offers more flexibility in premium payments and death benefit amounts. The cash value earns interest based on current rates.

Indexed universal life (IUL) ties cash value growth to the performance of a market index. Indexed interest-crediting strategies commonly include a floor on index-linked interest, meaning the index credit will not go below a stated minimum (often 0%) in a given period. However, policy charges still apply regardless of index performance, and cash value can decline even when the index credit floor is in effect. IUL policies involve more complexity and are worth reviewing carefully with an advisor.

Paladin Insurance Services does not offer variable life insurance or other securities products.

Permanent policies are typically more expensive than term and involve longer-term commitments. They are most commonly used for estate planning, business succession, and situations where lifelong coverage is needed. As with all life insurance, coverage continues only while the policy remains in force and premiums are paid as required.

How Much Coverage Do You Need?

Coverage needs vary based on income, debts, dependents, and existing savings. Use the coverage calculator to get a starting estimate, then use it as a starting point for a fuller conversation.

This estimate is a starting point. A protection review can help refine the number based on your complete financial picture.

What Affects the Cost?

Life insurance premiums are primarily based on age, health, gender, tobacco use, coverage amount, and policy type. Generally, the younger and healthier you are when you apply, the lower the cost.

Other factors that can affect pricing include family medical history, occupation, hobbies or activities, driving record, and the specific carrier's underwriting guidelines.

Each insurance carrier evaluates risk differently, which is why comparing options across multiple carriers — rather than looking at just one — often produces better results.