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Life Insurance Fundamentals

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With nearly 2,000 companies selling a variety of life insurance policies, deciding what coverage fits you can be tough. In an effort to make that decision a bit simpler, we've broken some of the popular options down to the basics. It's our hope that this will help make your decision a bit easier.

Life Insurance Fundamental One

Life Insurance is designed to provide financial security to those who are dependent on your income once you pass away. It can provide funds to cover a variety of expenses like mortgages, business debts, a dependent’s college education, retirement income for a spouse, or estate settlement taxes.

Life Insurance Fundamental Two

Life insurance can be divided into two main categories: temporary and permanent. Temporary, or term, life insurance provides coverage for a specified duration of time. Permanent life insurance provides coverage for a lifetime, regardless of when death occurs. Each category of life insurance has its own unique advantages and disadvantages, and what may be appropriate for one individual can be totally inappropriate for another person.

Term Life Insurance

Term Life insurance’s unique advantage is its relatively low cost. It is intended to provide the same amount of coverage, for the same premium, for a specific period of time. Farm Bureau Life Insurance of Michigan term options include: five, ten, twenty, or thirty years. The beneficiary is only paid if the insured dies during the term they specified for their policy. If the insured is still alive at the end of the term, the client can choose to pay an increased premium or discontinue the coverage. 

Our term life insurance can be purchased between the ages of 18 and 70. The term durations available are dependent upon the client’s age.

Permanent Life Insurance

Unlike term insurance, permanent insurance is designed to cover you throughout your life.  It is permanent protection. Permanent policies also accumulate a cash value.  This cash value can be:

  • Withdrawn or loaned against 
  • Used to create a guaranteed income stream  
  • Used to help offset some or all of the premium  

Whole Life Insurance 

With whole life insurance if you pay your premium, your policy will always be there. There are a variety of whole life policies. Some policies require you to pay to age 100, while others only require a one-time payment. All Farm Bureau Life Insurance of Michigan whole life policies are participating policies.  This means all of our whole life policies are eligible for a dividend if one is issued.  When you receive a dividend, you get to decide how they are used.  Dividends may be taken as cash, used to reduce the premium, or redeposited into the policy to purchase more insurance. This policy is good for someone who wants to know the policy is there for their safety.

Date Posted: April 26, 2021

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