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What is life insurance?

The main purpose of life insurance is to provide a financial benefit to your loved ones in the event of an early death. Typical reasons for buying life insurance include paying funeral expenses, providing mortgage assistance, supplementing educational expenses for children and spouses, replacing lost income, and helping to protect the value of an estate after the insured passes on.

Differences between Term and Permanent


There are many kinds of life insurance, but they generally fall into two categories: term insurance and permanent insurance.

Term insurance is the most affordable type of insurance when initially purchased. It provides protection for a specific period of time (the "term") and generally pays a benefit only if you die during the term. 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.

Pros and cons of term insurance. Term insurance can be a good fit for younger individuals and families, who need protection against the loss of income of a primary earner for a stated period of time, at an affordable cost. In most cases, a medical examination will be required.

Term insurance does not build cash value, so at the end of the term, the policy will have no value. An additional benefit of term insurance is that it is a simple product, so comparison shopping is quite easy.

Permanent insurance typically provides both a death benefit and cash savings. There are different types of permanent insurance that typically is designed to provide insurance protection for as long as you live, assuming your premium payments are made as required. Some benefits of permanent life insurance include:

Pros and cons of permanent insurance. Permanent insurance may provide protection for your entire life. If a guaranteed level premium is important to you, we will make sure your policy provides for one.

Permanent insurance accumulates a cash value, and the policy owner may be able to borrow against it tax-free or use it for retirement or other goals (like education). Premiums are initially higher than for term coverage.

Below is a short, informative video from Life Happens, a nonprofit organization dedicated to helping Americans take personal financial responsibility through the ownership of term or permanent life insurance. By educating the public about this important topic, consumers can see it's not as complicated or as expensive as they think. Our agents in Mount Airy, Maryland can help you find the policy that is right for your situation and your goals in protecting your family.

Click link to view video - Life Insurance 101