I never considered working with an advisor who I couldn't meet with in person . . . but the world has changed  . . . I found Set for Life on the web years ago and realized quickly that I found who I was looking for . . . a down-to-earth, easily accessible, very knowledgeable and non-pushy advisor to help sort out the complicated financial worlds of insurance. . . I highly recommend Set for Life!

— Dr. Bruce A., Psychiatrist, Pasadena, CA

Term Insurance

Term insurance is the most common type of life insurance.  The rates are locked in for a specified period of time. Typically 10, 15, 20 and 30 years.

The following are Pros of term insurance:

  • Inexpensive.
  • Can obtain a large amount of benefit for least amount of cost.
  • Rates can be locked in for a fixed period of time.
  • Policies can be converted to a permanent policy without any medical underwriting.

The drawbacks of term insurance are as follows:

  • Policy expires at the end of the term.
  • Policy is inflexible. You may not reduce or increase death benefit.
  • Death benefit does not increase with inflation.
  • At the end of the term, premiums can be significantly more expensive as age increases and if an adverse change of health has occurred.

Universal Life Insurance

Universal life insurance is a permanent type of life insurance that provides flexibility. It is typically more expensive than a term policy but less expensive than a whole life policy.

The following are Pros of universal life insurance:

  • Rate can be locked in for life.
  • Policy is flexible. Death benefit may be reduced at any time.
  • Additional premium can be paid into policy to accumulate more cash value.
  • Cash accumulates on a tax-free basis.
  • Premiums are adjustable within a minimum and maximum range.
  • Cash accumulates based on interest rates
  • Less expensive than whole life.

The following are drawbacks of universal life:

  • More expensive than term insurance.
  • If cash does not accumulate and only minimum premiums are paid, an increase in premium may be required to keep the policy in force.

Whole Life

Whole life insurance is a permanent life insurance policy. It is the most expensive type of permanent insurance, but can accumulate the most cash value with the highest guarantee rates.

Pros of whole life:

  • Rates are guaranteed for life.
  • Policy accumulates cash value by receiving company dividends.
  • Death benefit increases over time with paid up additions.
  • Cash accumulates on a tax free basis.
  • Guaranteed rates of return.

Here are some drawbacks of whole life:

  • Most expensive option.
  • Premiums must be paid regularly.
  • Policy is inflexible.

Term Life Insurance Conversion Provision

Some Term Life Insurance has a provision, or rider, which is an option that gives the owner the right to change to a plan of permanent insurance without providing evidence of insurability.  The policy will define the time period in which a conversion may be exercised; it may be limited to a number of years after policy issue, such as 5 or 10 years, or to a certain age, such as age 65.  This time limitation is to minimize adverse selection, which is always present in term renewals and conversions.  Those policyowners in poor health at the time of renewal, or as the conversion period ends, are more likely to use these policy provisions and pay a higher premium than those who are in good health or otherwise insurable.

The conversation may be on an attained age (current) or original age (or retroactive) basis.  The premium rate of an attained age conversion, the most common type, is based on the insured’s age at the time of conversion.  Original age conversions allow the new policy to be issued at the age of the originally issued term policy.

Juvenile Life Insurance

Parents sometimes choose to purchase a life insurance policy on their children. The primary purpose of this insurance is to protect future insurability. While your child is young and healthy, they can qualify for coverage and add increase options that can be purchased in the future without further medical underwriting.