We understand that people are often confused about the different types of life insurance. To illustrate the various approaches to life insurance, think of a housing analogy. Term insurance is like renting a house. You get the protection you need guaranteed for a fixed number of years (like a lease), but the premium (rent) will escalate over time. Even when you lock in a level premium for a definite period of time, there will come a day, 10 or 20 years from now, when that term and your insurance coverage run out. When you attempt to renew your coverage at that point, you must re-qualify medically. Since you are older, you can reasonably expect a hefty increase in your premiums. You also must assume (and hope) that you are still in good health and insurable.

So, what solution is right for you? No single answer is correct, as the right life insurance solution depends on why you need the insurance. If you are addressing a temporary need, you should choose term life, which pays a death benefit only when the insured dies during the term of the policy. A good example of a temporary need would be a future defined expense, like a short-term loan. Because you know both the cost and the term of the loan, term insurance can work well to ensure the insurance benefit is available should the insured die before the loan is repaid.

However, term insurance carries no additional benefits and term policies have very limited flexibility. Term insurance becomes increasingly expensive in later years. If you let the policy lapse, you may end up with no life insurance. So while term insurance is useful when used correctly, it may be an inadequate solution when the defined need is more permanent in nature.

For most people, especially those attempting to address ongoing family and business needs, a good choice may be some form of permanent life insurance, such as whole life or universal life. Permanent insurance is like owning a home. As long as you pay the premiums (like mortgage payments), your insurance coverage remains in force. In addition, you have the potential to build up significant cash value in the policy (like home equity). You have access to the cash value in case of an emergency or you can use it for supplemental retirement income needs.

Consider the following possible needs for life insurance:

• To provide financial security for your family in case of premature death
• To create liquidity for covering expenses incurred at death
• For business purposes, such as succession planning
• To transfer wealth to heirs or leave an inheritance
• To address potential estate tax exposure
• As a means of funding a charitable gift

The most valuable feature of permanent life insurance is that the death benefit will be there when your loved ones need it.

If you think you may need life insurance or would like an audit of your present insurance coverage, please contact your financial advisor. Your financial advisor can help you design a life insurance program customized to the unique needs you and your family have—today and in the future.