Term life insurance is one of the simplest forms of life insurance and it is considered to be the purest insurance protection because it doesnt create cash value. This type of life insurance is totally in contrast to permanent life insurance such as universal life, whole life, and variable universal life insurance. Basically, term life insurance provides coverage for a period of limited time, the relevant term. The insured can obviously drop the policy after that specific period, and also can pay yearly increasing taxes or premiums to carry on the coverage. Suppose the insured dies during the term, the beneficiary will get the death benefits. Term life insurance if often one of the most inexpensive ways to purchase a substantial death benefit on coverage amount per premium dollar basis. 1

Term life insurance is affordable because it does not accrue a cash value and only pays the death benefit. Therefore, the initial premium is much lower, allowing you to easily budget for your coverage. This option offers great value to an individual that needs a death benefit for a specific period of time. For example, term life insurance is a good choice for people that have started a family and need to consider paying for college, have amortized loans, or have a specific financial burden that will decrease over time. After the kids graduate from college, the amortized loans are paid down, or the specific financial burden has decreased, the need for cost effective high levels of coverage may not be as great. At this time your options vary. 2

Term insurance is the most common form of group life insurance. Group term life is typically provided in the form of yearly renewable term insurance. When group term insurance is provided through your employer, the employer will pay for most (and in some cases all) of the premiums. The amount of your coverage is typically equal to one or two times your annual salary. 3

With all lease options conditions may vary. This is consistent with term insurance policies, as well. For example, some term life insurance policies may include options such as accelerated death benefits, disability waver of premiums and accidental death benefits. Other term life insurance policies do not include these provisions and require rider for an additional expense. Additionally, some policies enable you to convert your policy to a permanent life insurance during a specific time frame early in the term. Some policies even allow this conversion without the standard health evaluation that is usually required. 5

Another important benefit of whole life insurance protection is the cash value that accumulates over the life of the policy. You can borrow those cash values and use the money any way you see fit. Whole life insurance is typically used to help loved ones pay those last remaining expenses such as funeral and medical bills. 6

ValueGard no exam, whole life insurance protection will provide your beneficiary a guaranteed death benefit that will be free from federal income tax. It accumulates cash value, which you can borrow, on a tax-deferred basis. The premiums for ValueGard are guaranteed to never increase; benefits will never decrease. You can get ValueGard whole life insurance without taking a medical exam. 7

What type of insurance should be considered? Child care protection is a temporary need. The need will end when the children are old enough to care for themselves. So this is the ideal situation for term life insurance, which for a young spouse can be very inexpensive. Note that Servicemembers Group Life Insurance (SGLI) now provides up to $100,000 of coverage for the servicemember's spouse. However, that amount is inadequate in most circumstances, and an individual policy to replace or supplement the SGLI coverage is usually necessary. Income replacement protection may or may not be temporary depending on the family's overall financial plan. In this case, term insurance or permanent insurance (whole life), or a combination of both may be desired. 8

Most employer group plans are term insurance, but if you leave that employer your state may require that you be allowed to convert the policy to a form of whole life insurance with the same insurance company that provides the group life insurance. You would then pay premiums directly to the company and keep the insurance in force. This can be an advantage if you are older, or have experienced deteriorating health, as it gives you the opportunity to qualify for whole life insurance without having a medical exam. 9

In many cases, a family can be more devastated financially by the death of the spouse than by the death of the servicemember. However, most military families fail to adequately insure the military spouse. The Navy Mutual Aid Association (serving the Sea Services, Navy, Marine Corps, Coast Guard), at 1-800-628-6011, and the Army-Air Force Mutual Aid Association (Serving the Army, Air Force and National Guard), at 1-800- 522-5221, have been insuring the family protection needs of military families for over 125 years. Both of these non-profit organizations have counselors available that can discuss life insurance options for your family. 10

Term life insurance, also called temporary insurance, covers a person against death for a limited time, the term. For example, the term might be until children are grown, or until college is paid for, or until retirement. You pay for the policy period and at the end of the term, the contract or policy expires. If no claims are made against the policy during the term, you don't receive any benefits after the policy expires, just like auto or homeowners insurance. 11

Universal Life Insurance is a flexible life insurance plan. These policies are interest-sensitive and permit you to adjust the death benefit and/or premium payments, within limits, to fit your situation. Your net premium payments are applied to the accumulation fund, which earns interest. The monthly cost of the death benefit and policy administration is deducted from the accumulation fund. As with Whole Life Insurance, the cash value is yours — you may withdraw it or borrow against it at any time.1�Or, you can use your cash value to pay premiums. 12

Variable Universal Life Insurance may be for you if you want to invest the cash value of your life insurance policy in various funding options that in turn invest in such things as stocks and bonds. You decide how your net policy values are to be invested—and you bear the investment risk.� If market performance is poor, your death benefit may decrease, and you may have to pay higher premiums to keep the policy in effect. But your cash value also has the potential to grow more rapidly than with other cash-value policies if the market performs well. 13

Members of the PFRS, SPRS, JRS and ABP do not pay for their life insurance coverage. They have noncontributory life insurance coverage. In addition, members of PERS and TPAF who have dropped their contributory life insurance coverage, have noncontributory life insurance coverage. To determine the taxable amount, if any, take the amount of your noncontributory life insurance coverage and subtract $50,000 from it. The premium rates are then applied to the remaining life insurance amount. The premium costs for the life insurance are determined by the IRS based on your age (see chart) and the life insurance in excess of $50,000. The premium cost of the remaining life insurance amount is the taxable amount and is added to your W-2 for that year. 14

This type of life insurance policy offers a guaranteed level premium to age 100, along with a guaranteed level death benefit to age 100. Most often, this is accomplished within a Universal Life policy, with the addition of a feature commonly known as a “no-lapse rider”. Some, but not all, of these plans also include an “extension of maturity” feature, which provides that if the insured lives to age 100, having paid the “no-lapse” premiums each year, the full face amount of coverage will continue on a guaranteed basis at no charge thereafter. 15