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Understanding Death Benefit Types

Fixed premiums and death benefit for the entire length of contract; issued based on health review. Full coverage from first day of premium. 

Level / Immediate:

"Death Benefit" is defined as the payout to your beneficiary upon death, which typically a lump sum. This amount may differ from the Face Amount in some cases such as outstanding policy loan at death or depend on policy structure at time of death. Policy structures are used to manage risks by protecting the insurance companies from issuing policies that may result in fast death claims. Some common policy structures for death benefits are as follows:
Coverage with a 2–3 year entry period during which benefits gradually increase for natural death, often through Return of Premiums (ROP), partial benefits, or both; issued based on health review.

Modified / Graded:

Issued with no health questions or exams; includes a 2–3 year waiting period for natural death, typically offering ROP.

Guaranteed Issue / Graded:

Types of Policies 

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Term Life Policy

Best for temporary protection needs such as covering a mortgage or income replacement during child raising years when financial responsibilities are their highest.

Pros:

  • Coverage lasts for a specific Term period (10-30 years)
  • Ideal for temporary needs
  • Offers the lowest cost for highest coverage

Cons:

  • Price increases since premiums are not fixed
  • Typically offers no Cash Value accumulation
  • Coverage ends when term expires

Whole Life Insurance

(Medical Examination / Fully Underwritten)
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Best for estate planning, legacy creation, & long-term wealth transfer. These policies offer guaranteed lifelong coverage and cash value growth.

Pros:

  • Lifetime protection
  • Fixed premiums that never increase
  • Death benefit & cash value guaranteed

Cons:

  • Most policies require full medical underwriting
  • Cash value growth can be slow
  • Less coverage per dollar than term
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Simplified Issue Whole Life

(Health Questionnaire / Partially Underwritten)
Best for final expense planning and ensuring funds are accessible for funeral costs or small debts without undergoing a medical examination. 

Pros:

  • Health Questionnaire, no medical exam 
  • Lifetime coverage
  • Fixed premiums that never increase
  • Death benefit and cash value guaranteed

Cons:

  • Smaller coverage amounts
  • Higher cost per dollar of coverage
  • Not ideal for large estate or income replacement

Modified Issue Whole Life

(Health Questionnaire / Partially Underwritten)
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Best for individuals with moderate health issues who couldn’t qualify for immediate coverage but want affordable permanent protection with a short Graded Benefit Period.

Pros:

  • Limited Health Questions, no medical exam 
  • Lifetime coverage once active
  • Fixed premiums that never increase
  • Death benefit and cash value guaranteed

Cons:

  • Partial Death Benefit during first 2-3 years
  • Smaller coverage amounts
  • Higher cost per dollar of coverage
  • Slower cash value growth
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Guaranteed Issue Whole Life

(No Health Question Asked)
Best for individuals with who can’t pass a medical examination or health questionnaire due to serious health complications or multiple past or current health conditions who need quaranteed approval for basic end of life protection. 

Pros:

  • Guaranteed acceptance, no health review
  • Lifetime coverage once active
  • Fixed premiums that never increase
  • Death benefit and cash value guaranteed

Cons:

  • Graded Death Benefit, 2-3 year Return of Premium Waiting Period
  • Small coverage limits
  • Higher cost per dollar of coverage
  • Minimal cash value

Universal Life 

(Indexed or Non-Indexed | Fully Underwritten)
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Highly complex policies best for those who want long term coverage that functions like a flexible savings account, allowing for premium & benefit adjustments based on performance. 

Pros:

  • Builds cash value with interest or indexed growth
  • Lifelong coverage when funded & maintained properly
  • Lower initial premiums than Whole Life

Cons:

  • Cost of Insurance is NOT fixed.
  • Policy Requires active management
  • Policy can lapse if underfunded
  • Policies are complex & fees can be high
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Accidental Death & Dismemberment 

Best for those with high-risk jobs or active lifestyles, these policies are focused on providing additional coverage in the event of a sudden accidental passing or loss of limb. 

Pros:

  • Extremely low cost
  • Fast, questionnaire based approvals
  • Adds extra protection to other policies

Cons:

  • Pays only for accident-related death
  • No illness or natural-cause coverage
  • No cash value
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