Let's get life insurance off your to-do list
Find a policy that fits your life and your needs. Young professionals, busy families, retirees, business owners — no matter where you are in life, thinking about your short- or long-term financial goals often comes with questions. For some, life insurance may be a simple answer.
What are the different types of life insurance?
Life insurance policies fall into two main categories: term life and permanent life (including whole life and index universal life). Understanding the differences between these two types of life insurance can help you choose a policy that fits your life and your goals.
Term life insurance
- Policy lasts for a specific period of time (think: term), as long as premiums are paid.
- Premiums are level for the initial 10, 15, 20 or 30 years, then increase annually until the policy expires.
- Premiums pay only for current coverage. There is no cash value to help with future cost of insurance.
- Coverage expires when the term ends or lapses if premiums are not paid.
- Death benefit payment only occurs if the insured dies during this specific period.
What to consider about term life insurance if you are a:
Young Professional
The initial premium of term life insurance can make larger amounts of coverage more affordable.
If you have financial needs shorter than that level premium period, you can afford a larger death benefit to help your beneficiaries pay a mortgage, student loans or other debts, a child’s tuition, or even for future retirement.
For needs expected to extend beyond the level premium period, term insurance may become more expensive than permanent as premiums increase with age.
Business Owner
Premiums for a term life insurance policy per thousand dollars of coverage are generally lower than premiums for a whole life policy on a per thousand dollars of coverage for the same time period. This can make term life more affordable for large needs with a definite timeline. For example, helping to make a loan repayment if the borrower dies or to cover the cost to recruit and train a replacement for a key employee who passes away.
Pre-Retiree
Some people layer or blend different types of life insurance to help prevent being under- or over-insured. Now may be the time to consider converting an existing term policy to a permanent life policy.
Permanent life insurance (including whole life and index universal life insurance)
- Policy provides coverage for the insured’s lifetime, as long as premium payments are made.1
- Premiums can pay for current coverage and build potential cash value to help cover future insurance costs.
- Cash value can help keep the policy in force if you are unable to pay premiums for some length of time.
- While primarily providing a death benefit, the policy owner may be able to access available cash value for other expenses under certain conditions.2
- There are several types of permanent life insurance. Each type offers different features that can provide more flexibility or death benefit options.
Whole Life
Index Universal Life
Whole life is a conservative type of permanent life insurance. Premiums and death benefit are guaranteed to stay level, and cash value grows at a guaranteed rate, as long as premiums are paid. Farmers offers four premium durations: 10-year, 20-year, age of 65, or age 100.
Index universal life offers more flexibility than whole life insurance. The distinctive feature is that the cash value growth is linked to the performance of a stock market index, such as S&P 500® or S&P® MARC 5% ER. This allows for potentially higher growth. The S&P® MARC 5% ER index offers uncapped growth, where the S&P 500® is capped. There is a floor on both indices, ensuring that the account value does not decrease.
Whole Life
Whole life is a conservative type of permanent life insurance. Premiums and death benefit are guaranteed to stay level, and cash value grows at a guaranteed rate, as long as premiums are paid. Farmers offers four premium durations: 10-year, 20-year, age of 65, or age 100.
Index Universal Life
Index universal life offers more flexibility than whole life insurance. The distinctive feature is that the cash value growth is linked to the performance of a stock market index, such as S&P 500® or S&P® MARC 5% ER. This allows for potentially higher growth. The S&P® MARC 5% ER index offers uncapped growth, where the S&P 500® is capped. There is a floor on both indices, ensuring that the account value does not decrease.
What to consider about permanent life insurance if you are a:
Young Professional
Some policies offer a cash value component you can use for anything, such as a down payment on a house or for a house renovation.2
Pre-Retiree
A policy rider available on certain policies that allow you to accelerate the death benefit or use of a policy with a cash value component for policy distributions2 — often called living benefits — can provide funds while you’re still living.2
Your life, your life insurance
As you shop around for life insurance, these details — factors that may be considerations for you and your life situation — can help you decide on the type of policy you want.
Think about…
Your age and income
If married, your spouse’s age and income
The number and ages of your children
Your family’s cost of living
Other people you support financially
Final expenses
Legacy plans
What can you expect when applying for Life insurance with Farmers?
- Apply securely online in the privacy of your own home or with the assistance of a Farmers® agent.
- Most applicants qualify for automatic underwriting (no medical exams) resulting in same-day policy decision on the application.
- For some applicants, a medical exam is necessary. Coverage may still be obtained within a few weeks depending on the outcome of underwriting.
- Self-service customer portal for viewing and managing your policy 24/7.
- A simpler claims experience with convenient self-service options.
- Bundle your insurance coverage under one brand you know.
- Multiple policy pricing available for current Farmers customers.4
For generations, customers have turned to Farmers Life to help as they protect the financial future of their loved ones. From term to permanent life insurance options, customers use our products to help them plan for the future of their loved ones, businesses, or both.
Learn From Experience
Have more questions about life insurance? Read on for more information from our pros.
The first number customers usually want to look at is the amount of coverage. This is the biggest question for most customers. How much do I need?
Life insurance can be a tricky topic. It’s designed to provide financial support for those who depend on you, but permanent life insurance can also be used to access money for big purchases during your lifetime through policy loans.
Both term and permanent life insurance offer “riders” that could potentially provide payments while you’re alive.
Permanent life insurance — a category that includes whole life and universal life — typically has two key features: a death benefit and a cash value that builds within the policy.
Farmers® entities, employees, agents, and representatives do not provide legal or tax advice. In general, partial or full surrenders from a permanent life insurance policy in excess of the policy’s basis are taxable. Limited circumstances exist where death proceeds will be taxable. This material has been prepared for general informational purposes only, and is not intended to provide and should not be relied on for tax, legal or financial advice. Because each individual’s situation is different, specific advice should be tailored to your particular circumstances; you should always consult your own tax, legal and other advisors before engaging in any transaction. This material reflects our general understanding of current law as of the date hereof, but tax laws and IRS administrative positions may change. This material is not intended to and cannot be used to avoid any Internal Revenue Service penalties. We specifically disclaim any liability resulting from the use or application of information contained in this publication. Farmers New World Life Insurance Company is not affiliated with or endorsed by any government agency.
1 Lifetime coverage (or life of the policy) is guaranteed as long as all premiums are paid to keep the policy in force.
2 Cash values may be accessible through policy loans or partial surrenders. Policy loans that are not repaid and partial surrenders will reduce cash surrender value and death benefit. Policy loans are subject to interest charges. If your policy is a Modified Endowment Contract, loans and surrenders may incur taxes and penalties.
3 The death benefit is guaranteed according to the terms of the contract and provided that premiums are paid.
4 Multiple policy pricing available on selected life insurance products and may not be available in all states. Contact us to see if you qualify for the multiple policy pricing.
The "S&P 500 Index" is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Farmers New World Life Insurance Company. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Farmers Index Universal Life is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.
The "S&P MARC 5% ER Index" is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Farmers New World Life Insurance Company. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Farmers Index Universal Life is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P MARC 5% ER Index.
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