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What Type of Life Insurance is Best for You


Step 1: This first section concerns the purpose and length of your life insurance needs.

Now that you know how much life insurance you need, the next question is "What is the most appropriate type of life insurance to buy?" While there are many factors involved in this decision, for most people it comes down to three key issues:

  • the duration of your need;
  • your personal risk tolerance; and
  • how large a premium you're willing to commit.
    Determine the amount you need.
   
What is your age?
   
What is the purpose of the life insurance death benefit? (check all needs that apply.)

Replace income for survivors in the event of your premature death.

Cover the remaining mortgage balance, leaving your home debt-free for survivors.

Pay for major loans and family obligations in the event of your premature death.

Assure that funds are available to provide for college expenses in event of premature death.

Build cash value to for emergencies and opportunities.

Accumulate tax-advantaged cash value to supplement retirement or other long-term needs.

Estate Planning is a complex issue, usually requiring consultation with your attorney, trust officer and professional insurance advisor. A form of permanent insurance known as "survivorship" or "second-to-die" life insurance is often used in estate planning situations. To prevent the proceeds from increasing the estate, survivorship insurance is generally owned by a trust, and the death benefit paid when the last of the two insureds (usually spouses) dies.
   
How many years will you require insurance to cover the above needs?
   

Step 2: This section concerns the amount you want to pay for life insurance coverage.

Which of the following describes your expected future income until retirement?
Future income expectations may determine your needs and ability to pay premiums.

   

Overall, how would you prefer to pay for the coverage?


Pay higher premiums, but for a shorter period of time.

Premiums stay the same for duration of the coverage.

Mortality increases with age, so you pay as you go.
   
How do you feel about premium guarantees?
Policies offer different levels of guarantees. The length of time a premium is guaranteed will affect the price of the premium. Some guarantee premiums for long terms (for life or for 30 years). Others are not guaranteed or only guarantee for a very short period of time (for example, one year).
   
Which of the following statements best describes your goals?
Life insurance should be part of your comprehensive financial plan.
   

Step 3: This final section concerns your attitude about financial risk.

Have you ever invested in variable investments like common stocks, mutual funds or variable annuities?

   

How do you feel about the rate of inflation and the impact it may have on your investments?

   
My feelings about risk can be summed up as:
   
Which of the following statements best describes how you would like your cash values to be invested?
   

Step 4: Products of Interest

Time horizon, risk tolerance and premium paying preferences are among the many factors that determine which type of life insurance may best suit your personal needs and goals.

Your answers suggest that the following types of life insurance may be appropriate solutions. We have ranked them according to your preferences.

Choosing an appropriate type of life insurance is only one step in the development of working life insurance solutions. Since there are many complex and confusing issues involved, we recommend discussing with a financial representative before you finalize your insurance decision.

More Information

If you have personally owned life insurance, click here.

If you have employer provided group life insurance, click here.

For some thoughts on life insurance costs, click here.

 

NOTE: Discretionary income available to fund ongoing premiums may also determine whether term, cash value, or a combination of both, is the best, or most workable, solution. Term policies are generally convertible to cash value policies, without evidence of insurability, and may offer a short-term solution, until the money is available to convert to a more permanent solution. These are a few of the many ideas that your Principal Financial Group Representative is trained to help you work through.

Investment and insurance products are: not a deposit · not FDIC Insured ·
not insured by any federal government agency · not a bank guarantee · and may lose value.

Have a question? Call us at 1.800.986.3343

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