Three types of insurance can act as mortgage protectors:

• Term
• Whole life
• A blended product

Term Insurance

Term lets you purchase a large amount of insurance protection at a competitive price. It was designed to help people purchase the insurance they need at a limited period of time when money is tight. Term features include:

• Competitively priced, affordable protection;
• Guaranteed death benefit, no cash value;
• Coverage available in one year, five year, or other increments of time;
• Generally is convertible to permanent life insurance, without showing proof of insurability.

The downside is that, term insurance, whether it's purchased from a lending institution or an insurance company, builds no cash value. Unless you die within the specified period, your heirs do not receive any insurance proceeds. Wouldn't it be nice to have something to show for your years of consistently paying premiums? A portion of the premiums you pay for permanent insurance coverage builds cash value each year.

Whole Life Insurance

With whole life, you are insured for your entire lifetime, provided you pay all premiums due. And while you may initially purchase whole life insurance as a mortgage protector, you can access the cash value accumulation via loans* for other means, like college funding. The features of whole life include:

• Tax-deferred cash value accumulation;
• A level premium that's fixed for life;
• Ability to customize a plan by adding optional riders (based on underwriting requirements);
• Eligible to earn dividends**, as declared by a mutual insurance company;
• Guaranteed death benefit, generally free from federal income tax.

* Loans against your policy accrue interest and decrease the death benefit and cash value by the amount of the outstanding loan and interest.
** Dividends are not guaranteed.

Blended Combination

Some insurance companies offer innovative plans that combine the guaranteed protection and cash value accumulation of whole life, with the affordability of term insurance. These plans are carefully crafted to meet the needs of today's growing families. As needs change, these plans allow you to convert the term portion into whole life. This will help boost your cash value accumulation in later years. Some of the features of these blended plans include:

• A lower initial premium than a comparable policy of 100% whole life;
• Flexibility to convert the term portion into permanent insurance;
• Tax-deferred cash value accumulation;
• Ability to customize the plan by adding optional riders (based on underwriting requirements);
• Eligible to earn dividends on the whole life portion of the plan, if and when declared by a mutual insurance company (Note: Dividends are not guaranteed.);
• Guaranteed death benefit, generally free from federal income tax.

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