What type of life insurance policy is right for me?

The answer to this question depends on your circumstances and needs.

You should consider the following:

1. Are your life insurance needs temporary or permanent?

2. Considering your budget, is the premium affordable?

The two major types of life insurance you can choose are:

• Term Life Insurance and

• Permanent (or Whole) Life Insurance

Here's some information to help you decide which type is better for you:

Both types of life insurance have strong points that fit different situations.

The "best" policy for you depends on your objectives and budget.

Depending on your needs and budget, you may want to consider a combination of some term insurance and some whole life insurance.

Term life insurance
Term life insurance provides death protection for a stated time period, or term.

Term life insurance is perhaps the simplest form of life insurance. It was developed to provide temporary life insurance protection on a limited budget. Since term insurance can be purchased in large amounts for a relatively small initial premium, it is well suited for short-range goals such as life insurance coverage to pay off a loan, or providing extra life insurance protection during the child-raising years.

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Features of term life insurance

• Initial affordability

• Adjustable premiums: Some term life insurance policies have adjustable premiums. This means that State Farm may raise or lower premiums at some point specified in the policy based on projected changes of investment earnings, mortality experience, persistency, and expenses. However, premiums may never be raised above the maximum premiums stated in the policy.

• Renewability: At the end of the time period of the policy you select, State Farm's level term policies allow the policyholder to renew or continue the coverage for the same time period up to certain maximum ages. With each renewal the premium will increase.

• Conversion: Generally every State Farm term policy is convertible. Before the end of the conversion period, which varies based on the type of policy, the policyholder has the right to switch the term policy for a whole life or universal life insurance policy, regardless of the insured's current health.

Whole Life Insurance
Permanent life insurance coverage for as long as you live and continue to make timely premium payments.

With level premiums and the accumulation of cash values, whole life insurance is a good choice for long-range goals. The guaranteed cash values can provide money later on to help with temporary needs or emergencies.

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Features of Whole Life Insurance

• Premiums generally are level and payable for life: Since premiums are level, the younger you are when you purchase a whole life policy, the less expensive the annual premiums will be.
  
  

• Dividends: Whole life insurance policies can earn dividends. Dividends result when our actual life insurance costs turn out to be less than we assumed in setting our premiums. When this happens, A portion of your life insurance premium to you as a dividend. Dividends are not guaranteed, since the  actual costs are not known   in advance.
  
  

• Guaranteed Cash Values: Unlike term life insurance, which does not accumulate any cash values, some of the money you pay into your whole life policy accumulates as guaranteed cash values. If you choose to surrender the policy, these guaranteed cash values would be available to you. Or, as long as the policy is in force, you may borrow against them as a policy loan at the current policy loan interest rate.
  
  The amount of your guaranteed cash value depends on the kind of whole life policy you have, its size and how long you have had it. The growth in cash values is tax deferred under current federal income tax law. Borrowed amounts reduce the death benefit and cash surrender value.