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Debunking Life Insurance Myths

It may come as a shock, but premium rates for individual life insurance – both term and permanent – are expected to drop by 4% in 2007, due in part to longer life expectancies and increased competition.1 In fact, premiums have fallen in 10 of the last 14 years.2

Here are several other misconceptions about the affordability and availability of life insurance that might surprise you.

"There's no need to pay the higher premiums for permanent life insurance. I'll get a cheaper term life policy." It is important to understand that when it comes to life insurance, you get what you pay for. With the additional cost of permanent life insurance, you receive many attractive benefits not offered by term life policies. For example, you have lifetime protection as long as premiums are kept current. Permanent life policies have the potential to build cash value, which can accumulate tax-free as long as the policies remain in force. Over time, permanent insurance may be even more economical than term because the premiums typically do not increase as you age.

"Variable life insurance is too risky at my age." Some people want a life insurance product with an investment feature in addition to the death benefit. Variable life insurance allows you to direct a portion of your premium into various investment options, and any earnings accumulate tax deferred unless you surrender the policy. With variable life insurance, you assume investment risk. Some policies are available with guarantee features at an additional cost.

Variable life insurance is sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved.

The life insurance industry has changed to offer increasingly competitive products. Call today to see whether some of these newer policies might change your perceptions of the life insurance industry.

1) Insurance Information Institute, September 19, 2006
2) Insurance Information Institute, October 5, 2005, and September 19, 2006