Does It Make Sense for Clients to Combine Term and Permanent Life Insurance Coverage?

When offering life insurance to clients, oftentimes the sales presentation will take an “either / or” approach as it pertains to purchasing term or permanent coverage. But in some cases, an individual may actually have reason to combine the features of both types of coverage in order to protect certain needs.

For example, life insurance policy holders who have permanent coverage that is combined with a term policy will have a higher amount of death benefit protection for their premium dollar than if they had purchased only a permanent policy of the same amount. Plus, they will still be able to up a substantial, and guaranteed, amount of cash value over time.

If the insured becomes disabled and in turn, unable to pay their premiums for the permanent life policy, he or she may be able to draw upon their cash value for making the additional premium payments and keeping the policy in force. They may also be able to use the cash for emergencies, debt payoff, and / or for supplementing retirement income in the future.

Therefore, combining the different types of life insurance coverage can really allow policy holders to put more of an emphasis on either the accumulation or the protection aspects of their given policies.

Business owners may also be able to benefit from combining term life insurance coverage with a permanent type of policy. Having both types of coverage could help to provide both security and value in various types of business situations. This could include using one or both policies as a funding mechanism for a key person arrangement, a buy-sell agreement, or a split dollar type of retirement savings plan.

With that in mind, having both term life insurance and permanent coverage can also allow business owners – especially those who own small businesses – with the extra flexibility in meeting their unique life insurance coverage needs.

So, depending upon the situation of the specific business owner or partner, combining policies may be used for a variety of situations where there is a business need for funds following the death of the policy holder.


Ensuring the Right Type and Amount of Life Insurance Protection

It will require some planning in order to set up a “combination” life insurance plan. For instance, the type of policy – as well as the length of time that this coverage will stay in force – will depend upon the individual factors and needs of the policy holder.

As an example, for shorter term needs, a term life insurance policy with a duration of five or ten years may be sufficient. However, for those with longer term needs, a term life insurance policy with a duration of anywhere between fifteen and thirty years may provide for a better solution.

Likewise, the client will also need to determine the amount of coverage that is needed for paying off debts, and / or for providing income to survivors. In this case, it is important to factor in future inflation and how it could impact the future needs of survivors, too.


Finding Good Quality Life Insurance Prospects

Regardless of the type of life insurance protection that is needed, you have to have good, quality prospects who have a need for coverage, as well as the ability and willingness to pay for it, before any type of sale can be made.

If you want to generate a consistent and predictable flow of additional leads for life insurance sales – in turn, providing you with the opportunity to earn thousands of additional commission dollars per month – give us a call at  and we will provide you with all of the information you need to for getting started.

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Brian J. Kay, Executive Director, Leads4Insurance
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