Because Term Insurance has no cash value element, premiums in the first several years are considerably lower than permanent Insurance premiums for the same death benefit. For example, a 30-year-old male nonsmoker may pay $200 the first year for $250,000 of Term Life Insurance.

He may pay $1,000 the first year for $250,000 of permanent Life Insurance. The Agent selling the $200-per-year Term Life Insurance policy typically makes $100 to $120—often not enough to cover the costs of designing your plan and processing your application. The Agent selling the $1,000 per year permanent policy generally earns $700 to $1,000 or more—good compensation for three to five hours of work.

The practice of paying Agents, covering the same death benefit, five to ten times more for selling a permanent policy than for selling a Term policy leads to heavy pressure on Agents to sell permanent Insurance, especially if they would lose money by selling you a Term policy.

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From Insurance for Dummies © 2001 by Wiley Publishing, Inc. © 2000 Text and Author Created Materials Copyright Jack Hungelmann. Used by arrangement with John Wiley & Sons, Inc.

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