Customizing a life insurance policy: Term and Whole

Life insurance isn’t one-size-fits-all. Customizing a policy ensures that your coverage meets your unique financial needs and future goals. Whether you choose term or whole life, tailoring your life insurance provides the right balance between coverage, cost, and flexibility. By adjusting coverage amounts, term lengths, and optional add-ons, you can create a policy that aligns with your budget and financial priorities.

Good to know: Our knowledgeable agents are here to listen to your goals and help you choose just the right coverage.

Customization also allows for important adjustments as life changes, whether you’re buying a home, starting a family, or planning for retirement. Understanding the differences between term and whole life insurance will help you make informed decisions about your coverage.

What is custom life insurance?

Custom life insurance allows policyholders to personalize their coverage based on their financial situation, future plans, and protection needs. Instead of choosing a generic policy, customization lets you adjust key elements such as coverage amounts, term lengths, payment options, and riders for added protection.

One of the main benefits of a custom policy is flexibility. With term life insurance, you can select a term of coverage to match financial obligations like a mortgage or education expenses. For whole life insurance, payment structures vary from continuous pay (for lifelong payments) to single-pay options (one lump sum).

Riders add another layer of customization, allowing you to enhance your policy with additional features. Options such as waiver of premium (which covers premiums if you become disabled) or accidental death coverage1provide extra security tailored to your needs.

Flexible payment schedules also make life insurance more accessible. SBLI Term Life Insurance offers payment options such as monthly, quarterly, semi-annual, or annual payments.

For SBLI Whole Life Insurance, you can choose continuous pay, 20-pay, 15-pay, 10-pay, or a single lump sum payment. These options allow you to structure your policy in a way that suits your budget and long-term goals.

Custom Term Life insurance

Term life insurance provides coverage for a set period of time, making it ideal for specific financial obligations. Customization options include:

  • Term lengths: Choose from 10, 15, 20, 25, or 30 years. For example, a 30-year term could be a smart option to cover the length of your mortgage, ensuring that your family can keep their home no matter what life brings.
  • Coverage amount: Tailor the payout to cover debts, education costs, or income replacement.
  • Riders: Add features like waiver of premium or accidental death coverage for added protection.
  • Conversion options: Many term policies allow conversion to whole life insurance later, offering permanent coverage without reapplying.

Custom Whole Life insurance

Whole life insurance provides lifetime coverage with a cash value component. Key customization options include:

  • Payment flexibility: Choose from continuous pay, 20-pay, 15-pay, 10-pay, or single-pay.
  • Cash value growth: Build cash reserves from premiums that you can borrow against or use as your needs evolve.2
  • Riders: Enhance your policy with add-ons to help ensure protection for changing needs.
  • Policy loans: Borrow against the policy’s cash value for financial emergencies or opportunities, such as a down payment on a house.3

Why customize a life insurance policy?

A customized life insurance policy ensures that your coverage aligns with your specific needs, avoiding unnecessary costs while maximizing protection.

  • Align coverage with financial goals: Your policy should reflect major financial responsibilities, such as paying off a mortgage, funding a child’s education, or replacing lost income for dependents.
  • Avoid overpaying for unnecessary features: Generic policies often include coverage elements you may not need. Customization ensures you pay for only the benefits that matter to you.
  • Adapt to life changes: A custom policy can be adjusted as your life evolves. Marriage, parenthood, career advancements, or retirement may require coverage updates.
  • Ensure budget flexibility: Different payment structures allow for financial flexibility. Whether you prefer a single lump sum payment or spread-out premiums, customization ensures affordability.

How to customize a Term Life insurance policy

Customizing a term life insurance policy ensures that your coverage aligns with your financial obligations and personal needs. Here are ways to tailor your coverage.

Term length options
Choose coverage length to match your financial obligations or goals.

Coverage amount
Select a payout that provides adequate financial protection for your family, covering debts, income replacement, or future expenses.

Riders

Enhance your policy with add-ons such as:

  • Waiver of Premium: This rider waives your responsibility to pay your life insurance premiums if you become totally and permanently disabled.
  • Accelerated Death Benefit Rider: The accelerated death benefit rider is automatically included in all SBLI life insurance policies at no additional cost. This rider pays up to 50% of the death benefit if you are diagnosed with a terminal illness and your death is expected within 12 months.4

Conversion options

Some term policies allow you to convert to whole life insurance without a medical exam, offering long-term security if your needs change.

How to customize a Whole Life Insurance policy

Whole life insurance offers permanent coverage with a cash value component. Personalizing your policy can help you maximize its benefits. Key customization options include:

Premium flexibility
Choose from various payment structures, including continuous pay, 20-pay, 15-pay, 10-pay, or a single lump sum.

Riders
Customize your policy with add-ons such the Guaranteed Purchase Option Rider or Children’s Level Term Rider.

Policy loans
Use your policy’s cash value as a financial resource, allowing you to borrow funds for emergencies or investments.

Key considerations for customizing a life insurance policy

Is custom life insurance worth it? Yes. However, you need to be deliberate about your choices to maximize its potential. As you personalize your insurance policy, consider the below factors.

Financial goals and obligations

When customizing a life insurance policy, it’s essential to align coverage with your financial responsibilities. If you have a mortgage, a term policy that matches the loan duration ensures your family won’t struggle with payments if something happens to you. Parents may want coverage that includes college funding to secure their children’s future education. Additionally, replacing lost income is critical for dependents, ensuring they can maintain their standard of living.

Budget and affordability

Balancing coverage with affordability is key when customizing life insurance. Term life insurance typically costs less than whole life insurance, making it an attractive option for those with budget constraints. However, whole life insurance offers permanent coverage and cash value growth, which may justify the higher premiums.

When choosing a policy, consider your monthly expenses, income, and long-term financial plans. Selecting a flexible payment schedule, such as monthly or annual premiums, can help manage costs.

Life stage and duration

Your stage in life plays a significant role in customizing your life insurance policy.

  • Young professionals may prefer an affordable term policy to cover student loans and early financial obligations.
  • Newlyweds and growing families often require higher coverage amounts to protect their spouses and children.
  • Established families may consider whole life insurance for estate planning and long-term financial security.
  • Retirees may choose life insurance to help cover final expenses, leave a legacy for loved ones, or ensure financial protection for their families.

Optional Riders for additional protection

Adding riders to a life insurance policy enhances its benefits, providing extra security tailored to your needs. An Accelerated Death Benefit Rider pays up to 50% of the death benefit if you are diagnosed with a terminal illness and your death is expected within 12 months, covering medical expenses or lost income. The waiver of a premium rider ensures your policy remains active even if you become disabled and unable to pay.

Custom life insurance costs

The cost of a customized life insurance policy depends on several key factors. Age is one of the biggest determinants, purchasing coverage at a younger age typically results in lower premiums. Health and lifestyle choices, such as smoking or pre-existing medical conditions, also impact pricing. The coverage amounts and policy duration influence costs, with higher payouts and longer terms increasing premiums.

Additionally, adding riders may raise the overall price. By understanding these factors, you can make informed decisions when tailoring your policy to ensure the right balance between affordability and protection.

Cost-saving tips for customizing a life insurance policy

Customizing life insurance doesn’t have to be expensive. Here are some practical ways to reduce costs while maintaining adequate coverage.

  • Buy early: Premiums are lower when policies are purchased at a younger age. Locking in rates early can lead to significant savings over time.
  • Assess your coverage needs: Avoid over-insuring by carefully evaluating how much protection your family truly requires. Opting for the right amount of coverage prevents unnecessary costs.
  • Choose a payment structure that works for you: Some whole life policies offer single-pay or limited-pay options that can reduce long-term expenses. If you prefer smaller payments, spreading them out over time can make premiums more manageable.
  • Consider a convertible Term policy: If you’re unsure about committing to whole life insurance, a convertible term life insurance policy lets you start with affordable premiums and switch to permanent coverage later without a medical exam.
  • Bundle policies: Some insurers offer discounts for bundling life insurance with other policies, such as home or auto insurance.
  • Reevaluate periodically: Life circumstances change, and a lot can happen in a year. Review your policy annually to ensure you’re not overpaying or are underinsured. Adjusting coverage can help optimize costs while still meeting your financial goals.

Explore custom life insurance policies from SBLI

Whether you’re looking for affordable term coverage or lifelong protection, we’re here to help. Get a quote for term life now or speak with a knowledgeable SBLI agent to learn more about whole life options.

Get a quote for Term Life

SBLI Whole Life policy form series: 21-P-PWL & 21-P-PSPWL.
SBLI Term Life Insurance policy form series B-56.
Not all riders are available for all products. An Accelerated Death Benefit rider is automatically included and subject to an administrative expense charge upon acceleration. Other riders are available at an additional cost. Rider form series BC-40.1, 18-R-AXRDB, 18-R-AXDDB, BN-9, BN-50, BN-56, and 14-WOPR.
25-4113
1 All Accidental Death benefits payable are subject to exclusions and limitations and may vary by state. Please refer to your policy for terms and conditions.
2 Withdrawals are subject to ordinary income tax and, if taken prior to age 59 ½, a 10% federal penalty.
3 Loans will reduce your net cash value and net death benefit and may be subject to interest charges. Unpaid loans are subject to ordinary income tax and, if taken prior to age 59 1/2, a 10% federal tax penalty.
4 Subject to an administrative expense charge upon acceleration.