Protect the people you love the most.
Life insurance has many unique characteristics that may make it an appropriate solution for a variety of challenges, including helping to pay for your final expenses, your mortgage, your taxes, and the living expenses of your loved ones when they no longer have your income. It can also be used for your children’s education and future income for you.
Basic types of Life Insurance
Cash Value: This type of life insurance policy builds up a cash value that has many benefits to the insured, such as borrowing against the policy or building a tax deferred investment income, in addition to paying a death benefit. Whole life, variable life and universal life are all types of cash value life insurance. Cash value insurance is also known as permanent life insurance because it provides coverage for the policyholder’s entire life.
Term Life Policy: This type of coverage does not build cash or investment value. Term life insurance covers you for a set period of time provided you pay the monthly premium, or in some instances, a lump sum in advance. The policy will pay to the named beneficiary the face amount of the policy (set benefit and/or lump sum) upon death of the insured within the stated term. Depending on the policy, it may also make payments upon terminal or critical illness.
More About Life Insurance
Whole Life Policy
This type of coverage combines the protection of permanent life coverage with an investment fund, and as long as you pay your premiums you are covered for life. Part of your premium goes towards the permanent insurance coverage that pays a fixed benefit upon your death, and part of your premium goes toward building taxed deferred cash value that you can borrow against. Some whole life policies offer plans in which you can pay a higher premium for a shorter, fixed period of time, such as 20 years, versus your whole life.
Universal Life Policy
This type of policy was developed from whole life insurance but with premium flexibility and adjustable death benefits. It has flexible terms that let you adjust your payment or coverage amount. The excess premium above the current cost of insurance is credited to the cash values of the policy. You also have the option of building more cash value by paying premiums even when your account has ample funds to cover the estimated future cost of insurance based upon the current interest rates. These policies need to be monitored if there is ever a drop in interest crediting rates.
Variable Life Policy
This type of policy is a form of permanent life insurance which provides permanent protection to the beneficiary. This type of insurance is generally the most expensive type of cash-value insurance. It allows you to allocate a portion of your premium dollars to separate investment accounts comprised of various investment funds within the insurance company’s portfolio such as stocks, bonds, equity fund or money market funds. Because of the investment risk, variable policies are considered securities contracts and are regulated under the federal securities laws.