Do you know which kind of life insurance is best for your family?
Whether for family protection, tax benefits, or for an investment strategy, everyone needs life insurance. Let us explain the many options you have between whole, universal, term, and variable life insurance to find your best option.
WHOLE LIFE policies are referred to as permanent protection, since as long as the premium's paid, coverage will continue for the life of the insured. This kind of policy is useful for an individual who wishes to lock into a level premium amount that will not increase over his or her lifetime. Whole life insurance provides protection for the entire lifetime of the insured. If the insured lives to the age of 100, the company pays the face amount of the policy to the insured. The cash value, which is created by the accumulation of premium, is scheduled to equal the face amount of the policy at age 100.
UNIVERSAL LIFE goes by the generic name of "flexible premium adjustable life". It allows the policyholder to adjust the premium. Because of this, the insurance companies may establish a target premium in order to cover the cost of insurance protection and keep the policy in force. A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable insurance. The cash account accumulates on a tax deferred basis and earns either the guaranteed contract rate or the current rate, whichever is higher. When the policyholder pays a premium for the policy, a small part of it is deducted for the premium expense charge, and the balance is allocated into the policy's cash value account. Certain expenses are then deducted from the cash account including: mortality costs, sales expenses incurred in marketing and distributing the policy, and expenses involved in issuing the policy. Universal Life products allow the partial withdrawal of the policy cash value which may include a charge and usually has limits as to how much and how often a withdrawal is made. During the withdrawal, the interest earned on the cash value may be subject to taxation, depending upon the plan.
TERM INSURANCE is considered temporary protection because it only provides coverage for the term of years that is specified in the contract. If the insured dies during this time, the policy pays the death benefit to the beneficiary. However, if the policy is canceled or expires prior to the insured's death, nothing is payable. There are no cash values that can be drawn upon or borrowed against while the insured is alive. Term insurance provides the greatest amount of coverage for the lowest premium.
VARIABLE LIFE is much like a traditional whole life policy. It is a fixed premium policy with the addition of an underlying investment account. However, it does not contain the same guarantees of principle and interest. The major distinction is that the policyholder may allocate the premium after certain deductions for expense loads into a sub-account that is held by the insurance company. The type of sub-accounts that are available include bond accounts, growth stock accounts, money market accounts, real estate accounts, and a balanced fund account. The death benefit and cash value are not guaranteed under variable life. The cash value and/or death benefit may increase or decrease over the life of the policy depending on the investment performance of the underlying sub-account. The death benefit generally cannot decrease below the initial face amount of the policy. The premium is fixed and will not change over the life of the policy.
THE BENEFITS OF CHOOSING LIFE INSURANCE:
- Tax-Free Income at Retirement
- Tax-Free Wealth Transfer to Heirs
- Terminal & Critical Illness Benefits
- Estate Protection and Security
- Big Reduction in overall taxes paid
PLEASE CONTACT US FOR MORE INFORMATION AND DETAILS REGARDING THE DIFFERENT OPTIONS THAT GO ALONG WITH EACH LIFE INSURANCE POLICY.
