Life Insurance
Life insurance pays out a lump sum payment to the beneficiary(ies) of the person covered by the policy when that person dies. It is one of the most important financial decisions a person can make and can ensure that a spouse, children or other dependents won’t be burdened with debt when the individual is no longer there to care for them.
There are two types of life insurance, Term and Whole (Permanent) Life.
Term Insurance…
Term life is simple, cheap and provides the largest cash benefit for your dollar but does not accumulate cash value. A specific lump sum is paid to the beneficiary upon death and is sold in terms of 5, 10, 20 or even 30 years.
The monthly premium will remain fixed throughout the length of the term. To make it simple, the death benefit and the term policy limit are the same, which means a $100,000 policy pays a $100,000 death benefit.
Some term life policies are renewable for an additional term or more, but your premium will be higher every time you renew/move from the original term. Usually, this type of policy can be converted to a permanent policy at any time prior to age 75.
Whole Life or Permanent Life Insurance…
Permanent life insurance provides death protection for as long as you live. The premiums rarely change and guaranteed cash values can allow you some flexibility in case of emergencies.
The primary advantages of whole life are guaranteed death benefits and cash values, fixed annual premiums and any mortality or expense charges will not make the cash value lower within the policy. It also has nonforfeiture benefits so you do not lose or forfeit the policy when you stop paying premiums. The disadvantages are premium inflexibilities and very low interest rates.
Variable life insurance provides stable death benefit protection and is the type of life insurance with account flexibility for the more risk-oriented policyholder. It offers low-risk, tax-free cash accumulation through the investment of the cash value amount. The return from this investment is usually promised to be on the higher side and is variable (thus the name on the policy).
Universal life insurance is even more flexible with separate accounts; one acts more like a term policy, the other more like a whole life policy. The investment portion of your universal plan will be invested in a money market account whereas the cash value portion will be placed into an accumulation fund. Apart from the regular death benefit, it allows you to earn market rates of interest on your cash value account and the right to borrow or withdraw from the policy during your lifetime.
Universal variable life insurance offers more features than any other and gives you more control of the cash value account. It offers premium flexibility, low-risk tax deferred cash value options and separate accounts for you to invest in. (i.e. money market funds, stocks, bonds, etc.)
How to Choose a Life Insurance Policy…
Meet with a qualified life insurance agent who can help you prepare an accurate asset assessment as well as an appropriate needs analysis. THEN…
- Decide on the right kind of life insurance plan for your family and desired coverage amounts
- Affordability of the premium at the outset and ongoing
- Compare the life insurance plans offered by different insurers
- Buy a life insurance policy from a reputable insurance company
- Verify the various offers and claims made by insurers
Locally you can call
(636) 239-1130
Or try our toll free number
(877) 919-1130
