We are all familiar with the saying that “there are no guarantees in life” and while that is usually true, Life Insurance does provide guarantees. With Life Insurance we can provide financial security for our loved ones so that in the event of death they will be provided for financially. With all Life Insurance policies, you can choose the Amount of Coverage (Face Value), name the Beneficiaries you want to receive the Benefits as well as choose a method of payment. The following is an overview on the types of Life Insurance policies. Each Life Insurance policy type has numerous features (riders) that can be added to customize it to your needs.
Term Life Insurance
Term Life is insurance that you have for a specified length of time (term), usually between one and 30 years. You select the amount of the death benefit (face value) to meet your needs. Premiums (payments) can either be level or increase with time, and are paid monthly, quarterly, semi-annually or annually. If you die during the term of coverage, the face value of your policy will be paid to your beneficiaries. Term insurance policies do not accumulate cash value but are extremely popular because they provide a death benefit at a lower premium than other Life Insurance products with the same face value.
Universal Life Insurance
Universal Life is permanent insurance that has the potential to accumulate cash value. It has features designed into the policy that allow you to increase or decrease the policy’s face value to meet changing needs. You can also increase or decrease the amount of your premium payments or make additional payments toward your policy.
Because a Universal Life policy builds cash value, you can take out a loan against the policy.* Once the Policy has built up enough cash value you may have the option of skipping premium payments. Crediting methods utilized with Universal Life policies have the potential to earn a higher rate of return than other types of Life Insurance policies.
Whole Life Insurance
Whole Life is insurance that you own for your entire lifetime because once it is paid up there are no more payments to make and the value can never go down. The amount of the death benefit can be selected to meet your needs.
Premiums are fixed and can be paid monthly, quarterly, semi-annually and annually. As premiums are paid, your policy accumulates cash value that grows on a tax differed basis. Premiums are generally higher for a Whole Life policy compared to a Term Life policy, peace of mind comes from knowing that with each payment you gain value that cannot decrease or go away at the end of the term. Whole Life policies allow you to borrow against the Cash Value if necessary.*
Final Expense Insurance
Final Expense Insurance is sometimes referred to as a Burial Policy. Final Expense is Whole Life insurance for an amount that is sufficient to pay the funeral expenses and the associated bills. Often the death benefit is large enough so that the beneficiaries can receive compensation for time away from work as they attend to the matters of settling the estate and thereby lessening the stress to your loved ones.
Whether you are interested in leaving a Legacy or covering Final Expenses, there is a Life Insurance policy that is right for your needs and your budget.
*Loans require you to pay interest. Any amount not paid back is deducted from the death benefit paid to beneficiary at the time of death.