Life Insurance offers a safe, predictable way to help provide peace of mind to you and your family. Ensure your family’s financial stability - Your family depends on your earning ability. Life insurance can be used to provide needed funds while your family is adjusting.
Protect your family from unpaid debt - Unpaid mortgages, car loans, medical bills and credit card debts can cause extra financial strain on the family members you leave behind. Life insurance can pay off these obligations, freeing up other assets for your family to use.
Secure your children’s future - Education is an opportunity and it takes money to ensure this opportunity. Life insurance can help secure your children’s future and dreams.
Provide tax-free funds to your loved ones - Life insurance proceeds pass to your heirs free of income tax.
Types of Life Insurance:
Term insurance provides death benefit protection for a term of one or more years. Death benefits are paid only if the insured dies within the specified term of years. Term insurance typically provides the largest immediate death benefit for each premium dollar.
Most term insurance policies are renewable for one or more additional years even if the insured's health has changed. Each time the policy is renewed for a new term, premiums increase. Term policies generally contain a conversion feature. This enables the policy owner, prior to the final conversion date, to exchange the term policy for a permanent plan of life insurance such as whole life or universal life, without evidence of insurability. Premiums for the new policy will be higher than what the policy owner had been paying for the term insurance.
Whole Life Insurance
Whole life insurance provides death protection for life. Typically the policy owner would pay the same premium for as long as the insured should live. Premiums can be several times higher than premiums you would pay initially for the same amount of term insurance, but they can be cumulatively smaller than the premiums you would eventually pay if you were to keep renewing the term insurance policy until the insured's later years.
Although you pay a higher premium initially for whole life than for term insurance, whole life policies develop cash values which may be available to the policy owner.
Additionally, the policy's cash value can be used as collateral for a loan. If the policy owner borrows from the policy, interest is charged at the rate specified in the policy. Any money owed on a policy loan is deducted from the benefits upon the insured's death, or from the cash value if the policy owner surrenders the policy for cash.
Universal Life has several unique features not found in whole life policies. Specifically, the policy owner is provided with the flexibility to vary the timing and amount of premiums and the face amount, depending upon present needs.
Cash values are a function of past and present premium payments, interest crediting rates, mortality charges and expense charges. The interest rate credited to the policy cash value is based on current rates of interest, subject to a stated guaranteed minimum interest rate. In addition, current mortality and expense charges are deducted from the accumulation value, but the only guarantee is that these charges will not exceed certain maximums. As a result, the policy owner bears more of the risk of adverse trends in mortality and expenses than if a traditional whole life insurance policy were purchased. On the other hand, if the insurance company's mortality costs and expenses improve, the policy owner may benefit through lower charges.
Second-To-Die or Survivorship Life Insurance
This is one policy that covers the lives of two individuals, typically a married couple. The death benefit is payable only when the last of the two individuals die. Typically this policy type is used to provide liquidity to pay estate taxes when the second spouse dies. Other uses of this form of life insurance include: to protect dual income families, to provide key person business insurance, to replace an asset gifted to charity and to fund a business buyout.
Because of the timing of the death benefit payment, the premium charges for survivorship plans are generally lower than those of comparable single life plans.
Second-To-Die policies are available in whole life, universal and variable life versions and can be funded on either a single premium or annual premium basis.
Variable Life Insurance