Permanent Life Insurance/Whole Life Insurance/Universal Life
Many people wonder what the difference is between term & whole life insurance. It can help to compare term & whole life insurance to determine which type of life insurance is best for your particular situation.
There are four types of permanent life insurance for which you can receive a life insurance quote:
Whole Life insurance (sometimes called Ordinary Life) is the most common type of permanent insurance policy. It remains in force during your entire lifetime, and offers a death benefit along with a savings vehicle (called the cash value). Some companies pay a dividend, which is a return of excess premiums. Part of each premium payment is applied to the policy's cash value account, which grows on a tax-deferred basis (based on current federal tax laws).
Universal (or Adjustable) Life insurance offers more flexibility than whole life insurance. As with Whole Life policies, Universal Life insurance provides a savings vehicle (cash value account) which generally earns a guaranteed rate of interest. The cash value belongs to you, the policy owner, and you may withdraw or borrow against it as provided for in the policy.
These policies also give you the option to adjust the death benefit and/or premium payments, within limits, to fit your situation. For example, if there is enough money in your cash value account to cover the costs, you have the option of reducing your premium payments. This can be a useful feature if your economic situation has suddenly changed. However, if you stop or reduce your premiums and the saving accumulation gets used up, the policy might lapse and your life insurance coverage could end.
Universal Life Insurance Advantages: Flexible Protection
Universal life products give you the flexibility to choose the amount of protection that best suits your family or business. It allows you to increase or decrease coverage as insurance needs change. Increased coverage may be subject to underwriting requirements. You may not decrease your coverage below the required minimum. A decrease may result in a surrender charge being applied against the policy's cash value.
Flexible Premiums
With universal life insurance, you control the amount and frequency of payments. Looking towards the future? You have the option to increase the premium or make lump sum contributions, subject to limits as specified in the policy. The extra dollars grow tax-deferred, and may increase the cash and death benefit values. On the other hand, in a temporary cash crunch, you can pay less than the scheduled premium and let the policy's accumulated cash value pay the remainder of the monthly charges.
Flexible Design
Universal life products can be customized with innovative policy features to fit your lifestyle. In addition to term life insurance protection, universal life insurance plans designed to cover you for as long as you live. A universal life insurance policy works similarly to whole life insurance which is designed to cover a person's entire life. Unlike whole life insurance, universal life makes it possible to adjust the benefit amount up or down without needing to get a new policy. Universal life insurance may be the right choice if you need long-term financial protection. As long as premiums are paid as requested by the policy, your beneficiaries will receive the death benefit.
Variable Life Insurance
Variable Life is a kind of policy that, in addition to a death benefit, offers several professionally managed investment options. You can use the cash accumulated in your savings account to invest in stocks, bonds and money market mutual funds. The value of your policy may grow more quickly, but you also have more risk. If your investments do not perform well, your cash value and death benefit could decrease, or you could be required to pay higher premiums to keep the policy in effect. Some policies, however, guarantee that your death benefit will not fall below a minimum level. As with whole life insurance and universal life insurance policies, you also may borrow against or withdraw the cash value at any time. However, it is important to remember that loans and withdrawals could reduce cash values and the death benefit.
Variable-universal life policies combine the features of variable and universal life policies. You have the investment risks and rewards characteristic of variable life insurance, coupled with the ability to adjust your premiums and death benefit that is characteristic of universal life insurance.
Final Expense Policies/Funural Life Insurance
Senior and preneed products Insurance companies have in recent years developed products to offer to niche markets, most notably targeting the senior market to address needs of an ageing population. Many companies offer policies tailored to the needs of senior applicants. These are often low to moderate face value whole life insurance policies, to allow a senior citizen purchasing insurance at an older issue age an opportunity to buy affordable insurance. This may also be marketed as final expense insurance, and an agent or company may suggest that the policy proceeds could be used for end-of-life expenses.
Preneed (or prepaid) insurance policies are whole life policies that, although available at any age, are usually offered to older applicants. This type of insurance is designed specifically to cover funeral expenses when the insured person dies. In many cases, the applicant signs a pre-funded funeral arrangement with a funeral home at the time the policy is applied for. The death proceeds are then guaranteed to be directed to the funeral services provider for payment of services rendered. Most contracts dictate that any excess proceeds will go either to the insured's estate or a designated beneficiary.
Should you have any questions or concerns about whether Life Insurance is right for you, please take a moment and contact us on the Home Page or under the More/Contact drop down menu.
There are four types of permanent life insurance for which you can receive a life insurance quote:
Whole Life insurance (sometimes called Ordinary Life) is the most common type of permanent insurance policy. It remains in force during your entire lifetime, and offers a death benefit along with a savings vehicle (called the cash value). Some companies pay a dividend, which is a return of excess premiums. Part of each premium payment is applied to the policy's cash value account, which grows on a tax-deferred basis (based on current federal tax laws).
- Premiums are set at a certain amount and don't change.
- Premiums are partially determined based on the age of the insured. The younger the insured is, the less expensive the annual premium.
- There are guaranteed cash values or dividends that are dependant on the specific terms of the policy.
- The insured can borrow against cash values.
- Current federal income tax law allows for deferred tax advantages for some insurance policies.
- Whole Life Insurance provides coverage for the entirety of the insured's life, generally to age 100, as long as the policy is in force.
Universal (or Adjustable) Life insurance offers more flexibility than whole life insurance. As with Whole Life policies, Universal Life insurance provides a savings vehicle (cash value account) which generally earns a guaranteed rate of interest. The cash value belongs to you, the policy owner, and you may withdraw or borrow against it as provided for in the policy.
These policies also give you the option to adjust the death benefit and/or premium payments, within limits, to fit your situation. For example, if there is enough money in your cash value account to cover the costs, you have the option of reducing your premium payments. This can be a useful feature if your economic situation has suddenly changed. However, if you stop or reduce your premiums and the saving accumulation gets used up, the policy might lapse and your life insurance coverage could end.
Universal Life Insurance Advantages: Flexible Protection
Universal life products give you the flexibility to choose the amount of protection that best suits your family or business. It allows you to increase or decrease coverage as insurance needs change. Increased coverage may be subject to underwriting requirements. You may not decrease your coverage below the required minimum. A decrease may result in a surrender charge being applied against the policy's cash value.
Flexible Premiums
With universal life insurance, you control the amount and frequency of payments. Looking towards the future? You have the option to increase the premium or make lump sum contributions, subject to limits as specified in the policy. The extra dollars grow tax-deferred, and may increase the cash and death benefit values. On the other hand, in a temporary cash crunch, you can pay less than the scheduled premium and let the policy's accumulated cash value pay the remainder of the monthly charges.
Flexible Design
Universal life products can be customized with innovative policy features to fit your lifestyle. In addition to term life insurance protection, universal life insurance plans designed to cover you for as long as you live. A universal life insurance policy works similarly to whole life insurance which is designed to cover a person's entire life. Unlike whole life insurance, universal life makes it possible to adjust the benefit amount up or down without needing to get a new policy. Universal life insurance may be the right choice if you need long-term financial protection. As long as premiums are paid as requested by the policy, your beneficiaries will receive the death benefit.
Variable Life Insurance
Variable Life is a kind of policy that, in addition to a death benefit, offers several professionally managed investment options. You can use the cash accumulated in your savings account to invest in stocks, bonds and money market mutual funds. The value of your policy may grow more quickly, but you also have more risk. If your investments do not perform well, your cash value and death benefit could decrease, or you could be required to pay higher premiums to keep the policy in effect. Some policies, however, guarantee that your death benefit will not fall below a minimum level. As with whole life insurance and universal life insurance policies, you also may borrow against or withdraw the cash value at any time. However, it is important to remember that loans and withdrawals could reduce cash values and the death benefit.
Variable-universal life policies combine the features of variable and universal life policies. You have the investment risks and rewards characteristic of variable life insurance, coupled with the ability to adjust your premiums and death benefit that is characteristic of universal life insurance.
Final Expense Policies/Funural Life Insurance
Senior and preneed products Insurance companies have in recent years developed products to offer to niche markets, most notably targeting the senior market to address needs of an ageing population. Many companies offer policies tailored to the needs of senior applicants. These are often low to moderate face value whole life insurance policies, to allow a senior citizen purchasing insurance at an older issue age an opportunity to buy affordable insurance. This may also be marketed as final expense insurance, and an agent or company may suggest that the policy proceeds could be used for end-of-life expenses.
Preneed (or prepaid) insurance policies are whole life policies that, although available at any age, are usually offered to older applicants. This type of insurance is designed specifically to cover funeral expenses when the insured person dies. In many cases, the applicant signs a pre-funded funeral arrangement with a funeral home at the time the policy is applied for. The death proceeds are then guaranteed to be directed to the funeral services provider for payment of services rendered. Most contracts dictate that any excess proceeds will go either to the insured's estate or a designated beneficiary.
Should you have any questions or concerns about whether Life Insurance is right for you, please take a moment and contact us on the Home Page or under the More/Contact drop down menu.
