Life insurance can be the foundation of your financial security and can provide comfort and stability for your family. The purpose of life insurance is to help provide your loved ones with financial protection after you die, in exchange for the premiums you pay to your insurer during your lifetime. Some life insurance policies can provide you with financial protection for a specific duration, while others accumulate cash value, offering a living benefit that can be used for any purpose such as to help supplement retirement income, funding for a child’s education, or cash for emergencies.
Term Life InsuranceTerm life insurance provides coverage for a set period of time at a generally lower cost than permanent insurance. Many term life insurance products allow you to convert to a permanent policy, such as whole life insurance. The cost of insuring oneself increases over time, so it’s important to understand your short- and long-term needs for financial security when you select a policy.
Permanent Life InsurancePermanent life insurance provides you with financial protection for your entire life, as long as the policy remains in force. Because of the flexibility permanent life insurance offers, there are several types of policies you can purchase.
Whole Life InsuranceThe benefits of whole life insurance include guaranteed fixed premiums, a guaranteed death benefit and guaranteed cash value growth. This means that with whole life insurance, your premiums never increase as long as they’re paid, and the policy has “living benefits,” which may enable you to access the cash value of the policy for any purpose while you’re alive.1 One thing to keep in mind when taking a distribution from awhole life insurance policy is that accessing the policy’s cash values will reduce the policy’s cash value and death benefit and increase the chance the policy will lapse.
Universal Life InsuranceUniversal life insurance provides lifetime death benefit protection along with flexibility that gives you choices as your needs and finances change. It offers options such as coverage amounts that may be increased or decreased, and premiums that you can vary based on your finances as long as there is enough money in the account to pay for the monthly insurance and administrative charges.
Variable Universal Life InsuranceVariable universal life introduces an investment component. With variable universal life, you can allocate net premiums and account values among divisions of a separate account and guaranteed principal account.2 You can direct a portion of your net premium payments to any of the investment options available through the separate account depending on the particular variable universal life product. Each investment option offers a different level of risk and growth potential. One feature of variable universal life insurance (and universal life) is its premium flexibility: you can skip payments as long as your policy has accumulated enough account value to meet the monthly deductions. Also, you can add numerous riders to your policy. Riders are available for an additional premium.
Survivorship Life InsuranceSurvivorship life insurance is a form of permanent life insurance that covers two people on one policy and pays a death benefit after both people on the policy have died. The cost for survivorship life insurance is usually lower than the cost of two individual policies.