Life insurance

 “In this world, nothing can be said to be certain, except death and taxes.” Benjamin Franklin’s famous quote is especially relevant when it comes to life insurance. Your life insurance type depends on your financial needs and goals. The following common varieties of life insurance provide coverage in different ways. 

Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed, and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit would be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time. 

Whole life insurance, or whole of life assurance, is a life insurance policy that remains in force for the insured’s whole life and requires (in most cases) premiums to be paid every year into the policy. This is the most common variety of permanent life insurance and offers flexibility to the policy holder. As the value of the policy increases, it is often possible to withdraw emergency funds or borrow against the policy. 

Universal Life Insurance is a type of permanent life insurance. Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance (COI) charge, as well as any other policy charges and fees which are drawn from the cash value, even if no premium payment is made that month. Interest credited to the account is determined by the insurer but has a contractual minimum rate of 2%. When an earnings rate is pegged to a financial index such as a stock, bond, or other interest rate index, the policy is an “Equity Indexed Universal Life” contract. 

Index Universal Life Insurance (IUL) is a type of universal life insurance product that offers a death benefit coupled with a cash account that can be used to pay policy premiums or take withdrawals and loans. Indexed life usually provides a floor of 0% but offers higher upside interest crediting based on the performance of an outside stock index such as the S&P 500 Index. Indexed life insurance is a moderately conservative interest-sensitive life insurance product. 

Variable Life Insurance is a necessity for your estate planning goals. It is a policy that incorporates your tax planning objectives, investment goals, and even certain insurance needs to pay a predetermined amount to your beneficiaries when you pass away. This permanent policy stays in place as long as you are alive and even offers investment options and the ability to withdraw funds or take out loans. A financial expert can help you navigate this insurance and make it work for you.