Life Insurance

If it’s your first time shopping for life insurance, there’s a good chance you may not know which option is the right one for you. Finding the best match requires some homework before you make your choice. Here’s a breakdown of the various life insurance options to help you figure out which one fits best. 

Term life insurance is a policy that has level premiums that last for a set number of years (the term). Term life insurance includes a death benefit in the form of a lump sum of cash that’s paid out to a beneficiary by the life insurance company if you die during the term period. This lump sum that can be used for a variety of things, from burial expenses to mortgage and debt payments, to living expenses for your family, to donations. The death benefit is typically passed on the beneficiary generally tax-free.  After the term expires the policy terminates.  In order to continue coverage, you’ll have to convert your policy to permanent coverage before the term ends, renew it for another term, or shop for a new policy.

• It provides a generally tax-free death benefit for your loved ones.
• Easy-to-understand.
• It’s the least expensive form of life insurance.
• Low-level premium expires after a set number of years or term.

Term life insurance is a great choice for most life insurance shoppers because it’s simple and cost-effective. If you’re on a tight budget, or you’re a young person age 20-30 who is just starting to build your financial future, term life insurance can be a good match for you.

Whole life insurance is permanent coverage that provides the ability to guarantee a death benefit to any age up to a maximum age as stated in the policy, as long as the premiums are paid and the policy remains in force. Whole life is designed to generate cash value.

• Can provide a guaranteed death benefit for your whole life
• Death benefit passes to beneficiaries generally tax-free
• Generates interest on your premiums like a built in savings account feature that can be accessed generally tax-free to use how you see fit

Anyone with a need for death benefit coverage that who desires to buy a policy that can cover their entire life with less costly premiums compared to other permanent products.

Indexed Universal Life is insurance offers death benefit protection, and the opportunity to earn tax-deferred interest on the interest credits linked to the performance of one or more stock market indices chosen. This feature gives you the potential for cash value accumulation plus, it offers downside protection in a poorly performing market because you do not participate directly in the stock market and the credited interest rate is never less than the minimum interest rate or zero percent (floor).  The upside is limited by either an index cap rate or an index participation rate.  The index cap rate is the maximum interest rate used to calculate the index credit and the index participation rate is the portion of the index change used to calculate the index credit. The premium paid in the policy is not directly invested in any index or the stock market.

• Death Benefit is not generally subject to income taxes for the beneficiary.
• It offers the potential to grow cash value.
• The amount credited to the cash value grows tax-deferred without investing in the market.
• Flexible, adjustable premium and death benefit amounts as needs change.
• It can be an expensive product depending on your goals.

If interested in providing a death benefit for your beneficiaries with additional benefits, indexed universal life insurance policy might be attractive to you for its upside growth potential.