Universal Life Insurance
You may pay premiums at any time, in any amount (subject to certain limits), as long as the policy expenses and the cost of insurance coverage are met. The amount of insurance coverage can be changed. In addition, the cash value will grow at a declared interest rate, which may vary over time. The cash value may be accessed via policy loans or withdrawals. But it can affect the cash value, death benefit, and policy guarantees.
Indexed Universal Life Insurance
Indexed universal life insurance is very similar to universal life insurance. It gives the policyholder a choice of allocating cash value amounts to a fixed account or a fixed-index account. You can pay premiums at any time, in almost any amount but subject to certain limits, so long as the policy expenses and insurance coverage cost are met.
Indexed universal insurance policies typically guarantee the principal amount in the indexed portion but cap the maximum return that a policyholder can receive. Since they’re seen as a “hybrid” universal life insurance policy, they tend to not be expensive (don’t have much management). They offer greater safety than an average variable universal life insurance policy, but their growth potential is limited compared to variable options.
Term Life Insurance
Term insurance will last a specified amount of time based on a set period. Time periods usually last for 10-30 years, with a 20-year period being the most common. If you were to purchase a 20-year term policy, it would last for 20 years. If the policy owner passed away within the 20-year term, the death benefit would be paid to the beneficiary. If the policy owner was to decease after the 20-year term, there would be no death benefit. The premium payments are at a very low cost and there is no cash value. You are purely purchasing for the death benefit only. There is also (ROP) Return of Premium Term Life Insurance which comes at a much higher cost.
Variable Life Insurance
As with whole life insurance, you pay a level premium for life. However, neither the death benefit nor cash value is predetermined or guaranteed. They fluctuate depending on the performance of investments in what are known as subaccounts. A subaccount is a pool of investor funds professionally managed to pursue a stated investment objective. You select the subaccounts in which the cash value should be allocated.
Why Get Life Insurance?
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How Much Coverage Do I Need?
Factors to consider:
How many people depend on you
What’s your current budget
How much can you afford
What’s the purpose of you getting the life policy
Note: Many people get life insurance as a substitution for their income when they die or for tax advantages
It’s important to consult with a qualified, licensed, professional life insurance agent on these matters before making a decision. Making a quick purchase will likely be disastrous. For instance, say you buy a 20-year term policy in your mid-twenties and over time you have children. When you have to go through medical underwriting again for updated insurance, your new policy will be more costly because you’re older and you’re more likely to have health issues. It shows the value of good choices from the start.
When to Get Permanent Insurance? Planning
Permanent coverage is a way for you to regularly save money and a way for you to leverage wealth. Your policy builds up value as you grow older.
It’s important to consult with a qualified, licensed, professional life insurance agent on these matters before making a decision. Making a quick purchase will likely be disastrous.