Term Insurance 

The simplest form of insurance. You purchase coverage for a specific price for a specified period. If you die during that time, your beneficiary receives the value of the policy. There is no investment component. This is a good option for the following: can not afford "Whole Life", on a tight budget, have a mortgage, College for children, peace of mind to care for loved ones. 

 

Term Life Insurance Simplified:

• Definition: Term life insurance (pure life insurance) provides a death benefit for a specific time period.

• Coverage: Guarantees payment to beneficiaries if the insured person passes away during the term.

• Options at Term End:

  • Renew for another term

  • Convert to permanent coverage

  • Let the policy terminate

• Benefit: Ideal for individuals or families who want to leave money for loved ones.

• Popular Choice: Widely chosen due to simplicity and affordability.

• Clear Benefit: Offers a straightforward and understandable death benefit.

• Affordability: Cheaper than Whole life.

• No Cash Value: No money accumulates within the policy.

• Term Lengths: Available for specific periods (e.g., 10, 15, 20, 25, 30 years).

• Shorter Options: Some insurers offer even shorter terms.

In a nutshell, term life insurance provides straightforward death benefit protection for a set time, making it a popular and cost-effective choice for those wanting to leave financial protection for loved ones.

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Whole Life Insurance 

Similar to term, but you purchase the policy to cover your "whole life" not just a set period. Premiums remain level throughout the life of the policy, and the company invests at least a portion of your premiums. Some firms share investment proceeds with policyholders in the form of a dividend. Many companies will offer "a relatively low guaranteed rate of return," but in reality pay at a rate in excess of the guarantee.

 

Whole Life Take-Aways:

• Lifelong coverage.

• Guaranteed savings growth rate.

• Premium remains fixed throughout policy life.

• Cash value growth on tax-deferred basis.

• Cash value can grow over time, sometimes with dividends.

 

Universal Life

You decide how much you want to put in over and above a minimum premium. The company chooses the investment vehicle, which is generally restricted to bonds and mortgages. The investment and the returns go into a cash-value account, which you can use against premiums or allow to build.

 

• With some policies, sometimes called Type I or Type A, the cash account goes toward the face value of the policy on the death of the policyholder.

 

• With a second variety, sometimes called Type II or Type B, the beneficiary receives the face value of the policy plus all or most of the cash account.

 

• While Type II is meant to provide a partial hedge against inflation, it demands higher premiums as you get older than Type I.

 

• A variation of a universal policy, often called universal variable life, allows policyholders to choose investment vehicles.

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Universal Life Take-Aways:

• Combines death benefit with savings.

• Different premium structures.

• Cash value growth based on market performance.

• Access cash value for various needs.

• Flexible premiums and death benefit.

• Cash value accessible for various purposes.

• Policyholder controls premium distribution.

• Offers tax-deferred growth.

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Indexed Universal Life Insurance

Indexed Universal Life Insurance plans are much like regular universal life insurance, but they come with distinct features. Both types offer a death benefit and a growing cash value, yet they vary in how they handle the non-insurance portion. Essentially, the premiums you pay cover life insurance expenses and fees, with the remainder contributing to the policy's cash value. The key distinction is that the cash value's growth is tied to changes in an equity index (such as the S&P 500) for indexed plans, whereas standard universal life insurance has a fixed interest rate for the cash value.

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Indexed Universal Life Insurance Take-Aways:

• Cash value tied to equity index performance.

• Tax-deferred growth.

• Potential for better returns in strong markets.

• Insurer keeps portion of gains.

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In summary, permanent life insurance options like Whole Life, Universal Life, and Indexed Universal Life provide lifelong coverage, death benefit, and cash value. Each type has its advantages and considerations, offering various ways to protect and invest in your future.

 

To learn more about this and other Health related topics, talk with a professional in your community. Make an appointment to speak with one of our professionals and see for yourself the Elkin Insurance difference. At Elkin Insurance "We Care About You".

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