Various Types Of Life Insurance

Term insurance

Term life insurance provides coverage for a specified period of time - the term of the policy (typically ranging from five to thirty years). After this time, it is possible to renew your policy with the premium adjusted for your health and age at the time you renew. Your policy is paid out only upon death within the prescribed period of time. Term policies allow you to save substantially on premiums so you can invest the savings in a higher yielding investment.

Term life insurance policies are designed to meet a specific need for a specific period of time. The most common type today is level term (level meaning it stays the same), which has a level death benefit and a level premium. These policies are commonly used to provide protection for families until their children reach a certain age (usually 18 or 21). It is also useful as an affordable starting point - you can convert it to a universal or whole life policy at a later date.

Another type of term life insurance, decreasing term, is generally sold with a level premium and a decreasing death benefit. One common use of decreasing term is to cover a remaining mortgage - designed to decrease at the same rate your mortgage balance decreases. These types of policies are often offered as riders in connection with whole and universal life policies, with the whole or universal life policy providing the "backbone" of your overall protection plan. A number of factors will influence your decision, including your health, your budget, your immediate needs and your long term plans and goals.

Exploring all the available insurance policies, options and riders can be mind boggling. An experienced professional can analyze your situation to help you decide how much protection you need and help you design an overall insurance plan that will provide you and your family the highest level of security at the best possible pricing. Once you have a plan in mind, shopping gets a lot easier.

Whole Life Insurance

Whole life insurance features a level premium and level death benefit to age 100 with an accumulating cash value that increases over time until it equals the set death benefit. Whole Life covers you for as long as you live, if the premiums are paid.

Cash value is an amount of money that you are guaranteed to receive in the event of policy cancellation. Your premiums are invested on behalf of the policy, generating the build-up of the cash value. Over time, your premiums grow like any other investment and the rate or return (yield) can vary from company to company.

You also have the right to borrow against the accumulated cash value for whatever reason you choose - to make purchases, cover expenses or to apply towards the premium itself (in effect paying for itself).

Cash Values are only available by initiating a loan. That's the only way to have access to the cash values.

Any loan against the whole life policy, is charged interest against the loan and is subtracted from the death benefit. However, if you had left the cash value in the MONY policies and had died the cash values are “NOT” added but included.

For example:

            On a $100,000 whole Life policy

            Cash value is $75,000

            UPON DEATH, ONLY $100,000 IS PAID NOT $175,000

However if you borrow the $75,000 of cash value of the policy and died, the $75,000 is subtracted from the $100,000.
 
When you first take out the policy, premiums may be higher than you would pay initially for the same amount of term insurance. They will be smaller than the premiums you will eventually pay if you were to renew a term policy until your later years.

Whole life is suitable for long-term obligations, such as surviving spouse lifetime income needs, estate liquidity, death taxes, funding retirement needs, etc. It also provides a good cornerstone for a complete protection package for your family and your assets. As an experience professional I can help you assess you current and future needs to determine the best overall life insurance approach for you.

Universal Life

Universal life is like term life insurance with an investment attached. It is a kind of flexible policy that lets you vary your premium payments and/or adjust the face amount of your coverage. The premiums you pay (less expense charges) go into a policy with an attached investment generally consisting of a short-term money instrument yielding a modest return.

If your yearly premium payment plus the earnings on your account is less than the total charges, your account value will become lower. If it keeps dropping, eventually your coverage will end. You may need to increase your premium payments or lower your death benefits to keep the policy in force. Even if there is enough in your account to pay the premiums, continuing to pay premiums yourself means that you build up more cash value.

Generally, you'll have lower premiums than with whole insurance but still keep most of the same benefits. However, the cash value build-up is not guaranteed and depends heavily on the your invested premiums' performance. Basically, cheaper rates but less certainty about a cash value.

Universal life can be a very solid base for an overall protection strategy and can easily and economically be supplemented by other policies to ensure total protection. As an experienced professional I can assist you in constructing a strategy to bring you the security only well planned protection can bring.

Pros:
Similar to whole life insurance. More flexible premiums. Fund for younger buyers who may have fluctuations in their ability to pay.

Cons:
If the insurance company does poorly with its investments, the interest return on the cash portion of the policy will decrease. In this case, less money would be available to pay the cost of the death benefit portion of the policy.