Life Insurance Types
There are many different kinds of Life Insurance, we understand that it can be Daunting...
The AIC Agency is here to help you sort through the different types of Policies until we find the one that is right for you!
We'll describe what type of life insurance will probably make the most sense for you at major milestones in your life.
Term Vs. Permanent Life Insurance
About Term Life Insurance
Provides your family with predictable and affordable financial protection for a specified period of time, for example 10, 20, or 30 years.
Term life insurance is the original form of life insurance and can be contrasted to permanent life insurance such as Whole Life, Universal Life which may guarantee coverage at fixed premiums for the lifetime of the covered individual.
Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities, for the insured. Such responsibilities may include, but are not limited to, consumer debt,dependent care, college education for dependents, funeral costs, and mortgages. Term is the biggest bang for your buck, however only for a specific period of time. It is for this reason that term is so relatively inexpensive.
About Return Of Premium Term ROP
Return of Premium Term (ROP) has the same attributes as a term policy.
Though higher in cost, this policy returns all of the premiums paid to the insured at the end of the term period without tax consequences.
This is also a Risk Protection Product however premiums returned can be used for retirement income Annuity or rolled over into a permanent policy which could satisfy Wealth Preservation needs as well.
ROP is a great way to still get relatively inexpensive risk protection with a great payoff at the end in the form of a lump sum that could be tens of thousands of dollars returned to you.
About No Lapse Guaranteed Universal Life
No Lapse Guaranteed Universal Life (GUL’s) is a type of permanent life insurance protection that provides a guarantee on the death benefit proceeds. With this form of coverage, your death benefit will not terminate.
Because a regular UL policy needs to have a sufficient amount of cash in order to remain in force, the No Lapse Guarantee UL can allow a plan that would otherwise lapse to stay intact. GUL’s offer a guaranteed insurance plan – not a cash accumulation vehicle…
Remove the cash that has built up in the policy and the No Lapse Guarantee falls apart. A good broker should explain this to you carefully. There is a new breed of GUL’s that offer several hybrid strategies which include riders or additions to the policy such as a Return of Premium option, Long Term Care Expense, and Chronic Illness Provisions. These products can be a great fit for many, but need to be looked at carefully and explained in detail.
About Whole Life Insurance
Whole life insurance is a contract with premiums that includes insurance and investment components. The insurance component pays a predetermined amount when the insured individual dies. The investment component builds an accumulated cash value the insured individual can borrow against or withdraw. This is the most basic type of cash-value life insurance. Whole life insurance provides policyholders with the ability to accumulate wealth as regular premium payments cover insurance costs. These payments also contribute to equity growth in a savings account. Dividends, or interest, can build up in this account, tax-deferred. As indicated by its name, whole life insurance protects an individual for his entire life. This is the most basic type of whole life insurance, also known as straight life, traditional or permanent whole life insurance.
There is also Whole Life, Indexed Universal Life, and many other policy types... which is right for you and your family?
Watch this video on Hybrid policies that combine Guaranteed Premiums with Life Insurance and funds for Long Term Care or even Retirement!