What is Term Life Insurance?
As its name indicates, term life insurance insures you for a specific term or
span of years. If you die during the term, your beneficiary is paid the
coverage amount subject to your policy terms. Because it provides "pure"
insurance without any cash value accumulation, term life insurance coverage
is generally less expensive initially than permanent coverage. Term life
insurance provides a great answer to the question: How will your family
manage financially if you die prematurely?
The Advantages of Term Life Insurance
Term life insurance helps to provide peace of mind for you and your family.
It also helps you protect the assets you've worked so hard to attain. And all
this security reaches up to 30 years into the future, at guaranteed level
premiums that are competitively priced today. The Trendsetter®
Super Series policies offer valuable protection for your family or business
partnership with attractive premiums.
What is Whole Life Insurance?
Life insurance under which coverage is intended to remain in force during the
Insured's entire lifetime, providing premiums are paid as specified in the
policy. A whole life insurance policy can build cash value on a tax-deferred
basis. Both the premiums to pay and the cash values that result are
predetermined and found in the policy contract. The cash value is an amount of
money available to the policy owner for policy loans or as the surrender value
if the policy is canceled and returned to the company.
Cash Value
With pure whole life insurance, the cash value is guaranteed. As an added
benefit, cash value can be used by the policy owner as a "cash reserve" for
emergencies, extra income, or college expenses. This is considered a loan
(interest charges accrue). What's more, you're not obligated to repay the loan,
but any amount not repaid will be deducted from the policy's death benefit.
What is Universal Life Insurance?
Universal Life (UL) is a form of permanent life insurance. If your UL policy is
in force at the time of the insured’s death (second death for joint life
policies), policy proceeds will be paid in accordance with the terms of the
policy to the beneficiary you designate. UL policies offer a valuable death
benefit and provide the opportunity to build cash values that you can borrow or
withdraw.
With certain limits, you can choose the premium you wish to pay and this
determines how the policy values develop. Each policy month, a monthly deduction
to cover the cost of the insurance protection is deducted from the policy value.
The Advantages of Universal Life Insurance
The advantage over other forms of permanent insurance is that universal life
insurance gives you more flexibility over your policy to assist you in meeting
your financial goals. Within certain limits, you can choose the amount, method
and timing of your premium payments. UL is also an “interest sensitive” product.
This means that the interest rates credited to policy values will change over
time.
Flexibility of payments, tax-deferred cash value accumulation, and coverage
options (subject to contract requirements) are the primary advantages over term
insurance. Because of these advantages, universal life can be used in estate
planning and retirement planning, offering the policy owner a variety of
options.
The Power of Tax-Deferred Earning, Access to
Your Cash Value, and Variable Life Insurance Protection
Because it's a life insurance policy, variable universal life insurance provides
your beneficiaries with a death benefit that can help them preserve their
financial security in a time of need while offering you the opportunity to
invest for your future.
Variable universal life insurance offers you the protection of life insurance
with the investment advantages of professionally managed money. Consider a
variable universal life insurance product if you want the benefits of life
insurance with tax-deferred growth and federal income tax-free transfer of the
death benefit to your beneficiaries.
Survivorship Insurance
Although Congress passed legislation to increase the "applicable exclusion
amount" for estate taxes, the fact is that the "death tax" will only be
completely eliminated for a one-year window - the year 2010 - unless the repeal
is extended or made permanent through new legislation.
The message is clear - planning ahead to cover the cost of potential estate
taxes is still the best strategy.
Sometimes referred to as second-to-die insurance provides a death benefit that
can be used to help pay estate taxes.