Term Insurance is typically the lowest cost type of insurance available and appropriate for temporary needs. Term Life insurance has lower premiums but does not build up any cash value. Coverage terminates when you stop paying premiums or the term period chosen expires. You initially choose a term of coverage such as:
- 5-year level term
- 10-year level term
- 15-year level term
- 20-year level term
- 25-year level term
- 30-year level term
The annual premium cost is guaranteed to remain level for the length of the original term period you choose. The cost of the coverage is determined by several factors including your age, sex, health status, smoker vs. nonsmoker status and the length of the original term chosen.
Term insurance is appropriate for temporary needs such as:
- Providing income for your spouse and family in the event of a premature death.
- Providing income to cover your children’s educational expenses in the event of premature death.
- Providing cash to pay off the mortgage or other debts in the event of a premature death.
- Provide insurance for business purposes such as buy-sell agreements.
Unlike term insurance, universal life insurance is appropriate for permanent insurance protection. It is a flexible policy that builds cash value and allows the following flexibility.
- Ability to increase or decrease premium payments or temporarily stop premium payments if necessary.
- Ability to borrow from the life insurance policy.
- Guaranteed death benefit riders are available.
- Ability to change the amount of life insurance coverage (future amounts will require medical underwriting).
- Ability to pay annually, pay only a single-sum amount, or pay only for a specific number of years.
Universal life insurance is appropriate for permanent insurance needs such as:
- Desire to leave a tax-free death benefit for beneficiaries (regardless of how long you live).
- Desire to have permanent insurance that builds cash value.
- Desire permanent insurance that allows policy loans.
- Desire to transfer wealth that is free from federal income tax and avoid federal estate taxes by using irrevocable Trust or having the beneficiaries own the life insurance policy.
Survivorship universal life insurance is a very cost effective type of permanent life insurance because it provides life insurance on two individuals but pays only a single death benefit. It is a flexible policy that builds cash value and allows the following flexibility:
- Ability to change the amount of life insurance coverage (future increases will require medical underwriting)
- Ability to pay annually, pay only a single-sum amount, or pay only for a specific number of years.
- Ability to increase or decrease payments or temporarily stop premium payments if necessary.
- Guaranteed death benefit riders available.
- Survivorship universal life insurance is appropriate for permanent insurance needs such as:
Estate planning purposes.
Desire to leave a tax-free death benefit for beneficiaries.
Desire to transfer wealth federal income tax-free and avoid federal estate taxes.
Desire to have a permanent life insurance policy that builds cash value and allows policy loans.