The purpose of Life insurance can best be summed up this way:
Paying a small amount of money now so that a large amount of money will be provided to your loved ones at a time they will need it most and nobody else will give or lend it to them. -Anonymous
Really brings it home, doesn’t it? Questions about Life Insurance are very common. It can appear confusing to those considering it for the first time. Truth is, once you understand the products available and how they serve your personal financial needs and the financial security of your family or loved-ones, it will all begin make sense. We are here to make Life Insurance easy to understand and explore your options with you.
Feel free to call us at 408-348-8930 with your questions, or drop us an email via the form on our contact page.
What are the Types of Life Insurance?
Term Life Insurance – Often considered the simplest form of life insurance, it is designed to provide a death benefit for a specified period of coverage such as 10, 20 or 30 years, at an inexpensive rate. Term life insurance can be purchased in a large dollar value, for low monthly premiums. It is best suited to short-range goals. For instance, clients often use a term life policy to cover income upon the death of a spouse when raising a family.
Whole Life Insurance – Provides insurance for the duration of the policy holder’s life. Whole Life has an interest bearing savings element that builds over time and provides an additional level of retirement security. The underwriting company essentially makes all the decisions regarding the savings investments and most aspects of the policy are fixed. Ongoing premiums and/or earnings from the savings portion cover insurance costs and build equity in the saving account. As long as premium payments are paid, a minimum guaranteed death benefit is paid out to the beneficiary.
Universal Life Insurance – A Universal Life policy provides a death benefit and can have savings component. Savings are invested and cash value builds over time. This policy may be reviewed and can be changed to meet a policy owner’s fluctuating needs over time. Universal Life was designed to give a policy owner the utmost in cost flexibility but must be examined carefully for to meet the long term goals of the purchaser.
Indexed Universal Life Insurance – An Indexed Universal Life policy is similar to a standard universal life policy and provides the same flexibility. Where the standard Universal Life policy has a declared interest rate, the rate earned in an Indexed policy, is tied to the performance of the stock market. A calculation against certain stock market indices is used to determine the actual interest rate. With an Indexed Universal Life policy, there is the added security of a floor, or a minimum interest rate within the policy. As a result, a policy owner shares in the market’s upside, and has limited exposure to its downside.
Variable Universal Life Insurance – A Variable Universal Life Policy offers the same flexibility found in other Universal Life policies. In lieu of being tied to certain stocks in the stock market, a Variable Universal Life policy is tied to specific mutual funds. These Mutual Funds are the determining factor in calculating the interest rate in the policy. If providing a death benefit is the primary goal vs. tax advantaged investment performance, this can be a riskier way to purchase that coverage.
Life Insurance – Getting Started
Simply give us a call, even if all you’re looking for is information right now. With a few simple questions, you’ll be well on your way to finding your best options for this vitally important coverage. Call 408-348-8930 or click to email via our contact page at your convenience.