The Basic of Life Insurance
We have three basic types of life insurance we should know about. Those are Term life, Whole Life ,and Index Universal Life.
TERM LIFE INSURANCE.
Term life insurance is a policy that provides financial coverage for a set amount of time.
Often called the “Simplest” form of life insurance. It covers for a short term.
If the policy holder die before the term is over, a beneficiary will receive a death benefit. Term life insurance policies can be renewed for a premium at the end of a given term if the policy owner ‘s life goes beyond the term. This type of insurance is less expensive than whole life and index universal life because it does not build up any equity. You are fully covered during the term of the policy, but you do not receive cash back when the term is over. For example, suppose Gabriel has term life insurance policy that covers him financially in the time of death until the age of 50. If Gabriel pass away before 50 years of age, the term of the policy will pay a death benefit to his beneficiary. If He lives past the age of 50 however, his policy will not generate financial benefit. He must renew the policy for another term under new conditions. It will be more expensive since Gabriel is getting old.
WHOLE LIFE INSURANCE.
Whole Life insurance is designed to provide coverage for the whole life of the insured.
It’s generally offer fixed premiums, death benefits and build up tax deferred cash value. For that reason, a whole life insurance policy can be described as providing life insurance protection with a savings option. Most of the time, whole life is used when the need for life insurance is permanent .Additionally, it may be used as a part of your estate planning. Premiums for whole life can be higher than premium you would pay initially for the same amount of term life, but they are smaller than what you would eventually pay if you were to keep renewing a term insurance policy until the insured’s later years.
How does whole life insurance differ from term life insurance?
Whole life is designed to provide coverage for the insured’s entire life as long as premiums are paid and the policy has not been terminated. On the other hand, term life provide coverage only for a fixed period that is stated in the policy.
INDEX UNIVERSAL LIFE INSURANCE (IUL)
An Index Universal Life (IUL) is permanent life insurance that offers death benefit protection coverage the insured’s life. It generally has flexible premium payment and a cash value component. Compare to term life and whole life, your premium payment will earn interest and grow the cash values of your policy. IUL also provides supplemental retirement income, protect loved ones and accumulate value on a tax deferred basis. Indexing is the element that provides this opportunity. The IUL uses the changes in the S&P 500 Index to determine interest earnings for indexed crediting strategies. If the Index increases, your cash value account will be credited, but if it decreases, your interest credited would be Zero. You are guaranteed never lose money.
The Index Universal Life simply allows policyholders to take advantage of the upside of the stock market while protecting them from downside of the market. This is what sets IUL apart from term life and whole life. Professionals and self- employed such as doctors and attorneys often find IUL suited to their needs. While generally making a high amount of income retirement investment choices might be restricted due to their particular tax codes and contributions limits. IUL has no limit on the amount you can contribute. When cash is needed, it can be accessed through tax free loans, or passed on to heirs in the normally tax free statement of life insurance.
Please be aware that all our Proprietary products come with living benefits.
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