Understanding The Differences In Life Insurance

The next series of Investment Basics that we will be covering will do with life’s liabilities. Life insurance, auto, medical, disability, property and casualty coverage’s and role each one of these different types of insurance plays in protecting your assets.

The complicated web of life insurance often paralyzes the consumer completely. The problem is that as with many other aspects of investing the terminology is confusing and understanding what you really need versus what you can afford can be a challenge.

Types of Life Insurance

Term Insurance

Term Insurance is designed to be suitable and affordable for a variety of individuals and purposes:

For meeting family obligations with a smaller income but good prospects for developing a career
As protection for outstanding loans, whether these loans are personal or business
As a means of protecting mortgage obligations
To guard against un-insurability in the future
To provide coverage for other family members
To protect key people of a business in its formative years of growth
To purchase time to increase earnings so that the coverage can be converted to a permanent life insurance policy without evidence of insurability in the future

Universal Life Insurance

Universal Life is a flexible premium adjustable life insurance product that provides permanent life insurance protection (complete with tax-free death benefits and tax-deferred growth of cash value), plus the flexibility of adjusting your premiums and protection as your needs evolve. With Universal Life you can:

Choose death benefits and premiums that fit your needs.
Provide a tax-free death benefit to your love ones
Protect and increase your assets through the tax advantages of life insurance
Adjust the amount and timing of your premium payments
Increase or decrease your policy’s death benefit
Add coverage for family members or other individuals
Increase your premiums to build cash value
Utilize the policy’s cash value to… Protect your home
- Fund a college education
- Pay off outstanding debts
- Protect a business
- Supplement your retirement

Variable Universal Life

Variable Universal Life insurance is a flexible premium life insurance policy that combines the security of life insurance with the opportunity to participate in the stock market through Separate Account investment portfolios. This type of insurance includes:

A guaranteed death benefit, free from federal taxes which is backed by the claims-paying ability of the insurance company and is payable to your beneficiaries no matter what the nature of the economy or the turns of the market
Tax-deferred growth of the policy’s cash value
Access to income-tax free dollars for use during your lifetime (through policy loans and withdrawals)

The opportunity to participate in the stock market involves:

A choice of Separate Account investment portfolios made up of stocks and bonds
A diverse range of portfolios (from Indexed to International)
Professionally managed investment portfolios

Insurance, no matter what the type, protects an individual and his/her family from events in life that would financially devastate them. Almost everyone has a need for some type of life insurance. When someone dies the emotional loss is great, safeguard the ones you love financially.