Call us at (678) 393-9588
Milton, GA 30004

Life Insurance

Life Insurance Types

Retirement Miracle Ebook

There are many types of life insurance products available in the marketplace, each with their own advantages and disadvantages. As you set out to determine the right product type for you, it will help to have a general understanding of life insurance terminology. Also many insurers now offer policies that provide accelerated living benefit options for terminal, critical and chronic illness needs.
Basically, there are two different types of life insurance policies—Term and Permanent.
Let’s start with the most common and affordable type, term insurance.

Term Life Insurance

Term insurance is the most affordable type of life insurance, and is usually the right type of coverage for most people. Often times, the true need for life insurance will diminish over time. The main reasons people buy life insurance are to replace income and cover debts. Children grow up and move out of the house, and debts get paid down. The people who may depend on your income for education opportunities, or to maintain a certain lifestyle, eventually become self-sufficient. Also, your nest egg may grow to a point that it would no longer cause financial devastation if you were to die prematurely. Term life insurance affordably covers a need that is temporary in nature. There are other important features of term life insurance, such as conversion privileges to a permanent policy without proving insurability, which is important when this type of temporary coverage is considered for personal or business protection needs. The common term durations are usually 10, 15, 20, and 30 years.

Permanent Life Insurance

Permanent life insurance, the opposite of term, is meant to provide coverage for the rest of your natural life, whether that’s one year or eighty years.
Whole Life Insurance —This used to be the most common type of permanent coverage, and has recently had a resurgence in popularity because of economic uncertainty. These policies are meant to accumulate cash values which can be accessed, subject to certain limitations, at some point in the future for any purpose. The premiums that support the guaranteed elements of the policy are also guaranteed not to increase. Many of these policies pay annual dividends, if the company’s actual claims experience is favorable when compared to their projections. Whole life insurance policies are usually not the least expensive way to buy permanent coverage.

Universal Life Insurance (UL) — combines two basic components—term life insurance and an accumulation fund. Generally speaking, ULs allow for flexible premiums, meaning you could skip premiums or pay future premiums in advance, within certain limits. This premium flexibility depends largely on the cash value in the policy. The policy will remain in-force as long as there is enough cash value to cover the monthly deductions for any particular month, but most people don’t fund them to just barely squeak by month-to-month.

Two Types of Universal Life policies available:
Variable Universal Life (VUL) and Equity Indexed Universal Life (IUL)
The main difference between these versions of Universal Life is how they earn interest.