What are the types of life insurance?

There are several different types of life insurance policies. It’s important to choose a policy that fits well with your situation and objectives. Here’s a summary of some of the policy types people often choose.

Term life insurance

Term life insurance pays a benefit if the insured passes away while the coverage is active. Term policies are temporary; they provide death benefits for a specific time period, or “term.” If you don’t die during the term, the policy ends. If the need for coverage continues, a new policy may need to be purchased.

While coverage amounts will vary, term life insurance coverage could provide funds for a variety of financial needs at your death, including:

• Pay off your home mortgage
• Fund college educations for your children
• Pay estate taxes, costs and administration expenses
• Provide money for your spouse to pay other remaining debts and retire

You may find your need for life insurance does not end at the time your term life insurance expires. Reach out to an agent or trusted financial advisor of your choosing to determine your needs and options based on your current situation and financial objectives.

Whole life insurance

Whole life Insurance is designed to provide a strong foundation of life insurance coverage by itself or combined with term life. Whole life insurance builds cash value from which you can borrow once it has accumulated. The interest rate is shown in the policy, and the death benefit will be reduced by the amount of any outstanding loan and unpaid accrued interest

Key features:

• A death benefit paid to your beneficiary at your death as long as the coverage is active and in-force.
• Protection intended to last a lifetime.
• The death benefit can be increased to meet changing needs. Coverage amount increases up to the policy maximum are typically allowed after the first policy year. Underwriting may be required.
• You may be able to borrow — generally tax-free — against your cash value and pay back the loan with interest. Any unpaid loan would be subtracted from the death benefit. This communication is not intended or written to be used and cannot be used by the recipient or any other person, for the purpose of avoiding any tax penalties that may be imposed on such person, and cannot be used or referred to, in promoting, marketing or recommending to another party any transactions or matters addressed herein.
• The insurance coverage you purchase, and the payment amounts are guaranteed to be fixed for the life of the policy as long as you meet the required premium payments.
• Should you leave your current employer or retire, you can take the policy with you and pay the insurance company directly.

Eligibility:

• Available through your employer’s benefits program
• Must meet employer’s eligibility requirements
• Your spouse and children are likely eligible for coverage based on the offer. Age restrictions may apply, and underwriting may be required. ¹

Rate:

• The insurance coverage you purchase, and the payment amounts are guaranteed to be fixed for the life of the policy as long as you meet the required premium payments.
  
  1 Premiums are conveniently deducted from your paycheck. If you leave your employer or retire, you will be able to continue your coverage by paying the insurance company directly. 

Indexed Universal Life

These policies provide death benefit protection and combine the flexibility of universal life with cash value crediting based in part on the performance of an equity market investment index (e.g., the S&P 500® index). Sometimes multiple indexes are used. The result is a flexible policy with enhanced potential for cash value growth.

Variable Universal Life

These policies provide death benefit protection and provide the flexibility of universal life insurance with cash-value growth potential based on the investment performance of a group of variable investment options, which are only available in variable universal life insurance policies issued by life insurance companies. Some of these options are conservative while others can be more aggressive. Because these policies allow the policy owner to choose from many variable investment options, they have more customizable investment potential.

VUL policies are subject to market and investment risk; account growth is not guaranteed and it will change in value. In addition, there is a possible loss of the principle amount invested.

Survivorship Universal Life

These policies provide death benefit protection and are designed to insure two people simultaneously (usually a husband and wife). They pay a death benefit when the last of the two insureds (the survivor) dies. Premiums and death benefits can be managed with the flexibility of traditional universal life policies and cash values can potentially be credited with growth in a variety of ways. Premiums on survivorship universal life insurance policies are often less expensive because death benefits are paid when the second insured dies rather than the first insured.