Types of life insurance
With all the different types of life insurance available out there, choosing one right for you can seem like a big task. Orfin & Associates offers our clients options in life insurance. Things we can help with include term, whole life, indexed universal life (IUL), and variable universal life insurance (VUL). Each type of insurance helps people in different ways. Depending on your situation, you may find one type of life insurance more beneficial than others.
Which Is Right For Me?
To figure this out, first, take a look at your needs. Do you want to leave money for those you love? Are you seeking some peace of mind? Or, are you looking for a way to tax a tax-free* income? Life insurance could be a way to answers all of these questions. To help, we host seminars and webinars each month on many retirement subjects. Life insurance information and income strategies are always hot topics. Be sure to sign up to attend one of these informative sessions to learn more.
Term Vs. Permanent
Basically, life insurance comes in two main categories. These include term life and permanent life insurance. Universal life insurance policies, such as whole life, indexed universal life (IUL), and variable universal life (VUL) are under the umbrella of “permanent life insurance.” This is because the benefits of these policies do not expire after a certain number of years. Instead, there is no expiration on your death benefit. Of course, you must pay your premium in order for this to be true. In addition, your cash value must be higher than the death benefit amount.
Types of Life Insurance - Term
Term life means that the benefits are available during a certain period. For example, a 20-year term life insurance policy would require premium payments each month or year for 20 years. In return, the insurance company agrees to provide a death benefit (or other benefits as indicated by the policy) if you pass away anytime during that 20-year interval.
In addition, some term policies use a specific age, not several years, to set the period for the policy. For example, you may have a term life insurance policy that provides a death benefit up to age 90. In some cases, you may be able to receive some cash benefit if you outlive the policy. Of course, not all policies offer this.
Types of Life Insurance - Permanent
With term life insurance, you don’t receive a death benefit if you outlive the policy term. However, permanent life insurance works differently. Whole life, indexed universal life (IUL), and variable universal life (VUL) insurance policies all fall under this category. With this policy type, you pay a set premium each year, and your policy builds a cash value. In addition, you may receive a dividend or an interest rate, depending upon the insurance company and the product.
Other benefits can make permanent life attractive for some people. For example, you can never outlive your benefit. So, you can be sure that the people you want to leave money to will get it. Also, the death benefits are tax-free and do not require probate court in order to get them. In addition, permanent life policies are sometimes used in conjunction with trusts as part of an overall estate plan.