Term life insurance policies provide affordable, temporary coverage. They contain no cash value and are designed for protection only. The premiums may be level for 10, 15, 20, or 30 years depending on the term period selected. Because the death benefit protection is for a limited period, the premium for term life insurance is often the lowest of all types of life insurance policies. However, after the level term period, premiums go up significantly and increase annually.
Universal life policies provide guaranteed death benefit protection. Unlike term insurance, which expires after a specified amount of time, universal life provides protection you can keep for life.
Universal life policies also offers child insurance for a low premium, or as a rider on a parent’s policy.
Indexed Universal Life
Indexed universal life is a version of universal life that combines death benefit protection with the opportunity to grow cash value through an account that credits interest based upon the upward movement of stock market indexes – without the risk of investing directly in the market. The index account features a zero percent floor, which guarantees your account won’t earn less than zero percent due to poor market performance.
Your premium payments into an indexed universal life insurance policy may accumulate cash value on a tax-deferred basis. Through policy loans and withdrawals, the cash value may then by used during retirement as a source of supplemental income.
Cash value from your policy may be used for anything – from a monthly cell phone bill to a favorite travel destination.
Term policies offer a Terminal Illness Rider that pays a portion of the death benefit as a living benefit when the insured is diagnosed with a terminal illness (life expectancy of 24 months or less). Additionally, Universal and Indexed universal life policies offer a Chronic Illness Rider that pays a portion of the death benefit when the insured is certified as being chronically ill (unable to perform at least two activities of daily living, or suffering from severe cognitive impairment), and a Critical Illness Rider that pays a portion of the death benefit when the insured is certified as having incurred one or more of five specified medical conditions – heart attack, cancer, stroke, kidney failure, or major organ transplant.