There are two major types of life insurance term and whole life. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. In 2003, about 6.4 million individual life insurance policies bought were term and about 7.1 million were whole life.
Life insurance products for groups are different from life insurance sold to individuals. The information below focuses on life insurance sold to individuals.
For a specified period of time or for the rest of your life, you can use an immediate annuity for regular payments. Immediate annuities are single payment annuities. A large sum of cash can be used for income for a specific time frame. These are not intended to offer liquidity or growth.
An annuity that is fixed or variable paying a certain monthly amount. Income annuities are usually purchased in a lump sum and are used to provide a stable income for retirement.
This annuity will begin payments from a specific date. Usually these are purchased with payments or sometimes a single payment. These payments are typically made while the insured is working in order to receive payments during their retirement.
This annuity is used for retirement or savings for long term investors that want to have the stability of a fixed interest rate with no risk that they’ll ever lose any of the principal. A fixed annuity will provide steady and guaranteed growth with the tax-deffered benefit
With a variable annuity, the insurance company pays periodic payments to you either now or at a future date. The insured might see higher growth from a variable annuity, but will also be at risk from market changes. Variable annuities will vary with the performance of the investment options that are chosen.
Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions.
There are two basic types of term life insurance policies; level term and decreasing term.
- Level term means that the death benefit stays the same throughout the duration of the policy
- Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policy's term.
In 2003, virtually all (97 percent) of the term life insurance bought was level term.
Whole life or permanent insurances pays a death benefit whenever you die even if you live to 100! There are three major types of whole life or permanent life insurance; traditional whole life, universal life, and variable universal life, and there are variations within each type.
In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy. The cost per $1,000 of benefit increases as the insured person ages, and it obviously gets very high when the insured lives to 80 and beyond. The insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than whats needed to pay claims, investing that money, and then using it to supplement the level premium to pay the cost of life insurance for older people.
By law, when these over-payments reach a certain amount, they must be available to the policy owner as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional, benefit under the policy.
In the 1970s and 1980s, life insurance companies introduced two variations on the traditional whole life product; universal life insurance and variable life insurance.
We understand that today's healthcare costs make it essential to have an affordably priced plan. Our specialists can tailor a package that will satisfy your family or employee needs, while keeping costs to a minimum.
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