Permanent Insurance

Permanent Insurance – (also called Whole Life Insurance) is designed to last for the duration of an insured’s remaining lifetime, or as long as premiums are received on the policy,

Are also called investment policies, where the main objective is to facilitate growth of capital by regular or single premium payments

While permanent life insurance comes in many flavors, the underlying minimum guarantees built into these policies are the very similar.

Permanent life insurance policies, have additional premium collected which grows cash values, within policy.

Level premium payments till age 100

Fixed monthly premiums or increasing premiums to cover cost of living increases

Cash values grow tax deferred, much like an IRA or 401k

Cash values can be accessed during the insured’s lifetime

Administrative costs associated with the policy are assumed by the Insurer and are not transparent

Generally, life insurance proceeds pass to your beneficiaries’ income tax free

Policies can be paid with a single premium, up to age 95 or 121, or for a set number of years

Eligible to earn policy dividends, but are not guaranteed

Upon death of the insured, death benefit plus any remaining dividends will be paid to beneficiaries

Policy loans can be taken in the event of an emergency.  Although they don’t have to be repaid; withdrawals, loans, plus accrued interest would be deducted from the death benefit before proceeds are distributed to your beneficiaries

Universal Life Insurance (also called ULs) is another type of Permanent Insurance – is similar to, in some ways and evolved from whole life insurance. However, the actual cost of insurance within the policy is based on annually renewable term life insurance, which offers for two major benefits for consumers:

  • ULs offer the advantage of guaranteed level premiums throughout the insured’s lifetime at substantially lower premium costs, than a comparable whole life policy
  • Unlike other types of permanent and term insurance, ULs offer flexible premium payments and adjustable death benefits

The death benefit can be increased (subject to insurability) or decreased, at the policy owner’s request.  This is helpful when the unexpected happens and the needs of your family change

The policy premiums are flexible, from a minimum amount specified in the policy or to the maximum allowed by the contract. If no premium payment is received, the cash values within the policy are used to cover the various deductions each month

Riders are available which provide a No Lapse Guarantee, which is designed to keep the policy in force when premium payments cease or are temporarily unavailable

Premiums are paid into policy’s account value, where it earns interest each month

Indexed Universal Life or (IUL’s) – is another type of universal life policy, which is similar to Fixed Indexed Annuities (or equity indexed annuities)

Indexed Universal life policies enjoy the same, wide range of benefits and advantages as offered by a traditional UL, such as flexible premiums, flexible payments and death benefits.  These policies can be modified as needed to address the changing needs of your situation

These policies credit interest linked to the positive movement of an index such as the S&P 500, Russell 2000, and the Dow Jones.

These policies, like a traditional UL, typically cost considerably less than a comparable whole life policy

The cash value inside an IUL generally has principal protection, less the cost of insurance and administrative fees.

Are designed to with the ability to outperform other types of permanent life insurance by offering the potential for much higher interest rates, when cash values inside the policy are linked to an external market which experiences growth

Index UL participation in the index may have a cap, margin, or other participation modifier, as well a minimum guaranteed rate

Some insurance companies are offering caps as high as 13% on their IULs participation rates, which is one reason that traditional whole life policies offering 2-4% interest at best, are being replaced with ULs with many life insurance companies

Features include:

  • death benefit in which life insurance proceeds are generally passed to beneficiary income tax free
  • cash values grow tax- deferred (per current laws pertaining to federal income taxes)
  • cash values can be accessed to take care of educational expenses, handle unforeseen emergencies, provide retirement income or for any other reason
  • beneficiary receives death benefit plus cash values, accumulated in the policy

Final Expense Insurance – is a type of whole life or permanent insurance, designed to protect an insured for the remainder or their life

Final Expense insurance was devised specifically for the niche market of seniors, in an aging population

Often low to moderate face value, whole life insurance policies, allowing senior citizens to purchase affordable insurance, later in life

Usually available for ages 50-80, but some policies are available for people over the age of 80

Typically have death benefits between $2,000-$40,000

Popular because they generally require only answers to simple “yes” and “no” questions, while most policies require a medical exam (and extensive medical questions) to qualify

Health questions can vary greatly between exam and no-exam policies

It may be possible for individuals with certain conditions to qualify for one type of coverage, but not another

Can be used to cover final expenses, such as burial costs, funeral arrangements and unpaid medical bills

You can choose whether or not to use policy proceeds for burial expenses

Gives your family time to grieve, instead of worrying about how to pay for your funeral, medical bills and associated burial expenses