The Walker Winslow Financial Group, LLC, has over twenty five top rated Life Insurance companies available to you the customer. We can provide you with options and alternatives on the top rated plans available instead of working with an advisor that has only one or two options for you to consider.
Term Life Insurance
What is Term Life Insurance?
Term Life Insurance is a policy that offers coverage for a certain number of years — whatever is set out in the terms of the contract — usually from 1 to 30 years.
People usually choose this type of policy for the following reasons:
- To provide coverage for dependents
- To provide for expenses at the time of death
- To cover a mortgage or college tuition.
Term life is appealing because you can choose your own terms of coverage, from length to premiums. It is also recommended by many financial advisors as the best type of policy, because it is a low cost coverage option that allows you to take the money you save and invest it in other financial interests rather than risk low returns on a whole life policy (this approach is also known by the adage “buy term and invest the difference”).
Types of Term Life Insurance
For those who decide to purchase term life insurance, there are three main types available, each with their own assets and weaknesses:
- Level Premium Term Insurance:
- Offers many benefits to buyers. For one, it is one of the most affordable types of coverage, and the rate of the premium remains the same throughout the duration of the policy. In some areas, it also provides you with the chance to increase the amount of your policy every two years in order to keep level with inflation, and is easily payable on an annual, semi-annual, quarterly, or even monthly basis.
- Decreasing Term Insurance:
- Usually purchased as mortgage protection insurance. In this type of plan, the amount of the benefit decreases over the life of the policy, while the premiums remain the same. For example, a $20,000 policy that is purchased for a term of ten years will decrease by $2,000 each year until it expires, usually corresponding to the decreasing mortgage debt.
- Increasing Premium Insurance:
- A temporary protection plan that is renewed on an annual basis. As your age increases, so do the premiums, but a benefit of this plan is that there is no need to provide proof of good health. With an increasing premium plan, as long as the premiums are paid, the policy stays in effect. People usually purchase this type of insurance to cover mortgages or loans, or when they have a limited budget but want to be insured, as this type of plan is usually easily converted to a more permanent insurance plan. They may also purchase it as a rider, or supplement, to their existing life insurance policy.
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Return of Premium Life Insurance
What is Return of Premium Life Insurance?
Imagine receiving all your money-back on your Life Insurance policy. Your beneficiary receives a death benefit if you were to die. If you live for the term of the policy, the insurance company returns all of your premiums. Return of Premium Life Insurance gives you all the benefits of a traditional term life insurance policy, plus the additional benefit of having your cumulative premiums paid back to you at the end of the policy period.
Return of Premium Life Insurance can give you the best of both worlds — all the protection that you require from a term life policy, followed by a full refund of premiums.
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Universal Life Insurance
What is Universal Life Insurance?
Universal Life Insurance is a form of Permanent Life Insurance, with considerable differences between the two. This form of insurance was created to provide customers with a better understanding of their policy and relieve them of some of the stricter policy provisions that come with standard whole life insurance.
With universal life, the policyholder can arrange the benefits to meet his or her needs. The policyholder controls how much of the premium is paid toward the insurance and toward the savings, and can change the value of the policy, as well. There may be a specific limit to how much the policy can be changed at one time, especially if the policyholder does not provide another health exam. Increases in the death benefit usually require updated proof of insurability. Universal life policies also allow for changing the amount and timing of premiums from time to time, as long as the premium covers the cost of monthly maintenance of the policy and maintains a basic benefit amount. If you fail to cover these minimum premiums, the death benefit of your policy can be greatly reduced.
Universal life policies usually have a minimum interest rate, but the rates can fluctuate similarly to a money market account. Therefore there are no guarantees as far as savings or cash value earnings. However, the growth of these accounts is at a substantially higher rate than average whole life insurance. These policies can sometimes allow any dividends paid by the insurer to be placed in the cash value account, as well.
Universal life insurance is the perfect policy for someone who has yet to purchase a home or start a family but expects to do so in the future because of its easy changeability and quick profit margin. However, because it involves more participation from the policyholder, consultation is recommended.
If it seems like universal life insurance is right for you: Request a no obligation comparison quote today.
Whole Life Insurance
What is Whole Life Insurance?
Whole Life Insurance is a form of Permanent Life Insurance that provides lifetime protection for as long as the premiums are paid. In some cases, whole life policies are designed to mature at age 100, which is the age when premium payments would end and the cash value would equal the face amount of the policy. At maturity, the face amount of the policy would be paid to an insured who is still living.
Whole life insurance may be used as a form of investment, as it accrues interest over time. With whole life insurance you can receive dividends from your insurer, which you can then use to offset the cost of your policy, to increase the amount of your coverage, or even to buy a supplemental term life policy.
To better understand the difference between whole and term life insurance, please review Term Life vs. Whole Life Insurance — What is the Difference?
Whole Life Policy Premiums
Whole life policy premiums are divided into two parts: Death Benefit and Cash Value Account.
- Death Benefit:
- Part of the premium in a whole life policy is used to cover the cost of the death benefit coverage over the insured person's lifetime. The so-called “death benefit” refers to the amount of money paid or due to be paid when a person insured under a life insurance policy dies. This is paid directly to the beneficiaries of the insured.
- Cash Value Account:
- The other part of a whole life policy is used to build a cash value account, which is paid to the beneficiary upon the death of the policyholder in addition to the death benefit. The interest accrued by the cash value account, usually at a fixed rate, is comparable to that of a savings account. This money can usually be borrowed against or withdrawn in times of need or emergency — one of the things that make a whole life policy attractive to prospective buyers. However, the money is not available right away; policyholders must wait for the cash value account to accumulate to a certain amount before they can borrow against or withdraw it. They must also not exceed the limits of the policy, or it will become forfeit and all coverage will be cancelled.
Tax Benefits of Whole Life
Any money accrued under a whole life policy is not subject to taxation as long as the policy is in effect, and any money you borrow or withdraw up to the amount of the premium is also tax-free. If you cancel the policy at any point, you receive a lump sum of money stored in the cash value account - including interest! You pay taxes only if the cash value plus interest exceeds the sum of premiums paid.
Cancelling (or “surrendering”) a policy is a good option for retired persons who have paid off their mortgage and are free of dependents. They can then use the money in other investments — which would provide a stream of income — or spend it as they please.
Forced Savings
The cash value account is, in effect, a forced savings account, which is very appealing to consumers. To keep your policy you must pay the premiums, and as a result you are putting money into savings instead of spending it elsewhere. Whole life policies are thought of as a low-yield investment, but their level of security over other financial ventures are something to consider when looking into coverage. Premiums are indeed higher than those of term life policies, which may be a drawback, but the returns can be greater.
If it seems like whole life insurance is right for you: Request a no obligation comparison quote today.
Disclaimer: This is for information and educational use only. For specific information concerning investments in the stock market please consult with a securities licensed professional.
