What Is Whole Life Insurance
Whole life insurance is a type of permanent life insurance that helps protect your loved ones from the burdens of an untimely event. With Whole Life Insurance, the insured person is covered for the duration of their life as long as premiums are paid on time.
This is the most common type of life insurance policy
What Are the Benefits of Whole Life Insurance?
The reason why Whole Life Insurance is the most popular life insurance is because:
- Premiums are fixed amounts and do NOT fluctuate with market conditions
- You may be able to withdraw funds
- Your death benefit is guaranteed as long as there are no missed premium payments
What Is Level Term Insurance
By definition, level term life insurance is a term life policy guaranteed to have the premium remain the same for the duration of the contract. This is what most people refer to as term life. Purchased for a set number of years (5, 10, 30 years, for example), the premium and the death benefit remains the same (level) until the end of the term, or can be canceled at any time.
2 key takeaways:
- The premium rate for the policy stays the same (level) for the entire life of the policy
- The death benefit also stays the same
How Does Level Term Life Insurance Work?
- Choose a policy, death benefit amount and term period - the cost of the policy is dependent on the applicant’s health and age.
- Pay premiums monthly or annually.
- If the policyholder dies during the policy term the death benefit is paid out to the beneficiaries in a tax-free lump sum of money.
- If the policyholder outlives the policy, the policy expires and stops making premium payments.
What’s The Difference Between Level Term And Whole Life Insurance?
Term life policies expire, while whole life policies last as long as you pay premiums
Whole life policies have a cash-value component that can grow over time
What Is Keyman Life Insurance
It’s a life insurance policy that a company purchases to protect key executives’ lives. In this case, the beneficiary would be the company who will also pay the insurance policy premiums. Keyman Insurance is also known as “key woman” or “business life insurance.”
In the event a CEO or an essential personnel dies, the company’s operations typically have a significant negative effect. The payout from the executive allows the company time to find a new person or implement new strategies to prevent operations from floundering.
Types Of Keyman Insurance
Keyman Insurance can cover different types of scenarios:
- The keyman may be unable to work but has not died. Usually in an instance of business lost during extended absence.
- Keyman Insurance can protect profits by offsetting income from lost sales, losses resulting in the delay or cancellation of projects in which a keyman was involved.
- Coverage can protect shareholders. This insurance can be purchased by the shareholders or partners in the event a keyman is unable to fulfill their duties.
- Any keyman involved in guaranteeing business loans or banking facilities. The value of insurance coverage is arranged to equal the value of the guarantee.
What Is What Is Universal Life Insurance?
In Term Life insurance, a disadvantage to the policy compared to Whole Life insurance is the investment savings option that Whole Life contains. With Universal Life Insurance, it’s a hybrid of both Term and Whole Life Insurance, allowing you flexibility in what you can do with the savings or investment of the premium. Universal Life (UL) insurance is generally more expensive than term life insurance.
How Does Universal Life Insurance Work?
Similar to Whole Life Insurance, a portion of the monthly premium is put into the cost of the life policy, which will provide the death benefit to your beneficiary, and another part is invested to be used as investment savings.
The benefit maintains that the investment portion will grow over time and may eventually be able to pay for the premiums of the life portion of the policy. Therefore, you could pay into the policy for a certain amount of years and the investments would eventually start to cover the cost of the premium. You end up getting life insurance for your whole life, yet do not keep making payments.