The principle reason to buy life insurance is to provide a death benefit to your beneficiaries. However, some policies can also serve your needs in estate planning, wealth transfer, estate tax liquidity, and growing your money in a tax-deferred manner. There are three basic kinds of life insurance to consider and we’ve provided an overview of each below. Each individual policy carries its own provisions and benefits and the experts at H.J. Spier can help you determine your best fit.
Term Life Insurance- Level term insurance offers a longer term, usually for 10,15,20,or 30 years, in which the premium stays the same each year during the term. Level convertible term is a great way to purchase high death benefit amounts and spread the cost over a period of year, while maintaining the ability to purchase permanent insurance with no evidence of insurability in the future. There is no "cash value" accrued with term insurance.
Whole Life “Permanent Life Insurance – Whole life policies spread the cost of insurance over your entire life. Any extra (excess) premium money is invested in the insurance company’s portfolio in order to build “cash value.” Make sure that any company you buy whole life from has an excellent track record, as the choice of company is very important. This type of policy is set up with regular monthly, quarterly, or annual premium payments that are inflexible in nature. Therefore, the policy will lapse if premiums are not paid in accordance to the contract.
Universal Life Insurance- This option offers greater flexibility than whole or term life. After your initial payment, you can reduce or increase the amount of your death benefit. Also, after your initial payment, you can pay premiums any time, in almost any amount within the polices requited minimums and maximums. This type of policy can be used to accrue "cash value".