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Life Insurance

TERMTerm life insurance is the simplest form of life insurance you can buy.  You purchase a certain amount of death benefit for a certain time period (term), typically 10 years (or more).  The premium is level for the initial term but then increases each year thereafter.  Term insurance is typically used when there is a temporary need that goes away after a certain number of years.

PERMANENT - Permanent life insurance comes in two basic types:  Whole Life and Universal Life.  Permanent insurance is designed to provide life insurance for the entirety of a person's life.

WHOLE LIFE - Whole Life is the original form of life insurance and has been the cornerstone of financial planning for hundreds of years.  Whole life guarantees a death benefit and the accumulation of cash value as long as premiums are paid.  Premiums are level for the entire length of the contract.  Policies can be designed to accumulate cash value very quickly which can be used at any time for any reason.  The accumulated cash value can be used to purchase cars, payoff your home mortgage, fund college education for your children or grandchildren, or provide tax-free supplemental income during retirement.  Whole Life is a very powerful and flexible tool and should be your financial foundation.

UNIVERSAL LIFE - Universal Life is a relatively new form of life insurance that combines the simplicity of term insurance with an external cash accumulation account that may have a rate of return that is fixed, tied to a stock market index (Index Universal Life), or to a mutual fund like pool of investments (Variable Universal Life).  Universal Life has the potential to build cash value more quickly and at a better rate than Whole Life, but without the same level of guarantees.  These contracts shift some of the risk from the insurance company to the policy holder and even if you make the planned premium payments, the policy may lapse due to insufficient cash value.  These policies must be carefully designed and monitored in order to prevent this from happening. 

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