Permanent (cash value) life insurance is often the best long-term solution.
Despite higher initial premiums, permanent life insurance can actually be less expensive than term insurance in the long run.
Some reasons for choosing permanent insurance include:
• to ensure your spouse will have sufficient money to retire with in the event of your death,
• to guarantee that you will leave some money to children,
• provide money to pay capital gains or estate taxes, and
• to provide funding for final expenses.
There are two basic types of permanent insurance:
This type of policy is designed to provide permanent insurance plus it has a savings component and a single monthly premium. Whole Life has a level cost of insurance where the costs do not increase each year – the premium is the same for the first year as for the last.
A Whole Life policy does not disclose the cost of insurance, the administration costs or how the insurer calculates the returns on your savings portion. You cannot choose where the money is invested and the return you are receiving is not disclosed. You will have an illustration showing a guaranteed “cash value” and another cash value which reflects non-guaranteed projected returns.
Universal Life policies are a type of permanent life insurance where premiums (less expense charges) are credited to an investment account from which periodic charges for life insurance coverage are deducted and to which income is credited. Usually, the policyholder can vary the amount and timing of premium payments. Universal Life policies can be used for estate planning as well as for meeting traditional insurance needs.
This type of policy does provide disclosure as to how the premium is allocated and you can choose the investment options. The funds grow tax-free – you do not pay any income tax on the growth. Set up properly this type of policy sees the entire investment account plus the face value of the insurance policy go to the beneficiary tax-free on the death of the insured.
Speak to one of our licensed Life and Living Benefits Account Executives to discuss your situation and determine the most appropriate life insurance solution for you.