INDIVIDUALS & FAMILIES
Life Insurance
Life insurance to suite your estate planning needs.
What is term life insurance?
Life insurance provides a payout after your death to the people you designate as beneficiaries. It’s an important safety net if anyone depends on you financially. The life insurance payout can pay debts such as a mortgage, replace your income and provide college tuition funds.
Term life insurance is the least costly insurance for most people.
Compare Term & Whole Life Policies
Term life is sufficient for most families who need life insurance, but whole life and other forms of permanent coverage can be useful in certain situations.
Choose term life insurance if:
- You need life insurance only to replace your income over a certain period, such as the years you’re raising children or paying off your mortgage
- You want the most affordable coverage
- You think you might want permanent life insurance but can’t afford it. Most term life policies are convertible to permanent coverage. The deadline for conversion varies by policy.
| Policy features | Term life insurance | Whole life insurance |
|---|---|---|
| Choice of policy length | ✓ | |
| Provides lifelong coverage | ✓ | |
| Premium generally stays the same | ✓ | ✓ |
| Low premium | ✓ | |
| Life insurance payout amount is guaranteed | ✓ | ✓ |
| Accumulates cash value | ✓ | |
| Might be eligible for annual dividends | ✓ |
Tip
Term Life insurance is a great solution for covering a specific need, such as a mortgage, car loans, and having a set amount set aside for education, if you have children who are not out of the house yet.
What is whole life insurance?
While your policy’s guarantees provide you with a minimum death benefit and cash value, dividends give you the opportunity to receive an enhanced death benefit and cash value growth. Many times, dividends are not guaranteed.
Compare Term & Whole Life Policies
Whole life insurance is often referred to as a permanent solution, because it will last as long as the insured is living, assuming premiums are paid.
With whole life, the policy builds cash value over time that can be used to help you pay for college, supplement your retirement income, or for emergencies. Any amount withdrawn from the cash value will reduce the death benefit.
The premiums of a whole life insurance policy are not tax deductible per the Internal Revenue Service (IRS).
Several questions to ask yourself when considering a life insurance policy are:
- Would your financial plan, without life insurance, enable your spouse to maintain the lifestyle you worked so hard to achieve?
- Would you be able to pass on something to your children or grandchildren?
| Policy features | Term life insurance | Whole life insurance |
|---|---|---|
| Choice of policy length | ✓ | |
| Provides lifelong coverage | ✓ | |
| Premium generally stays the same | ✓ | ✓ |
| Low premium | ✓ | |
| Life insurance payout amount is guaranteed | ✓ | ✓ |
| Accumulates cash value | ✓ | |
| Might be eligible for annual dividends | ✓ |
Tip
While whole life insurance has many benefits, it is best to speak with an insurance advisor prior to selecting this type of policy.
What Is Universal Life Insurance?
Features of Universal Life Policies
Most Universal Life policies will also provide a guaranteed rate of return on your cash values, with one important exception. It is possible that you will not accumulate any cash value if any, or all, of the following circumstances, occur: administrative expenses increase, mortality assumptions are changed, the insurance company’s investment portfolio underperforms, premium payments are insufficient.
| Policy features | Whole life insurance | Universal life insurance |
|---|---|---|
| Lifelong protection, as long as premiums are paid | ✓ | ✓ |
| Cash value | ✓ | ✓ |
| Interest on cash value | Guaranteed rate of return | In line with current money market rates |
| Premiums | Fixed | Flexible |
| Death Benefit | Fixed | Flexible |
Tip
In recent years, there’s been considerable interest in what’s commonly referred to as Universal Life with Secondary Guarantees (also known as a “No-Lapse Guarantee”). With an ordinary Universal Life product, the policy could lapse under certain circumstances (e.g., interest rates fall below projections, insurance costs or administrative expenses rise, etc). When you buy a policy with a “secondary guarantee,” you’re guaranteed that the policy won’t lapse even if the above factors come to pass.
Planning for Your Loves Ones
A Whole Life Insurance policy can set your estate up to receive a tax-free sum of money.