The best policy for each client depends on budget, amount of coverage needed and length of time the coverage should last.
Advantages |
Disadvantages |
---|---|
Least expensive type of insurance. | Does not generate cash value. |
Can be Basic, Increasing or Decreasing term. | Periodically, premium will increase or coverage will decrease. |
Basic Term provides a constant level of insurance for a specified number of years. | Decreasing Term continually decreases coverage as premium amount stays the same. |
Increasing Term periodically increases the face value of the policy. |
Advantages |
Disadvantages |
---|---|
Premiums are paid over a specific period (limited-pay whole life) or over the life of the policyholder (straight whole life). | More costly than Term Life during the early years. |
Can borrow funds from the insurance company up to the current cash value. | If the policyholder dies before the loan is repaid, borrowed amounts are deducted from the death benefit paid to beneficiaries. |
Cash values can build up tax-deferred. | |
Amount borrowed need not be repaid. |
Premiums are deposited in a specified policy fund. Each month, the insurance company deducts its fees and costs for protection from the policy fund. Administrative charges may be front-loaded (deducted before the premium is credited to cash value) or back-loaded (paid if you surrender the policy).
Advantages |
Disadvantages |
---|---|
Most policies pay a current interest rate competitive with other available options. | Interest rates are not guaranteed over the life of the contract. |
After monthly deductions, the insurance company credits interest to the fund at the market rate. | |
Income and cash value can build up tax-deferred. | |
Beneficiary proceeds are income tax-free. |
Premiums are deposited in a specified policy fund. The insurance company deducts its fees and costs for protection from the policy fund each month.
Advantages |
Disadvantages |
---|---|
Most policies pay a current interest rate competitive with other available options. | Interest rates are not guaranteed over the life of the contract. |
After monthly deductions, the insurance company credits interest to the fund at the market rate. |
Life insurance agents selling variable life policies must be registered representatives of a broker-dealer licensed by the National Association of Securities Dealers and registered with the Securities and Exchange Commission.
Advantages |
Disadvantages |
---|---|
Policyholders may receive higher cash values and death benefits than other policies based on a fixed rate of return. | Policyholders risk lower cash values and death benefits if investment performance is negative. |
If a policyholder prefers to put all or a portion of the insurance proceeds away for future distribution, the policyholder can specify exactly how the life insurance proceeds are to be paid to beneficiaries. That choice can also be left to the heirs after the insured dies. Life Insurance Settlement options include the following:
Interest Option: The company holds the life insurance proceeds and pays interest at a rate that is usually higher than the rate guaranteed by the policy. If desired, part of the money can generally be withdrawn.
Amount Option: A regular monthly income of a desired amount is paid until the money runs out.
Time Option: A regular monthly income is paid for the desired period of time. The amount of income is determined by the money and interest available.
Lifetime Income Option: This plan provides a monthly income for life. The amount received depends on:
The amount of income is desired
The rate of interest guaranteed by the policy
The age at the death of the policyholder
Life Insurance is a critical element in your financial legacy. However, once in-force, most life insurance policies are seldom reviewed or analyzed to ensure they remain the best possible investment for each client’s evolving needs.
A new family situation, a different career, a shift in financial status or a change in health should always trigger a re-evaluation to ensure your life insurance policy is the most advanced solution possible.
Watch below to find out more:
Increasing Death Benefits at Current Funding Levels
Reducing Premiums while Maintaining the Same Coverage
Extending Guaranteed Coverage
Is Over 3 Years Old
Has an Annual Premium Over $1,000
Does not Reflect Your Health or Lifestyle Changes
Copyright © 2014 | Unity Financial and Insurance Services Inc