Types of Life Insurance
In
choosing the type of life insurance policy you purchase, consideration
must be given to the need which is being filled; e.g., funding
retirement needs, creation of an estate, payment of estate settlement
costs (federal and state death taxes, last illness and burial
costs, probate fees, etc.), business buyout, key-man coverage,
etc.
Decreasing
Term:
Level Premium, Decreasing Coverage, No Cash Value: Suitable
for financial obligations which reduce with time; e.g., Mortgages
or other amortized loans.
Annual
Renewable Term:
Increasing Premium, Level Coverage, No Cash Value: Suitable
for financial obligations which remain constant for a short or
intermediate period; e.g., income during a minor's dependency.
Long-term
Level Premium Term:
Level Premium, Level Coverage, No Cash Value: The annual premiums
are fixed for a period of time, typically 5, 10, 15 or 20 years.
Suitable for financial obligations which remain constant for a
short or intermediate period; e.g., income during a minor's s
dependency.
Whole Life:
Level Premium Level Coverage, Cash Values: Cash value typically
increases based on insurance company's general asset account portfolio
performance. Suitable for long-term obligations; e.g., surviving
spouse lifetime income needs,. estate liquidity, death taxes,
funding retirement needs, etc.
Universal
Life:
Level or Adjustable Premium and Coverage, Cash Values: Cash values
may increase, based on the performance of certain assets held
in the company's s general account. Suitable for long-term obligations
or sinking-fund needs: estate growth, estate liquidity, death
taxes, funding retirement needs, etc.
Variable
Life and Variable Universal Life:
Level / Adjustable Premium, Level Coverage, Cash Value: Suitable
for long-term obligations and those who are more active investors
and for estate growth and death tax liquidity.
Single Premium Whole Life
Entire Premium Is Paid At Purchase, Cash Values, Level Coverage:
Provides protection as well as serving as an asset accumulation
vehicle.
