Whole life insurance provides coverage for the lifetime of the insured, provided premiums are paid when due. Premiums are set based on the age and health of the insured at the time of the contract and do not increase over time. Upon death, the insurance payout is made to the designated beneficiaries. Whole life is “permanent” insurance; part of the “cash value” category of life insurance. These policies — which also include universal life and variable life[i] policies — all include a cash value component.
Benefits of a Whole Life insurance policy:
Term life insurance provides coverage for a specific period of time. Prior to the expiration of the term, the policy owner must decide whether renew the term policy or allow it to expire. An annually renewable term policy offers lower rates that rise with each passing year. This may be a good choice for those who expect their income to increase over time. A level premium term policy locks in a premium that is guaranteed to remain unchanged over the course of the term.
Benefits of a Term Life insurance policy:
*All guarantees are contingent upon the claims paying ability of the issuing company(s).
[i] Variable universal life insurance is sold by prospectus. Before purchasing a variable life insurance policy, investors should carefully consider the investment objectives, risks, charges and expenses of the variable life insurance policy and its underlying investment choices. For this and other information, obtain the prospectuses for the variable life insurance policy and its underlying investment choices. Please read the prospectuses carefully before investing or sending money.
[ii] The decision to purchase life insurance should be based on long-term financial goals and the need for a death benefit. Life insurance is not an appropriate vehicle for short-term savings or short-term investment strategies. While the policy allows for access to the cash value in the short-term, such as through loans or partial surrenders, these transactions will impact the policy’s death benefit if the values are not restored prior to the insured’s death. You should know that there may be little to no cash value available for loans in the policy’s early years.
Distributions under the policy (including cash dividends and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 10% tax penalty.
Access to cash values through borrowing or partial surrenders will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.
Long-Term Disability Income Insurance (LTD) helps replace income lost for an extended period when a disability prevents you from working full-time. LTD starts once short-term disability expires, typically after three to six months. A policy can be customized by choosing the elimination period, the benefit period and optional riders* that work best for each individual’s needs.
Benefits of Long-Term Disability Insurance:
*Riders are available at additional cost.