Life Insurance is the foundation of financial security for you and your family. It protects your financial resources against the uncertainties of life so you can plan for the future with confidence.
There are two basic types of life insurance:
- Temporary Insurance – Otherwise know as Term Insurance (Annual Renewable to 30 Year Term or Longer & ROP)
- Permanent Insurance – Whole Life or Universal Life (Cash Value Plans)
If you purchase life insurance, the insurance company will pay a death benefit to the beneficiary or organization named in the policy when the holder dies. In the case of temporary insurance, your death must be during the policy term. The choice between temporary and permanent insurance will depend upon your personal goals and objectives.
Term Life Insurance
Term Life is one of the simplest, most cost-effective types of life insurance. Generally, it provides the largest immediate amount of protection for the lowest cost. With Term Life, your beneficiaries are paid the entire amount of your policy (subject to your policy’s provisions) if you die during the term, which is typically from five to 30 years.
People who purchase Term Life generally have a substantial need for insurance protection during a specific period of time. They may be young and have growing families and need temporary protection now, with the option to convert to permanent coverage later.
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Return-of-Premium
The “ROP” in ROP Term Insurance stands for Return-Of-Premium
ROP Term is a newly introduced term life insurance product that provides a death benefit protection and a return of premium feature. This product is revolutionary do to the fact that it bridges the gap between low-cost term insurance and permanent insurance.
Return-Of-Premium (ROP Term) addresses one of the greatest consumer objections to regular term life insurance: “I am probably not going to die, and my money will have been wasted.” Unlike regular term, ROP Term rewards you for living by offering a guaranteed return of your total cumulative premium paid on the policy during the level term period, not including any substandard and rider charges. The remainder will be paid to the policy owner at the end of the level term period if the policy is then in force.
Here is an Example:
Male, 35 preferred plus, 500K 30 year term:
Annual premium = $810, Return of Premium after 30 years = $24,300
($810 x 30yr = $24,300) Income Tax Free, because the premiums you paid are after-tax dollars.
Whole Life Insurance
Whole Life Insurance combines the security of lifetime insurance protection with the advantages of tax-deferred cash accumulation. In addition to providing a death benefit, Whole Life policies also guarantee that premiums will remain level throughout the life of the policy. This allows owners to build the cost of their coverage into their long-term financial plans.
People who purchase Whole Life generally want to ensure that when they die, money will be available to pay final expenses, fund college costs, pay estate taxes, care for an elderly parent, or simply allow loved ones to maintain their lifestyles.
Universal Life Insurance
Universal Life insurance combines the security of lifetime insurance protection with the advantages of policy flexibility and tax-deferred cash accumulation. The difference between Universal Life and other forms of permanent coverage is the flexibility it offers. Within certain limits, policy owners can increase or decrease their death benefit according to their changing needs without having to purchase a new policy. Likewise, owners can increase, decrease, or cease paying premiums altogether provided the policy has sufficient cash value.
Like people who buy Whole Life insurance, people who purchase Universal Life generally want to ensure that money will be available to pay final expenses, help fund college costs, pay estate taxes, care for an elderly parent, or simply allow loved ones to maintain their lifestyle.
