The Facts of Life
You might think life insurance can be complicated. But even a basic understanding of what it is and how it works can make a big difference in finding the product that meets your needs.
So let’s get to the facts.
Life insurance provides protection for your family or business.
The death benefit from a life insurance policy can help achieve many goals, such as:
- Ensuring your family is able to maintain their lifestyle
- Transferring wealth to the next generation, income-tax-free
- Keeping a business going.
There are two types of life insurance: term and permanent.
Term life
Purpose: Protection for a specific number of years
Duration: Typically 10-30 years
Cash value growth potential: No
Access to cash value: No
Cost: Initially more affordable, but can increase in cost if you choose to renew or purchase a new policy
Permanent life
Purpose: Permanent protection plus cash value accumulation to do more during your lifetime
Duration: Your lifetime, as long as premiums are paid
Access to cash value: Yes
Access to cash value: Yes
Cost: Initially more expensive than term, but becomes more cost-effective over time
There are different categories of permanent life insurance, each offering its own unique advantages.
Our History
- Purpose: Guaranteed lifetime protection with growth tied to the company’s performance
- Advantages: Predictable payments
- Risk tolerance: Low
Universal
Life
- Purpose: Guaranteed lifetime protection with cash value growth potential tied to an interest rate
- Advantages: Low cost and flexible payments
- Risk tolerance: Low
Indexed
Universal Life
- Purpose: Lifetime protection with cash value growth potential tied to the performance of a market index
- Advantages: Strong downside protection if the index performs poorly
- Risk tolerance: Medium
Variable Universal Life
- Purpose: Lifetime protection with unlimited growth potential tied to the performance of variable investment options
- Advantages: Downside protection, although limited
- Risk tolerance: High
Permanent life insurance can benefit you during your lifetime
The cash value in a permanent life insurance policy can be used at any time, for any reason, during your lifetime — and, income-tax-free in most cases.4 For example, you can use your policy’s cash value to:
- Pay for a loved one’s college education
- Turn that side hustle into a full-time business
- Fill an income gap in retirement
- Cover unexpected medical expenses.
The right kind of life insurance, with the right amount of coverage, can help you achieve your goals at any stage of life. Let’s talk through your options together.
The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges; if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company.
Life insurance permanent policies contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Loans are income tax free as long as policy is not a “modified endowment contract” (MEC) and policy must not be surrendered, lapsed, or otherwise terminated during the lifetime of the insured, and withdrawals must not exceed cost basis. Partial withdrawals during the first 15 policy years are subject to additional rules and may be taxable. Excess policy loans can result in termination of a policy. A policy that lapses or is surrendered can potentially result in tax consequences. You should consult a qualified tax professional for tax advice on your own personal situation. All guarantees are based upon the claims-paying ability of the issuer.