INSURANCE PLANNING SOLUTIONS
“Planning is bringing the future into the present so that you can do something about it now.”
--Alan Lakein
Life insurance is an important aspect of financial planning. It provides peace of mind for individuals that their loved ones will be financially secure in the event of their untimely demise. However, there are various types of life insurance policies available in the market, and it can be confusing to choose one that best suits your needs. In the following, we will discuss five commonly available types of life insurance strategies – Term, Universal Life, Indexed Universal Life (IUL), Premium Finance Insurance, and Whole Life.
- Term Insurance: Term life insurance provides coverage for a specific time frame, ranging from 1 to 30 years. It is the most popular and affordable type of life insurance. The policyholder pays premiums for the duration of the policy, and in case of their death during the term, the beneficiary receives the death benefit. If the policyholder outlives the term, the policy can renew at much higher premiums or it expires.
- Universal Life Insurance: Universal life insurance is a permanent life insurance policy that offers flexibility in premium payments and death benefit. It combines a term insurance component with a savings account, also known as cash value. The policyholder can withdraw or borrow against the cash value, and the interest is tax-deferred. The interest earned is set by the insurance company and it varies.
- Indexed Universal Life (IUL): Similar to Universal Life Insurance, an IUL also offers a savings account with a death benefit. However, the savings component is tied to the stock market index, such as the S&P 500. Thus, the account value can fluctuate based on the stock market performance. IUL policies offer a guaranteed minimum interest rate on the cash value and have tax advantages. Consider Indexed Universal Life Pros and Cons when considering.
- Premium Finance Insurance: Premium Finance Insurance is a financial arrangement in which an individual or a company borrows money from a lender to pay for an insurance premium. This type of insurance allows individuals or companies to use leverage when funding their life policy. The lender will typically charge interest on the loan, which must be paid back over time. Premium finance insurance is most commonly used by businesses and high net worth individuals to finance expensive insurance policies.
- Whole Life Insurance: Whole life insurance is a permanent life insurance policy that provides lifetime coverage. It offers a fixed premium, cash value accumulation, tax-deferred growth, and a guaranteed death benefit. The premium payment is higher than a term insurance policy, and the policyholder can borrow against the cash value, but it may affect the death benefit.
To sum it up, life insurance is essential, and the type of policy one chooses depends on their individual needs. Term life insurance is suitable for those seeking affordable coverage for a specific period, while permanent life insurance policies offer a lifetime of coverage with savings components. We can help you to determine the best policy based on your goals, financial situation, and needs.