Life Insurance is an essential part of financial
planning. It can provide an investment opportunity for many of life's
important goals while protecting your loved ones financial security.
Life Insurance also offers a way to replace income that would be lost
when someone dies.
There are two types of Life Insurance - Term and
Permanent.
Term Life Insurance:
Term life insurance provides a death benefit that is payable only
if the insured dies during the specified time that the policy is
in force. Specified periods of coverage make term insurance ideal
for covering specific short term financial needs. You can purchase
it one year at a time, or for a certain period, and it tends to
have lower premiums than permanent insurance. There is no savings
feature (cash value) with term insurance.
Permanent Life Insurance:
Also known as cash value life, permanent life insurance provides
lifelong protection as long as you continue to pay premiums as specified
in the policy. When your premium is paid, part of it goes into a
cash reserve and accumulates tax-deferred.
There are several types of Permanent Life Insurance,
to cover a variety of needs:
1. Whole Life - Sometimes called ordinary life or life, it usually
has premiums that are fixed for the life of the policy. Whole life
insurance also builds a savings element (cash value) as a result
of the level premium approach to funding the death benefit.
2. Universal Life - Has more flexibility than whole life
insurance policies. Within certain limits, you can change the death
benefit, the amount of premium and the payment frequency. Unlike
whole life, this is an interest driven policy, which normally pays
a minimum guaranteed interest of 4% - 4.5%. If the interest rates
are continuously low, additional premiums may have to be made to
avoid a lapse in coverage.
3. Second-To-Die - Is a type of whole life that insures two
people and pays a death benefit only after the second person dies.
It is generally designed to provide funds to pay estate taxes and
is sometimes called survivorship insurance.
4. Variable Life - The death benefit and the cash value of
this type of policy fluctuate according to the investment performance
of funds offered as separate investment accounts. You get to decide
where to invest your money based on the choices provided by the
issuing company. Many variable life insurance policies guarantee
that the death benefit will not fall below a specified minimum,
but a minimum cash value is not usually guaranteed.
5. Variable Universal Life - Is a type of variable life insurance
which combines the premium and the death benefit flexibility of
universal life with the investment flexibility and risk of variable
life insurance.
Williams & Stazzone Insurance Agency
has agents with over 25 years of extensive experience in all aspects
of providing life insurance solutions to customers' specific needs.
Please contact us for more information.
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