Whole Life Insurance
Permanent insurance is more complex and tends to cost more than term, but it offers additional benefits. Whole life is the most well-known and simplest form of permanent life insurance. Other kinds of permanent life insurance include universal, variable and variable universal. Whole life insurance will last the rest of your life, so your beneficiaries are guaranteed a payout no matter when you die. Whole life insurance also builds up “cash value,” which is money you can access while you’re alive. Term life has no cash value.
Although it’s more complicated than term life insurance, whole life is the most straightforward form of permanent life insurance. Here’s why:
- The premium remains the same for as long as you live
- The death benefit is guaranteed
- The cash value account grows at a guaranteed rate
Term life insurance is easier to understand and costs much less than whole life insurance, but it has an end date. A 30-year policy is typically the longest term available, depending on your age. Term life insurance is the easiest to understand and has the lowest prices.
Term life insurance provides coverage for a certain time period. It’s often called “pure life insurance” because it’s designed only to protect your dependents in case you die prematurely. If you have a term policy and die within the term, your beneficiaries receive the payout. The policy has no other value.
You choose the term when you buy the policy. Common terms are 10, 20 or 30 years. With most policies, the payout, called the death benefit, and the cost, or premium, stay the same throughout the term.
Universal Life Insurance
Universal life insurance policies offer flexible premiums that may allow you to adjust how much you’ll pay each year, by accessing some of the policy’s cash value (though you will need to pay the minimum premium amount or the policy will lapse). Depending on your policy’s potential cash value, it may be used to skip a premium payment, or be left alone with the potential to accumulate in value over time.
Potential growth in a universal life policy will vary based on the specifics of your individual policy, as well as other factors. When you buy a policy, the issuing insurance company establishes a minimum interest crediting rate as outlined in your contract. However, if the insurer’s portfolio earns more than the minimum interest rate, the company may credit the excess interest to your policy. This is why universal life policies have the potential to earn more than a whole life policy some years, while in others they can earn less.
Long Term Care Insurance
If you become chronically ill – because of a cognitive impairment, or because you’re unable to perform at least two activities of daily living without substantial assistance – long-term care insurance could help pay for the care you need. Depending on the level of care required, it may be provided in a nursing home, and alternate care facility, or even at your home.
In addition to helping pay the costs of long-term care, long-term care insurance may help to provide these benefits:
- Protect your savings and other assets
- Preserve your independence
- Exercise your own choices
- Avoid government dependence
- Maintain a better quality of life
Disability insurance pays some or all of a worker’s salary if that worker becomes disabled and is unable to work at his or her job. According to the Council for Disability Awareness, at least one out of every four workers will become disabled at some point during their working career. This disability can come from accidents or injuries on the job, as well as from other debilitating illnesses such as cancer or a heart attack. Disability insurance can reimburse disabled workers for some of the income they lose while recovering from illnesses and injuries.
With college for the kids (or grandkids) plus retirement coming, think about this: skipping $20,000 in retirement contributions from age 50 to 55 could leave you with $85,000 less by age 67.
That big difference for tomorrow is a good reason to talk to us today. Our Financial Professionals have advice on ways to pay for college—from financial aid and scholarships (even unusual ones) to accounts that you, your family or anyone else can contribute to. All while staying on track for retirement and balancing the rest of your financial life.