Permanent Life Insurance

Whole

Premier

Juvenile

Fixed Premium

Universal Life Insurance

Universal life allows you, after your initial payment, to pay premiums at any time, in virtually any amount, subject to certain minimums and maximums.

You also can reduce or increase the death benefit more easily than under a traditional whole life policy. (To increase your death benefit, the insurance company usually requires you to furnish satisfactory evidence of your continued good health.)

The key advantage to Universal Life is its flexibility. When you are young you have the opportunity to over fund the policy and build up a cash reserve that can be accessed later in your life. You can also take advantage of very low insurance cost at a time in your life when your need for insurance is at its highest. As you get older you can decrease the death benefit to reflect your new financial needs while maintaining the growth of your cash reserve.

The insurance company invests the cash reserve in a Universal policy. Unlike a Variable policy where the insured controls the investment, the Universal policy gives a guaranteed minimum rate of return and in most cases exceeds that amount. The guaranteed rate of return is often higher than most banks offer on their passbook savings and in down markets can be an excellent hedge against the risk of traditional investments.

Whole Life Insurance

Whole life or ordinary life is the most common type of permanent insurance. The premiums generally remain constant over the life of the policy and must be paid periodically in the amount indicated in the policy.

Whole life is a great tool for planning long-term expenditures. If you know that you or your family will be liable for an expense 20 years from now, whole life can help you plan for that. It gives you a guaranteed rate of return on the premiums that are paid in and if something happens between now and the time that the expense comes due the death benefit will cover any money that was not paid into the cash reserve.

Whole life insurance is also the most popular method for planning for final expenses. Unlike a funeral home that may or may not be around in 40 years, you can work with an A+ rated life insurance company that has been paying policies for 75 years or longer.

The following points can help you determine if permanent insurance best suits your needs.

Advantages

Disadvantages

• As long as the premiums are paid, protection is guaranteed for life.

• Premium costs can be fixed or flexible to meet personal financial needs.

• The policy accumulates a cash value against which you can borrow. (Loans must be paid back with interest or your beneficiaries will receive a reduced death benefit.) You can borrow against the policy’s cash value to pay premiums or use the cash value to provide paid-up insurance.

• The policy’s cash value can be surrendered, in total or in part, for cash or converted into an annuity. (An annuity is an insurance product that provides an income for a person’s lifetime or a specific period.)

• A provision or rider can be added to a policy that gives you the option to purchase additional insurance without taking a medical exam or having to furnish evidence of insurability.

• Required premium levels may make it hard to buy enough protection.

• It may be more costly than term insurance if you don’t keep it long enough.