When it comes to life insurance, your two primary options are term life insurance and permanent life insurance.
Term insurance is fairly straightforward and offers affordable life insurance coverage for a specific amount of money over a specific period of time. Permanent life insurance, however, comes in many shapes and sizes. While its primary purpose is to provide a financial benefit upon death of the policyholder, cash value withdrawals could potentially be used for college expenses, supplemental retirement income and other emergency financial needs. Permanent life insurance also provides additional options and features, which aren’t usually associated with term coverage.
Term insurance serves a purpose for those whose primary need is cost-effective protection against an unexpected death. However, if you outlive your term contract, purchasing another later in life likely will make the premiums more expensive. If you’re coming to the end of your contract, you may be able to exercise an option to convert to permanent insurance coverage without additional medical questions. This can allow you to still provide a benefit to your loved ones in the event of death and also leverage the additional benefits of permanent life insurance.
Thrivent Financial suggests learning more about these three types of permanent life insurance coverage and the benefits each can provide.
Whole life insurance
Whole life insurance provides coverage for the rest of your life, without needing to renew the policy. Your premiums will remain consistent throughout the lifetime of the policy and will build cash value you could potentially use for various other financial needs. These can include paying for a child’s college, using it for retirement income or saving it for a life-event purchase, such as a second home or fun vehicle.
Universal life insurance
Universal life insurance provides lifetime coverage and a cash value account like whole life insurance, but allows you flexibility in making premium payments. The policy often provides a broad range of payment options and a maximum and minimum premium. Within the policy’s guidelines, you can choose how much and when you pay your premiums. Reducing payments will affect the cash value of the policy and possibly the death benefit, but will allow you payment flexibility.
Variable universal life insurance
Variable universal life insurance offers lifetime coverage while taking advantage of the payment flexibility of universal life coverage, with an added investment option for your cash value account. Most policies provide several investment options, which are professionally managed to pursue a stated objective. Investment choices can range from conservative to aggressive, with many options in between. Remember, with any investment, there is risk involved, including loss of principal, which can affect the death benefit and cash value. These types of policies are an option for those who are looking for more investment flexibility in addition to the death benefit.
Additional types of polices exist, which can be of service to you and your family, but these three represent the most popular plans currently available.
Life insurance contracts can be complex, and you should use a trusted financial professional to ensure you understand exactly what you’re purchasing. However, life insurance can be one of the most generous gifts you give your family, ensuring they are taken care of after you are gone.
Thrivent Financial is represented in the Red Mountain area by Red Mountain Group, which includes Jeff Kolzow, Jeff Rodemeyer, Rick Aussprung and Colton Sheley, located at 2941 N. Power Road, Suite 105. For more information, call (480) 396-5333.