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Protection

Life insurance is a powerful part of a sound financial plan. It provides critical protection for loved ones and can build cash value that can be used for other future needs.

College Funding

Permanent life insurance can help clients save for their children's or grandchildren's college education, while providing critical death benefit protection and additional flexibility that can complement traditional college savings vehicles.

Combined Strength of Two Policies

Purchasing two life insurance products can be an effective solution to help address the different concerns a client may have and ensure they are fully protected.

Myth: Term is the least expensive insurance”-

Reality: While the initial cost may be lower, over time term can actually be more expensive since the cost goes up as you age or as your health changes.

Term Insurance:

Because term life insurance premiums can initially be lower than the premiums for the same amount of permanent life insurance coverage, many people believe that all of their protection needs can be met with term life insurance. They may decide to take the difference between what they would have spent on the permanent life insurance compared to the term life insurance premiums, and invest it elsewhere.

However, this approach requires commitment and not everyone follows through with investing the difference on a consistent basis. Due to this challenge and the limitations of term life insurance, this may not be the best approach for those who need permanent coverage throughout their lifetime.

  • You are essentially “renting” your insurance, just like renting a home.
  • It is designed to fill a temporary need for protection.  
  • You build no equity/cash value.
  • You don’t own it; rent (premiums) will increase over time.
  • Term insurance is designed to expire before you do.
  • It often has a low cost but since a term life policy is only in force for a limited period of time, coverage will either end (leaving you unprotected) or become very expensive.
  • It can be compared to renting a home: you have use of it, but you will never own it; you don’t gain equity, and the payments will increase over time.
  • When a term life policy ends or the premium increases, there is no guarantee that you will be able to purchase a new policy - especially if there have been changes in your health or occupation.

Permanent Insurance: Protection + Possibilities

  • Builds cash value over time
  • You can borrow from the Cash Value
  • Has tax deferral benefits associated with the cash buildup
  • Locks in the cost of the coverage
  • Is designed to remain in force until a claim is paid
  • It can be compared to owning a home: you build equity over time, you lock in your premium payment, and at a certain point in time you can own it outright without making additional mortgage payments.

Permanent Life Offers:  

  • The death benefit to the beneficiary is income tax-free.
  • The money accumulates income tax-free.
  • It is fully protected from creditors.* 
  • Loans from cash value are tax free
  • Permanent life insurance can help you throughout your life by providing cash value accumulation that can be accessed and used for:
    • College funding
    • Supplemental retirement income
    • Starting or helping to support a business
    • Making a down payment on a home
    • Emergencies

Your cash value grows by one of these four ways:

  • Whole life -  fixed interest which are low yield and low risk of about 4 to 6%. This is like the “merry-go-round” at the fair; safe and not very exciting.
  • Universal life (UL and/or Universal Guaranteed)—these use items such as 52-week T-bills with short-term interest rates of 3 to 6%.
  • Variable life* - has a cash value that is invested in a number of sub-accounts that are similar to mutual funds; the returns could be negative (“exposed”), may lose value, but also has no upside ceiling, meaning it could have significant gains. This is like the biggest, fastest roller coaster full of excitement and chance.
  • Indexing (IUL) - the new kid on the block! This uses the S&P 500 and provides upside potential with cash value linked to market index. It has downside protection and is never exposed to market losses! You cannot lose money with this one.

*Creditor protection laws varies by each state.

Life insurance permanent policies contain exclusions, limitations, reductions of benefits and terms for keeping them in force.  Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. Loans are income tax free as long as policy is not a “modified endowment contract” (MEC) and policy must not be surrendered, lapsed, or otherwise terminated during the lifetime of the insured, and withdrawals must not exceed cost basis. Partial withdrawals during the first 15 policy years are subject to additional rules and may be taxable. Excess policy loans can result in termination of a policy.  A policy that lapses or is surrendered can potentially result in tax consequences. You should consult a qualified tax professional for tax advice on your own personal situation.