Not all life insurance policies are created equal
Man is Mortal. That makes life insurance a little unique and interesting, doesn’t it? We purchase things like health insurance, car insurance and home insurance, then hope we never have a need to use them. Life insurance is different because it’s a widely accepted fact that, sooner or later, each one of us will die.
So many choices. When it comes to life insurance, there are many options. You may have heard terms like “whole life insurance,” “term insurance,” or “variable insurance,” but what do they all mean? And what are the differences? Well, first let us point out what they have in common: all life insurance policies provide payment to a beneficiary in the event of your death. Except for that basic tenet, the differences between policies can be major.
What are the types of life insurance policies available?
The five major types of life insurance are: Whole Life, Term Life, Indexed Universal Life, Variable Life and Universal Life.
Typically a policy holder makes equal premium payments for life. The death benefit and cash value are predetermined and guaranteed (subject to dividend paying ability of the issuing company). Once a policy is purchased, the policy holders only responsibility is to pay the fixed premium on a monthly or annual baisis–depending on how the policy was designed.
Term insurance coverage lasts for a specified amount of time based on it’s term. If a 30 year term policy is purchased, the policy would only last for 30 years. If the policy holder passed away during the 30 year term, a death benefit would be paid out to the beneficiary(ies). But, if the policy holder were to outlive (or live past) the 30 year term, no death benefit would be paid to the beneficiary. This type of insurance is purchased for the death benefit only. Premium payments for term insurance are usually at a low cost and no cash value is accumulated.
Similar to whole life, a variable life policy requires a level of premium payment for life. Returns are not guaranteed as there is an investment fund that is tied to a stock or bond mutual-fund investment.
A universal life policy is a variation of whole life insurance (permanent insurance) with more flexibility to change premium payments, death benefit and cash values to be changed or altered at any time. Also unlike whole life insurance, universal life insurance combines term insurance with a money market-type investment that pays a market rate of return.
Why do people own life insurance?
The primary purpose of life insurance is to protect your dependents financially in the event of your passing.
What are beneficiaries and contingent beneficiaries?
A policy holder will name a beneficiary (person or entity) to receive the death benefit upon your passing. Often times beneficiaries are spouses, children or family members. A contingent beneficiary can also be named as the “next-in-line” to receive the death benefit of your policy in the event your first beneficiary passes before you.
Bank On Yourself®:
Demystifying The Whole Life Policy Concept
Not all life insurance policies are created equal. In fact, Bank On Yourself® is not a traditional whole life policy. Bank On Yourself®-type policies have riders or options added on that significantly turbocharge their growth compared to traditionally designed policies. Whereas, traditional whole life insurance tends to grow at a much slower rate and can be very expensive to purchase!
Also with Bank On Yourself®, no two policies are alike. Yours would be custom-tailored to help you reach as many of your short-term and long-term goals and dreams as possible, in the shortest time possible.
Here are some helpful videos and article with more information about Bank On Yourself®: