Life Insurance

 

In the quest for financial and economic security, investors are exposed to varying degrees of risk.

 

 

 

LIFE INSURANCE

In the quest for financial and economic security, investors are exposed to varying degrees of risk. Traditional life insurance products provide investors the opportunity to hedge against these risks, including a premature death. Variable life insurance provides death benefits and cash values that vary in accordance with the performance of a selected investment portfolio. Variable life insurance is a security and is offered by prospectus only. Shares of variable life insurance subaccounts are subject to investment risk, including possible loss of principal amount invested, and will fluctuate in value. In addition, Variable Life insurance can provide significant tax-advantaged accumulation opportunities during the owner’s lifetime.

Life insurance can provide:

• tax-deferred accumulation of wealth (cash values) within a policy;

• tax-free access to accumulated policy value for income or emergencies;1

• access to cash values via withdrawals and loans during the insured’s lifetime;

• tax-free payment of the death benefit to the beneficiaries, possibly a solution to business or estate transfer issues;

• access to top money managers and the ability to direct one’s own investment within the policy (variable life policies only);

• asset allocation models and the ability to transfer assets at no cost between the subaccounts of the policy (variable life policies only).2

The payment of a death benefit is subject to the claims paying ability of the issuing insurance company. Life insurance is used in personal, business, and estate planning situations. Its flexibility and unique capacity to mitigate risk can make it a critical component of an investor’s overall financial plan.

 

Life Insurance: Term or Permanent*

At some point in time we will all wonder if we should buy life insurance. Life insurance can possibly offer peace of mind, ensuring that your debts or loved ones will be taken care of in the event of your death. But before you buy, you need to ask yourself if you’ll qualify, and whether you should purchase term or permanent life insurance.

 

Term Life Insurance

Term life insurance is an insurance protection that pays a predetermined sum if the insured dies during a specific period of time. Upon the death of the insured, term insurance pays the face value of the policy to the named beneficiary. All premiums paid are used to cover the cost of insurance protection.

The main characteristics of term life insurance are as follows:

  • Temporary insurance protection;
  • Low cost;
  • No cash value;
  • Usually renewable; and
  • Sometimes convertible to permanent life insurance.

 

Permanent Life Insurance

Permanent life insurance provided lifetime insurance protection, but the premiums must be paid on time. Most permanent policies offer a savings or investment component combined with the insurance coverage. This component, in turn, causes premiums to be higher than those of term insurance.

The main characteristics of permanent life insurance are as follows:

  • Permanent insurance protection;
  • More expensive to own;
  • Builds cash value;
  • Loans are permitted against the policy;
  • Favorable tax treatment of policy earnings; and
  • Level premiums.

*source: http://www.investopedia.com/articles/pf/05/012405.asp

1A contingent deferred sales charge may be assessed against the contract value of a variable product if the policy is surrendered early. The termination value may be more or less than the amount of the premium payments made to the contract. Loans will reduce the policy’s death benefit and cash surrender value, and have tax consequences if the policy lapses.

2Variable life insurance is a security and is offered by prospectus only. Shares of variable life insurance subaccounts are subject to investment risk, including possible loss of principal amount invested, and will fluctuate in value.

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