To determine your personal life insurance needs, request a quote for a personalized assessment of your financial needs.
Disclaimer: The information provided below is provided for general informational and educational purposes only and does not constitute legal advice. It is not intended to be all-inclusive. You should not act or rely on any information contained without first seeking the advice of a professional. Further, any hyperlinks contained in this Guide to outside resources on the Internet are provided as informational; Kevin Nilsen Insurance Agency does not endorse these sites.
Term Life Insurance
Term life insurance is basic coverage that generally does not build life insurance policy cash value. Consumers typically buy term life insurance to provide death benefit protection for a specific period of time. Premiums for term coverage are usually initially lower than other types of life insurance because the policy only provides a death benefit for a defined period. Later, some term insurance policies can be extended or converted into another type of coverage. However, if you renew or convert your coverage, your new premium will probably be higher than your previous coverage, and can continue to increase as you grow older.
Whole Life Insurance
As its title indicates, whole life insurance provides a lifetime death benefit for a set premium amount and builds cash value you can use while you’re living. The strength of a whole life insurance policy is that it provides guaranteed cash values and benefits in return for fixed premiums. A trade-off to consider is that a whole life policy may build cash value at a lower rate than alternative coverage options.
Guarantee Universal Life Insurance
Guarantee Universal life (GUL) insurance policies provide a death benefit as well as the opportunity to build policy cash value. This coverage is different from term and whole life insurance because, within policy limits, you can vary the amount and timing of your premiums. Typically, you can also increase or decrease your death benefit (based on your insurability). As long as you maintain sufficient policy value to keep your policy in-force, your policy’s flexibility enables you to pay premiums as your circumstances allow.
Your cash value in a GUL policy is determined by the amount of premiums you pay, the declared interest crediting set by the insurance company, and policy charges.
As a policy owner, you have more flexibility with GUL than with whole life, but you assume additional risk. GUL policies usually have fewer guarantees than whole life coverage, so you must carefully manage premium payments and any distributions taken to help ensure your policy will stay in-force. This type of life insurance policy usually offers a built-in no lapse guarantee that can last for the lifetime of the insured life or for a shorter period selected by the policy owner.
Index Universal Life Insurance
Index universal life (IUL) insurance includes the premium flexibility and adjustable death benefit that typical UL coverage provides. Plus, IUL can provide the potential for greater policy value growth than UL, with less risk to you than a Variable Universal Life policy.
IUL policies link the growth of policy value to the percentage change of one or more widely-followed financial market indices such as the S&P 500® Index, Nasdaq-100®, or Dow Jones Industrial Average. As a rule, IUL policies also include a fixed-rate interest crediting option.
Insurers offering IUL policies credit interest at rates that are linked to the percentage change of a selected index. These companies typically provide a “crediting rate zone” with a cap that represents the maximum crediting rate and a floor that represents the minimum crediting rate. Based on the percentage change in the index, interest will be credited between the cap and floor.
With IUL, your policy value can be credited with higher interest rates than whole life and UL policies typically provide. You may have greater downside protection than Variable Universal Life, but, compared to Variable Universal Life, the upside potential is more limited.
Index Universal Life Insurance coverage is typically purchased for one of two reasons:
- A death benefit index UL product solution is designed to provide affordable death benefit guarantees with the opportunity for cash value growth to provide financial flexibility.
- A cash accumulation index UL product solution provides a death benefit, and is also designed to accumulate policy value that can be used to supplement income, either as a withdrawal or policy loan, on an income tax-free basis1 later in life.
How much life insurance do you need?
By far, this is the most challenging question most people have to face when dealing with life insurance. Most people under estimate the amount they need and do not update their policy when there needs change. This can leave your family in a financial bind putting additional undue stress while you are mourning a lost loved one.