Selecting the right type of life insurance
will ensure that upon death you have planned for surviving family members and loved ones. The basic concept and calculations of "how much life insurance" to buy really depends upon each persons individual financial situation. When you visit with Dwayne at Alabama Insurance Services,
he will take the time to learn about your situation and only then make a recommendation that fits what you express as your goals to ensure the policy delivers a proper amount of benefit to your family.
Other popular types of life insurance are whole life and universal life. There are many other options available so it is best to first review the definitions below to understand the basic concepts and then get with us to discuss the details, options and receive a quote.
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. Learn more here.
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 provides a lifetime death benefit for a set premium amount and builds cash value you can use while you're living.
The main feature 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. Learn more here.
Index Universal Life Insurance
Index universal life (IUL) insurance includes the premium flexibility and adjustable death benefit that standard UL coverage includes. In addition, IUL can provide the potential for greater policy value growth than UL, while having less risk than a Variable Universal Life policy. Learn more here.
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 these 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 basis later in life.
For more details contact us at Alabama Insurance Services today.