ALWAYS FREE FINANCIALS

Term life insurance offers coverage for a specific period, typically ranging from 10 to 30 years. During this term, the policyholder pays a fixed premium. If the policyholder passes away within this period, the designated beneficiary receives a death benefit. This benefit can be utilized in various ways, such as covering mortgage payments, funding education, or managing daily expenses.

The policyholder selects a term length that aligns with their lifestyle needs. Premiums remain fixed throughout the policy unless the policyholder opts for changes. If the policyholder passes away during the term, the beneficiary receives the death benefit. If the policyholder outlives the term, renewal is possible but with higher premiums based on their current age. Beneficiaries often include a spouse or child, but can also be a trust, charity, or friend. The death benefit is typically disbursed tax-free, unless premiums were paid with pre-tax dollars.

Indexed Universal Life (IUL) is a form of permanent life insurance providing both a death benefit and a cash value account. The cash value can increase based on the performance of a stock market index, like the S&P 500 or the NASDAQ Composite, allowing it to earn interest linked to these indices.

IUL offers policyholders greater control over cash value growth compared to traditional life insurance plans. They can modify premium payments and death benefits within specified boundaries. The insurance company establishes a participation rate, which dictates the portion of the index’s gains credited to the policy. This rate can range from 25% to over 100%. IUL policies frequently come with an interest rate guarantee.

Whole life insurance is a type of permanent life insurance policy that offers lifelong coverage as long as premiums are paid promptly. It ensures a guaranteed death benefit for the insured’s beneficiaries. Part of each premium contributes to the policy’s cash value, which grows tax-deferred at a fixed interest rate. The policyholder can access this cash value during their lifetime and use it as they see fit.

Whole life insurance premiums are generally higher than term life insurance, but they remain constant throughout the policy. Certain whole life insurance policies, known as participating policies, can earn dividends, which can be used to enhance the death benefit or offset premium costs. While these policies do not qualify for dividends, they are typically more cost-effective than participating policies.