LIFE POLICIES AT A GLANCE
Indexed Universal Life (iul)
The Indexed Universal Life policy is permanent coverage that accrues cash value with every premium payment. A small percentage of each payment is set aside in the policy and accrues with interest. The interest rate is set per the performance of an Index ex. S&P 500, Nasdaq, Blackrock, Morgan Stanley, etc… You will pay your regular premium each month and any cash needed to offset a change in premium will be paid from the cash value that has accrued. The policy supports itself. You can adjust your premium once there is enough cash value and lower your monthly premiums if needed. This cash value is yours. You can withdraw it, take it as a loan against the policy, or surrender it for its cash value if you no longer need it.
whole life
Whole Life coverage is exactly what it sounds like, it’s for your whole life. You will not outlive a Whole Life policy. The premium, death benefit, and interest rate are all guaranteed to never change. The policy will be good until age 120. Whole Life policies will accrue cash value with the fixed interest rate assigned to the policy. This cash value can only be used as a loan against the policy or by surrendering it. Whole Life is the most expensive option dollar for dollar but is excellent for children under 18 and adults over 40 with health issues.
term
Term Life Insurance is the exact opposite of Whole Life. It is temporary coverage for a specific period of time. The premium will adjust after the set term duration. There are Annual Renewable policies that the premium will change every year. There are Term policies that the premium will change every 5 years. The most common Term policies come in set term durations of 10, 15, 20, 25, 30, 35 years. Once the term selected ends, the premium, will adjust and you will be forced to cancel the policy. Term insurance is the least expensive type of life coverage but you need to be ok with possibly outliving the policy and losing your coverage. You will also lose the money invested in the policy once you cancel.