When choosing the appropriate life insurance policy, consideration must be given to the needs that are being filled. Will life insurance be needed to fund retirement needs, estate creation, payment of estate taxes and settlement costs, business buy-out, keyman coverage, etc.
Features: Level or adjustable premium and coverage, cash values. Cash values increase based on the performance of certain assets held in the company’s general account.
Need: Suitable for long-term obligations or sinking fund needs: estate growth, estate liquidity, death taxes, funding retirement needs, etc.
Features: Level premium, level coverage, cash values. Cash value typically increases based on insurance company’s general asset account portfolio performance
Need: Suitable for long-term obligations, such as surviving spouse lifetime income needs, estate liquidity, death taxes, funding retirement needs, etc.
Features: Level premium, decreasing coverage, no cash value.
Need: Suitable for financial obligations which reduce with time such as mortgages or other amortized loans.
Annual Renewable Term
Features: Increasing premium, level coverage, no cash value.
Need: Suitable for financial obligations which remain constant for a short or intermediate period such as income during a minor’s dependency.
Variable Life and Variable Universal Life
Features: Level or adjustable premium, level coverage (can be increased by positive investment performance. Cash values are directed to a choice of investment accounts (bond, stock, money market, etc.) by the policy owner.
Need: Suitable for long term obligations and those who are more active investors and for estate growth and death tax liquidity.
Single Premium Whole Life
Features: Entire premium is paid at purchase, cash values, level coverage.
Need: Provides protection as well as being an outstanding asset accumulation vehicle.