Life Insurance Greenville SC is a way to provide financial support for your loved ones after you die. It can also help fund retirement. It is important to reevaluate your life insurance needs at least once a year or after significant events.
Permanent policies like whole life or universal life have a cash value component that builds over time and can be accessed as needed. However, there are many factors that influence life insurance rates.
Term insurance is an affordable life insurance policy that provides coverage for a set period of time. It can help pay for mortgages, debt, and other expenses, or it can provide a lump sum to your family when you die. It’s important to understand the different types of life insurance before purchasing a policy.
There are two main types of life insurance: term and permanent. A term policy covers you for a certain period of time, such as 10, 20 or 30 years. The death benefit and premium are guaranteed for the entire term, unless you cancel the policy or make changes to it. Permanent policies, on the other hand, build cash value over time and may offer partial death benefits while you are still alive.
Most term policies have an underwriting process, in which the insurer evaluates your age, health status (you’ll be asked to undergo a medical exam), lifestyle, and other factors. Depending on your condition, you might have to wait for approval or pay a higher premium than if you were healthy. If you have health problems, you might want to consider a guaranteed or simplified issue policy, which doesn’t require a medical exam and asks only a few questions about your health.
Some term policies can be extended for a longer period of time, but the premiums will usually increase. Some also have a return of premium feature, which allows you to get part of your premium back at the end of the term.
Many people buy life insurance for a variety of reasons, including covering a funeral or burial cost, settling estate taxes, indemnifying loan debts, providing income to children or spouses after their deaths, or paying for medical bills and other expenses. Others buy it to pay for business or partnership buyouts or to fund retirement plans.
While it is not necessary to have a life insurance plan, you should consider getting one for the following reasons:
Whole life insurance
Whole life insurance, also known as ordinary or straight life, offers permanent coverage with a fixed premium that doesn’t change. This type of policy typically includes a cash value component that builds up over time and may earn annual dividends. In addition, the death benefit is guaranteed to your beneficiaries. The death benefit will be paid out to your beneficiary no matter when you die, so long as you’ve paid all your premiums.
However, whole life insurance policies are often more expensive than term policies and offer less flexibility in terms of premium payments and death benefits. For this reason, it’s important to review your options carefully and consider the pros and cons of a whole life policy before purchasing one.
Unlike most other types of investments, life insurance payouts are generally tax free for your beneficiaries. Nevertheless, you should be aware that some state laws may impose taxes on some or all of the death benefits received by your family members. If you are concerned about estate taxes, it’s a good idea to consult an attorney or financial advisor to help you make the right decision.
Whole life insurance has two primary components: a death benefit and a cash value component. A portion of each premium goes toward the death benefit, and the remaining amount is set aside to build up a predetermined cash value. The cash value of a life insurance policy can be used for other purposes, such as to pay for college or fund retirement, making it an integral part of your financial plan.
Many life insurance companies offer a variety of different whole-life policies. Some provide a fixed premium for a certain period of time, such as 20 or 30 years, while others offer a level rate for the entire duration of the policy. In either case, be sure to look for a “participating” policy that will pay you dividends, which can be used to increase the death benefit.
Another option is a modified life plan, which allows you to choose a higher or lower premium for the first few years of the policy. This can help you to avoid the steep premium increases that come later in a standard whole life policy. These plans are typically sold as a family policy and include protection for your spouse and children.
Universal life insurance
If you are looking for life insurance that offers flexibility and permanent coverage, a universal life policy may be a good option. However, be aware that it can also be more expensive than whole life insurance. You can find out more about this type of policy by working with a financial advisor or life insurance agent. They can help you figure out whether or not a universal life policy is right for your needs.
Unlike whole life insurance, universal policies typically have a cash value component that can be withdrawn or borrowed against. However, if the cash value is used up or is no longer sufficient to cover the cost of insurance and policy administrative charges, the policy will lapse. A lapsed universal life policy is returned to the owner, minus any surrender charges.
To keep a universal policy in force, you can add riders to it. Some of these riders will offer additional guarantees, while others will provide greater investment opportunity. One example is a no lapse guarantee rider that, as long as you pay the required minimum annual amount, will keep your death benefit in place even if your cash value drops to zero. This is often included in a guaranteed universal life policy and is also found in group universal life policies that are offered through employers or as part of workplace benefits programs.
Other riders can include collateral assignments, split dollar agreements, and pension funding. You can even use a universal policy to fund a buy-sell agreement. Some insurers will also offer indexed universal life contracts that credit interest to the positive movement of financial indexes such as the S&P 500, Russell 2000, or Dow Jones.
Depending on how your life changes, you may be able to adjust your premium payments or increase the death benefit as needed. This is another advantage of universal life over whole life insurance, which usually doesn’t allow these types of adjustments. You can also choose to take a lump sum distribution instead of receiving the death benefit in regular installments. This is often a better option for those who need to cover immediate expenses such as funeral costs or medical bills.
Variable life insurance
A variable life insurance policy is a type of permanent insurance that includes both death benefit protection and investment features, all rolled into one tax-advantaged product solution. This is a good choice for people who want to protect their loved ones but are looking for a long-term investment vehicle that can take advantage of the growth potential of the markets. However, it’s important to note that this type of policy can also be a risky investment. It’s essential to understand the risks involved in variable universal life insurance before purchasing it.
Like other types of permanent insurance, a variable life insurance policy can provide a guaranteed death benefit to your beneficiaries. However, unlike whole life insurance, variable life insurance offers flexible premiums and a cash value account that can be invested in different asset options. These assets are often mutual funds. The cash value in a variable life insurance policy grows on a tax-deferred basis, meaning your beneficiaries won’t pay taxes on the death benefit. However, withdrawals and other charges may be subject to income taxes.
A downside of variable life insurance is that the death benefits can decline if the investment subaccounts perform poorly. This is because the amount of cash in your account is tied to the performance of these investments. If the death benefit drops below a minimum level, your policy will terminate or lapse. It’s important to ask your financial professional for details about the variable life insurance policy you’re considering. You can also request a copy of the prospectus for more information about fees and expenses, as well as the death benefit, investment options, and other policy features.
Depending on your needs, you may be better off with a traditional whole life or term insurance policy. These policies offer a level death benefit and stable premiums, but they come with a higher cost than other types of permanent insurance. In addition, the amount of death benefits you receive will be dependent on how much you invest and the overall market return.
If you decide to buy a permanent life insurance policy, it’s important to fully understand the product before making a decision. Make sure you consult a fee-only life insurance consultant who can explain the pros and cons of different policies. The consultant can help you choose the best permanent life insurance policy for your specific circumstances.
