4 Major Types of Life Insurance 

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• Work Coverage - This type of protection is offered through your job and is a great addition to permanent life insurance products.  Alone it is highly insufficient, because work insurance is typically only enforce while you work for that specific company - when protection is available to take with you it’s usually very expensive. Which means once you quit, retire or get fired you are left unprotected. In addition your employer owns the policy and any living benefits associated with it. 

• If the work policy is portable the ex employee or retiree will no longer receive the group discount rates available through the employer. This continuation of coverage typically requires the person to re-qualify at the retired age and with whatever health deteriorations have developed.  This means the coverage is going to be much more expensive, if they can even still qualify.  We recommend as a general rule of thumb if your employer offers life insurance for free or for a nominal amount it is generally worth adding to your financial portfolio. We caution against it being the only form of protection.

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• Term Insurance - Term insurance is essentially a temporary form of protection that is designed to last usually between 10 and 30 years. Depending on your age it may be renewable at a higher rate after the initial term is over and generally does not extend past age 70 with a few exceptions.

• Term insurance is great for specific goals in addition to a permanent form of protection in your portfolio. For example you may have a 30 year mortgage and would like to insulate yourself against the possibility of your death before the mortgage is paid off to ensure the home can stay in your family. We call this mortgage protection.

• Term insurance would be a great way to supplement income for the primary bread winner as something we call income protection for your family during working years in the event the primary income earner were to die.  Again this type of coverage is an accoutrement to a permanent policy, and is not ideal for anyone’s only form of protection.

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• Whole Life Insurance - Whole life insurance is a form of permanent life insurance that is available to those 14 days old to 89 years old. This type of policy builds equity cash value overtime. This means that this policy serves as not just a death benefit but a living benefit as you have access to this cash value once it has accrued sufficiently. It also can be used as your own private bank, Infinite banking is a process that allows you to take a policy loan from the cash value in your policy, pay it back, rinse and repeat an infinite number of times over your life.

• This unique tool provides the policy owner significantly more peace of mind because he or she never has to be at the mercy of traditional financial institutions when needing to borrow money; no credit check required and the money borrowed does not have to be paid back as long as the interest is paid.  Although if the policy loan is not paid back, the policy cash value cannot be used long term as an infinite banking system. 

• Please Note: The amount withdrawn does diminish the face amount (death benefit) of the policy unless paid back in full, for example: Lisa protects her family with a $50k face amount policy on herself, she borrows $5k in year 7 of the policy, so if she were to die in year 8 without repaying the loan, her policy would pay out $45k to her beneficiaries instead of $50k.

• The money borrowed is paid out tax free on the assumption that pre-tax dollars are used to fund the policy.  Additionally whole life insurance generally has the most liberal underwriting requirements and even offers a guaranteed issue variation for those unable to be approved by traditional carriers. As an added benefit; in very specific instances and with a handful of carriers whole life insurance can be over funded turning it into an effective investment vehicle that generally earns in the neighborhood of 4% +.

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• Universal Life Insurance - Universal protection is the baby of Whole Life and Term insurance,  There are three main types of universal life insurance;

• 1. Variable Universal Life - It offers no guarantees on protection length and just like the title varies depending on multiple occurrences that are completely out of your control - not recommend.

• 2. Guaranteed universal life - which usually lasts until 120 years old and does not build any cash value but is generally cheaper than whole life coverage,

• 3. Indexed Universal Life - This is our personal favorite, it has the benefits of term insurance by being significantly cheaper than whole life and even guaranteed universal life, while being a form of permanent life insurance that is designed to last until age 120. It builds cash value and can be overfunded like whole life insurance which would allow it to become an investment vehicle that mirrors the stock market, but insulates you from losing money. Win! Win! Win!

• Underwriting and approval process for this type of policy is available to smokers and non smokers but is generally reserved for healthy individuals between 18 - 70 years old.  Policy loans are generally cheaper with indexed universal life than with whole life and after 10 years become affectively free. 

• With policy loans being tax free, there is not a safer or more effective investment vehicle that we know of.      In the case of whole life and index universal your borrowed money continues to grow even after it is has been released from the company and used for whatever purpose you intended for it. 

• There is not another investment vehicle on the planet that grows money you don’t have in the investment container any longer.  You may be catching on to why this is our proffered product for those who qualify for it!

 

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