Explore the Living Benefits
Whole Life Insurance
Whole life policies lock in the cost of insurance from the date it is effective and grows in cash value as long as the premiums are paid. While initially it may cost more than term or universal life policies, there is usually a break even point where the premiums paid equal and surpass the cash value in the policy. The best whole life policies increase the death benefit as the cash value increases. A further advantage is to access the living benefit which is the cash available in the policy which can be accessed income tax free. This cash can help defray college costs, augment retirement or even provide a down payment on a new home
While initially Term insurance appears to cost less, in the long run it is actually much more expensive. The percent of payouts on term policies is extremely small since most policies expire before the insured. It is a good option for a finite solution and can be purchased with a conversion rider to lock in guaranteed eligibility.
Universal Life Insurance
Introduced in the 1980's, Universal Life policies embody the ability to accumulate cash value and initially are priced closer to term policies. They can grow reflecting an index or based on the profitability of the writing company, but, unlike whole life policies, the cost of insurance continues to rise as the insured ages. Close monitoring of these policies is required to maintain their solvency since they can expire if the cost of insurance exceeds the value in the policy.