Buying life insurance to protect your family’s future may require you to make some important choices, including the type of life insurance you need. If you’re a first-time life insurance shopper, chances are you may not know which option may be the right one for you. Below is a breakdown of various life insurance options to help you find the best match.
Term life insurance has level premiums that last for a set number of years (the term). This life insurance includes a death benefit in the form of a lump sum of cash that’s paid out to a beneficiary by the life insurance company if you die while this coverage is active. This lump sum can be used for a variety of things, such as burial expenses, mortgage, and debt payments, living expenses for your family, or donations, generally tax-free. Additionally, you may have the option to convert your policy to permanent coverage before the term ends. After the term expires the policy may either terminate or automatically renew annually. If your policy is at the end of the term period, then you may be able to renew it for another term or convert it to a permanent policy.
Term life insurance is a great choice for many people because it’s simple and cost-effective. If you’re on a tight budget, or you’re a young person age 20-30 who is just starting to build your financial future, term life insurance can be a good match for you. Learn more about term life insurance by watching the video below.
Guaranteed universal life insurance is permanent coverage that provides the ability to guarantee a death benefit to any age up to a maximum as stated in the policy, as long as premiums are paid and the policy remains in force. Guaranteed universal life insurance generally is not designed to build up cash value.
Anyone with a need for death benefit coverage who desires to buy a policy that can cover their entire life with less costly premiums compared to other permanent products.
Indexed Universal Life is insurance offers death benefit protection, and the opportunity to earn tax-deferred interest on the interest credits linked to the performance of one or more stock market indices chosen. This feature gives you the potential for cash value accumulation plus, it offers downside protection in a poorly performing market because you do not participate directly in the stock market and the credited interest rate is never less than the minimum interest rate or zero percent (floor). The upside is limited by either an index cap rate or an index participation rate. The index cap rate is the maximum interest rate that could be credited to the policy. The index participation rate is applied to the index change in order to calculate the index credit. The premium paid in the policy is not directly invested in any index or the stock market.
If interested in providing a death benefit for your beneficiaries with additional benefits, an indexed universal life insurance policy might be attractive to you for its upside growth potential and downside protection.
Remember that you don’t have to make a decision about life insurance alone. If you feel lost or overwhelmed by the choices or complexities of the products, discuss the pros, cons, and possibilities with a financial professional.
The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.
Neither Midland National Life Insurance Company nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.
The tax-deferred feature of an indexed universal life policy is not necessary for a tax-qualified plan. In such instances, you should consider whether other features, such as the death benefit and optional riders make the policy appropriate for your needs. Before purchasing this policy, you should obtain competent tax advice both as to the tax treatment of the policy and the suitability of the product.
Indexed Universal Life Insurance products are not an investment in the “market” or in the applicable index and are subject to all policy fees and charges normally associated with most universal life insurance.
Life insurance policies have terms under which the policy may be continued in effect or discontinued. Permanent life insurance requires monthly deductions to pay the policy’s charges and expenses, some of which will increase as the insured gets older. These deductions may reduce the cash value of the policy. Current cost of insurance rates and current interest rates are not guaranteed. Therefore, the planned periodic premium may not be sufficient to carry the contract to maturity. For costs and complete details,refer to the policy or call or write Midland National One Sammons Plaza, Sioux Falls, SD, 57193. Telephone 800-923-3223