The choices can be confusing.
Presented by the MEMBERS Financial Services Program* at SLFCU
Did you know that September is Life Insurance Awareness Month? Although it does not have to be part of everyone’s estate plan, life insurance can be useful, especially to support those who are (or may become) dependent on your income in the event of your death. It can also be a helpful cash source to pay for funeral expenses, debts, and outstanding taxes.
SO MANY CHOICES
You may have heard terms like “whole life insurance,” “term insurance,” “variable insurance,” or “universal insurance,” but what do they all mean? All life insurance policies have one thing in common: they provide payment to a beneficiary in the event of your death. Except for that basic tenet, however, the differences between policies can be major. Following is more information about the most popular types.
WHOLE LIFE INSURANCE
This type of insurance is guaranteed for your entire lifetime (not just a portion or a “term” of it), providing that the required premiums are paid. Premiums are typically fixed and usually do not increase with the person’s age, but whole life policies tend to cost more than term policies. This is because they grow the “cash value” and, after a certain period of time, you can borrow against or withdraw from the benefits. Because of the relatively high premiums, they may not be attractive to those who need to pay off large debts.
Rather than covering your whole life, “term” insurance covers a pre-determined portion of your life. If you die within that term, your beneficiaries receive a death benefit. If not, generally, you get nothing. To put it simply, term insurance allows you to purchase more coverage for less money.
VARIABLE LIFE INSURANCE
Variable life insurance is a permanent insurance (i.e., a plan that does not expire, like term insurance can). Unlike whole life insurance, it allows you to invest the cash value of your policy into “subaccounts” such as money market funds, bonds, or stocks.Variable insurance offers a bit of control, as the value and benefit depend upon the performance of the subaccounts you select. Significant risk could also be involved, though, since the performance of your subaccounts cannot be guaranteed.
UNIVERSAL LIFE INSURANCE
With this type of insurance, it all comes down to flexibility. It is permanent life insurance that provides access to cash that can build up tax-deferred value over time. You can choose the amount of coverage you feel is appropriate, and retain the ability to increase or decrease it as your needs change (subject to minimums and requirements). You also have some flexibility in determining how much of your premium goes toward insurance, and how much is used within the policy’s investment element.
SO, WHICH POLICY IS RIGHT FOR YOU?
Many factors come into play when deciding what type of life insurance will suit your needs. The best thing to do is speak with a trusted and qualified financial professional.
MEMBERS Financial Services* advisors located at SLFCU can assist you in looking at all of the factors and help you choose the policy that will work best for you. Call 505.293.0500 or 800.947.5328 x3930 for a no-cost, no-obligation appointment.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
* Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. FR-2544172.1-0519-0621
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