Life
Insurance Options
There are many different
life insurance options to choose from out there. MEG
financial will help you better understand your life insurance
options.
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Equity Indexed Life Insurance |
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Universal Life Insurance |
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Term Insurance |
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Whole Life Insurance |
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Variable Life Insurance |
EIUL is permanent life insurance with a cash value tied to the equity markets. It offers all the benefits of universal life with accumulation values tied to the S&P 500*Index.With equity-indexed universal life, you can reap the rewards of stock market type gains, but you're also protected in case of stock market loses with our minimum guaranteed interest rates. It's also flexible. You can vary the amount of premium you pay and also change the death benefit while the policy is in force. Equity-index annuity offers security, and a guaranteed return.
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This option offers greater flexibility than whole or term life. After your initial payment, you have the option of reducing or increasing the amount of your death benefit. If you choose to increase your benefit, you may have to provide medical proof that your health has not deteriorated. Also, after your initial payment, you can pay premiums any time and in any amount, as long as you don’t miss a payment. In some cases, there are limits to how much extra you can pay in advance premiums.
Term life insurance also known as “temporary insurance” is designed to provide low cost protection for risk of premature death and will pay a benefit only if the covered individual dies within the given term period. There is no cash value growth with term life insurance. Therefore, premiums for term are much lower over the short-run than any other type of life insurance. Actual costs of term insurance are based on the age, gender, lifestyle and health of the insured. After the initial term period, the cost of insurance will increase as the insured gets older. Over time, due to age increases, policy costs will eventually become cost prohibitive. Therefore, term insurance is best used in cases where the insurance is needed for a limited time.
Two important contractual features of term life insurance are the renewable provision and the conversion privilege. The policy’s renewable provision permits a covered individual to continue the insurance policy beyond the initial term period without providing evidence of good health. The costs beyond the initial term period will increase but the insurance company cannot cancel the insurance policy for any reason as long as it is renewable. Most policies are renewable to age 95.
The conversion privilege is as equally important and allows a policyholder to “convert” or exchange a term policy for a whole life or universal life policy without evidence of insurability. The conversion of a term policy is done at the insured’s current age and the premiums to convert to more permanent life insurance will be higher. The conversion privilege is especially important in situations where health changes impact an individual’s ability to get competitively priced insurance or especially when the individual is uninsurable.
There are several different forms of term life insurance policies. The types of term life include annual renewable term (ART), level term, decreasing term, return of premium (ROP) term, and lifetime guaranteed term insurance. Currently, the most popular term life policies are level term life, ROP term and lifetime guaranteed term.
For more information on term insurance see, “What are the types of Term Life Insurance?” or "What is term Life Insurance?"
Similar to annual renewable term and convertible term, whole life policies stretch out the cost of insurance over a longer period of time. With whole life policies; however, the costs are spread out over your entire life. Once your premiums are paid up, the excess dollars are invested by the company. In essence the insurance company is managing the investment of your excess premiums, and that’s why your choice of company is so important.
With this type of policy; however, the inflexibility of premium payments could become a burden if your expenses increase or if you lose your job.
Variable life policies offer fluctuating benefits. That’s because the insurance company invests your premiums. The insurance company offers you a choice of funds, in which your money will be invested. The amount of money your beneficiaries will receive and the cash value of your policy depend on how well the insurance company invests your money. There are both Universal and Whole Life versions of Variable Life.
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