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‚ÄčLife Insurance

Types of Life Insurance Policies

In choosing the type of life insurance policy you purchase, consideration must be given to the need which is being filled, e.g., creation of an estate, payment of estate settlement costs (federal and state death taxes, last illness and burial costs, probate fees, etc.), business buy-out, key- man coverage, etc.

Decreasing Term

Level premium, decreasing coverage, no cash value: Used for financial obligations which reduce with time, e.g., mortgages or other amortized loans.

Annual Renewable Term

Increasing premium, level coverage, no cash value: Used for financial obligations which remain constant for a short or intermediate period, e.g., income during a minor’s dependency.

Long-Term Level Premium Term

Level premium, level coverage, no cash value: The annual premiums are fixed for a period of time, typically 5, 10, 15 or 20 years. Used for financial obligations which remain constant for a short or intermediate period, e.g., income during a minor’s dependency.

Whole

Level premium, level coverage, cash values: Cash value typically increases based on insurance company’s general asset account portfolio performance. Used for long-term obligations, e.g., surviving spouse lifetime income needs, estate liquidity, death taxes, funding retirement needs, etc.

Single Premium Whole Life

Entire premium is paid at purchase, cash values, level coverage: Provides protection as well as serving as an asset accumulation vehicle.

Universal Life

Level or adjustable premium and coverage, cash values: Cash values may increase, based on the performance of certain assets held in the company’s general account. Used for long-term obligations or sinking-fund needs: estate growth, estate liquidity, death taxes, funding retirement needs, etc.

Indexed Universal Life

Level or adjustable premium and coverage, cash values: Cash values may increase, based on the performance of an underlying stock or bond “index.” The death benefit may increase or decrease (but not below a guaranteed minimum) depending on investment performance. Used for long-term obligations or sinking fund needs, estate growth, estate liquidity, paying death taxes, funding retirement needs, etc.

Variable Life and Variable Universal Life

For more information about Variable Life and Variable Universal Life, please contact David via phone at (215) 540-1188 or email at [email protected]


Indexed universal life policies are not stock market investments and do not directly participate in any equity investments. Such contracts offer the opportunity to earn credit linked to the growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees are backed by the financial strength of the insurance company. Investors are cautioned to carefully review an index universal life policy for its features, costs, risk and how the variables are calculated.

Past performance is no guarantee of future performance or of values of indexed life insurance. Cap rates are illustrative in nature, are not guaranteed, are subject to change. Cap rates and participation rates may vary. Indexed universal life policies are not stock market investments and do not directly participate in any stock or equity investments.

There may be a surrender charge imposed during the first several years that the client owns the fixed annuity contract. Withdrawals prior to age 59 ½ may result in a 10% federal tax penalty, in addition to any ordinary income tax. The guarantee of the annuity is backed by the claims paying ability of the issuing insurance company. Although it is possible to have guaranteed income for life with a fixed annuity, there is no assurance that this income will keep up with inflation. Optional riders may increase the internal cost of the product.