Although the chief purpose of life insurance is a death benefit, life insurance products have grown to include a multitude of extra features, like cash value accumulation and living benefits. Because of this, a life insurance policy may not only be a smart investment for your beneficiaries in the event of your death, it can be a valuable resource for you during life.
However, with all these modern life insurance products and innovations, it can be challenging to find an appropriate life insurance policy that fits your goals. This is where meeting with a trusted Gugma Financial Services Professional can be helpful. With decades of experience, we provide you the best life insurance options to address your unique needs.
Types of Life Insurance
Term Life Insurance
Term life policies grant coverage for a specified duration. Once this period expires, the contract is terminated. Some companies may provide an option for renewal. It may even be possible to convert a term contract to another policy type. Term life policies do not accumulate cash value.
Permanent Life Insurance
Unlike term, permanent life insurance grants coverage for a policyholder’s entire life, as long as the policy premiums are paid. This type of life insurance features a cash value accumulation account, meaning that premiums paid into the contract grow at an established rate. This cash value may be accessed through policy loans or withdrawals.
There are few common versions of permanent life insurance, including:
Provides a death benefit and cash value accumulation at a set rate.
This is similar to a fixed indexed annuity, in which accumulation of the cash value is tied to the performance of a specific stock market index, such as the Standard and Poors or Dow Jones Industrial Average. While the interest rate is based on positive stock movement, there is no direct market exposure.
Provides flexible premium options with an adjustable death benefit, in addition to cash value accumulation.
As long premium targets are reached, a death benefit will be issued, even if the cash value is exhausted.
With this type of insurance contract, payments that go over the pure cost of the policy are placed in the company’s general investment account.