Even though I greatly appreciate the client's trust, I still take the time to explain in easy-to-understand terms all the different types of life insurance and what they do that sets them apart from one another. Let's do this quickly and you'll understand (in general terms) life insurance in a few minutes.
First, there are 2 main types of life insurance: Term and permanent.
Term life insurance is just a death benefit for a certain amount of time (10, 20, 30 years) that you decide upon when purchasing. That's all it does. No cash value, no borrowing against it, nothing. Term life insurance is very reasonably priced.
Permanent life insurance is where things get a little tricky because there are differing kinds of permanent coverages. The idea is that they all have the potential to build cash value. How they do that is the difference.
Whole life - Very safe, very slow growth, most expensive to purchase later in life.
Universal life (traditional) - Growth based on interest rates. Less expensive than whole life but don't expect a lot of growth in a low-interest environment.
Variable universal life - Growth based on investment accounts. Premiums are comparable to traditional universal life but can lose money. Can only be purchased by a securities licensed agent.
Indexed universal life - Growth based on an index that reflects the market. Can be a steady and quick grower of cash value with a floor (minimum) and a cap (maximum).
That wasn't too hard to understand was it? The key to it all is that you have enough coverage to help your family if you were to die too soon and to make it affordable. If you have any questions, give us a call or look us up at Surf Financial Brokers.
