Life Insurance and its many uses besides Life Insurance
Maryland Annuity Resource offers Life Insurance and all variations of Life Insurance in Maryland, Washington D.C. and Virginia. We believe that Life Insurance is the foundation of any individual or family investment strategy. Life Insurance itself insures the life of a loved one and creates an estate once issued. There are many uses and types of Life Insurance and below are the types and uses of each. If you would like to discuss your options or just want a quote, we would be happy to help you.
Types of Life Insurance and its many uses
Term Life Insurance is the most cheapest and simple products that are offered by insurance companies.
Life Insurance is the first level or foundation of financial security. Life Insurance is a contract between you and an Insurance company. The insurance company will promise to pay a designated beneficiary a sum of money which are benefits upon the death of the insured person. Depending on the contract, benefits can also be triggered by events such as terminal illness or critical illness diagnosis. The policy holder agrees to pay a premium, and the insurance company promises to pay the benefits.
The most common exclusions from liability of claims are suicide, fraud, war, riot, and civil commotion. Premiums can be applied either monthly, quarterly, semi annual or annually.
Whole Life Insurance is a life insurance policy that remains in effect for the insured’s whole life and requires premiums to be paid in each year. These policies have guarantees at issue relating to death benefits, cash surrender values, and premiums required to keep the policy in force.
A portion of your premium will go towards the insurance cost and a portion will go into a investment determined by the insurance company and the contract details.
Universal Life Insurance are life insurance policies that are characterized as flexible premium adjustable life insurance. The excess of premium payments received above the cost of insurance is credited to a cash value account each month with interest.
That interest rate is declared at the start of the policy and usually is guaranteed not to go below a floor rate. The account is debited each month for the cost of insurance even if you don’t send in premium.
You will usually have two options for death benefits. Option A will pay out the cash value of the contract to beneficiaries. Option B will pay out the value of the cash account and face amount of death benefit stated in the policy. Some have no lapse guarantees and paying the minimum premium is rarely sufficient to build up significant cash values.
Indexed Universal Life are life insurance policies that offer death benefit protection when death occurs. Your premium payments pay for the cost of insurance, credited to the fixed account, credited to an index account.
The Fixed account is usually credited with a declared interest rate determined by the carrier between 3-5%. The Index account will have a cap rate and floor rate. So funds that are credited cannot earn more than the cap or less than the floor rate.
IUL’s offer increased account value accumulation, downside protection, and the potential of tax free retirement income. Its like having a savings account with much greater growth potential than any bank. Interest credited is locked into place and cannot go down. These accounts are no risk, fully liquid, IRS approved, and tax free. Life Insurance proceed or cash value are not taxable.