Because the most important people in your life will depend on it, life insurance is one of the most significant purchases you will ever make. Most people are completely unfamiliar with the critical questions they should ask before choosing a life insurer. In fact, most people spend far more time researching for a vacation home than life insurance.
TermLifeApp wants you to make the most informed decision possible when it comes to this essential part of your financial foundation. When you purchase life insurance, you are not just buying the coverage itself. You are also buying the experience, financial strength and claims paying ability of the insurance company.
Individual life insurance plays an integral role in helping Residents, Fellows & Attendings fulfill their lives, not only by removing some of the “unknown,” but also by providing tax-smart wealth transfer opportunities. TermLifeApp’s wide range of insurance options- including term life insurance, universal life, and whole life – help meet these objectives. The distinguishing difference between these types of insurance is the amount of market exposure and the price (term being the least expensive in the short term). For a comparison, please refer to the chart below.
Term Life Insurance provides death benefit coverage for a fixed rate of premium for a limited period of time. Time periods are typically 10, 15, 20, 25 and 30 years. Rates are usually guaranteed for the chosen time period. After the period expires, the previous rates are no longer guaranteed and the rates increase substantially. Term Insurance is the least expensive way to buy life insurance and is ideal for Residents, Fellows and Attending Physicians.
Term Life – Return of Premium (ROP)
Return of Premium Term Insurance pays your premiums back at the end of the level premium period you select. As long as you live to the end of the term, you have the option to get your money back: guaranteed and tax free. At the end of the level premium period, you may choose to surrender your policy for cash value – guaranteed to be equal to the premium you’ve paid over the years. Or, you can take advantage of other options to extend your coverage.
Whole Life Insurance
A form of permanent life insurance, whole life insurance features guaranteed premiums, death benefits, and cash. Whole life insurance policies give you the potential to receive dividends, which increases the value of the policy when the insured is living or provide an increased death benefit for your beneficiaries.
Universal Life Insurance is a type of permanent life insurance where excess premium payments above the cost of insurance is credited to the cash value of the policy. Each month the cash value is debited the cost of insurance charge and expenses, then credited with interest. The interest rate is determined by the insurer, but has a contractual minimum. Premium payments are flexible and the policy remains in force as long as there is sufficient cash to pay the cost of insurance and expenses.
Indexed Universal Life
A type of Universal Life Insurance where the earnings credited to cash value are based on a financial index such as the S&P 500 stock market index. This differs from standard Universal Life Insurance where the cash value is credited with interest based on the insurance companies investment portfolio.
Types of Life Insurance Comparison
|Term Life||Return of Premium||Whole Life||Universal Life|
|This is a general description of coverage only for educational purposes. A complete statement of coverage is found only in the policy when it is issued.|
|Coverage period||1 to 30 Years||1 to 30 Years||Life or up to 100||Life or up to 100|
|Guaranteed Death Benefit||Yes||Yes||Yes||Yes|
Cash value growth is tax-deferred
Cash value growth is tax-deferred. Can be depleted to pay premiums
|Premiums||Can increase periodically or be guaranteed to remain fixed||Can increase periodically or be guaranteed to remain fixed||Fixed (level)||Varies, up to customer (subject to federal tax laws)|
Eligible to earn dividends but not guaranteed
|Advantages||Simple, afforable coverage for a period of time||Simple, afforable coverage for a period of time and premiums are returned at the end of the policy term asumming death benefit has not been paid out||Lifetime coverage with access to cash value||Flexible coverage with flexible premiums|
|What it's Used For||Appropriate for short-term protection needs||Appropriate for short-term protection needs||Lifetime protection needs||Lifetime protection needs and flexibility|
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