Life Insurance & Annuities

Understanding the differences between Life Insurance Plans

Term Life Insurance

Temporary insurance is the most common and characteristically most affordable. Coverage is only for a set period of time, ex: 10 yrs, 20 yrs or 30 yrs. Does not accumulate a cash value, but has the highest payout vs. premium in case of a sudden death. The two forms of term are: level term and decreasing term.

Whole Life Insurance

This is permanent insurance with high level premiums, death benefits, and a tax deferred cash value. Essentially there are two values to consider: the face value (aka death benefit) and the cash value that can be borrowed from. There are many different types of whole life insurance, such as Family Income Policies, Modified, Vanishing Premium, Single Premium, Graded Premium, etc.

Annuities offer specific benefits.
Learn about the common factors below.

Common Factors Across Different Types of Annuities

An annuity is a contract between you and an insurance company
Opened with funds that the insurance company will then invest
During the savings or "accumulation" phase you are making payments into the annuity, although some can be opened with one lump sum
Because of the insurance benefits of annuities there are associated fees
Death protection options
Living benefit protection options
Payments distributed during the payout or "annuitization/income" phase
Primarily designed as a retirement investment option
Tax-deferred earnings
Lifetime income options