Whole Life: life insurance participating, or par
- Dividends
- Builds Cash Value
- Guaranteed Cash Value Accumulation
- Endow, worth face amount in cash, at age 100 or age 121
- Increasing face amount
- Cash dividends option, after a period of years
- Paid Up Insurance
- Cash value protects policy if payments are missed
- Coverage guaranteed to age 100 or age 121
Pros: Since it builds on top of guaranteed cash value, par whole life has highest potential for cash value accumulation, flexible to changing circumstances; good to start for children, in 20’s, 30’s or upper income
Cons: much more expensive than Universal Life (UL) or Indexed Universal Life (IUL)
Indexed Universal Life: IUL
- Builds Cash value, higher upside potential with index crediting then current assumption UL
- some guaranteed cash value accumulation, not all years
- Flexible on payments
- Option for increasing face amount, option B
- Cash value protects policy if payments are missed
- Policy lapses with zero cash value
Pros: less expensive than Whole Life, flexible to changing circumstances
Cons: if underfunded and or performs poorly can lapse without additional premium; higher cost of insurance charges than UL, periodic review is advisable, more complex, more choices to make than current assumption UL
Universal Life: UL, current assumption UL
- Builds Cash value
- Flexible on payments
- Option for increasing face amount, option B
- Cash value protects policy if payments are missed
- Policy lapses with zero cash value
Pros: less expensive than Indexed UL, flexible to changing circumstances, lower cost of insurance charges than Indexed UL
Cons: if underfunded and or poor interest credited can lapse without additional premium
Whole Life: non-participating, non-par
- guaranteed cash value accumulation
Pros: fixed premium, guaranteed cash value accumulation, endow at age 100 or age 120; good for final expense
Cons: level death benefit; cash surrender value matter little compared to death benefit
Guaranteed Indexed Universal Life: GIUL
- cash value accumulation, generally not in 80’s and older
Pros: lifetime guarantee, or set guarantee year
Cons: lower casher value accumulation than Indexed UL
Guaranteed Universal Life: Guaranteed UL, GUL, no lapse guarantee UL
- Little to no cash value accumulation
Pros: least expensive lifetime guarantee age 120+, also least expensive setting guarantee to age 90, 95, 100, 105, 110 or whatever length desired; ability to structure longer guarantees, and at older ages than term life, for example 30 year guarantee at age 59
Cons: missed premium payments lapse policy, little to no cash value accumulation
Return of Premium Term: ROP term
- guaranteed cash value accumulation
- reduced paid up insurance with some carriers
Pros: At the end of the term you get all your premiums back; builds cash value, mostly in the last years of the term period
Cons: death benefit same as term if you pass away, cash value not included; more expensive than term, especially after mid 40’s