Services
Life insurance
Term, whole life, and indexed universal life — including the costs and risks.
Start with the need
Life insurance is primarily a way to replace income or fund an obligation if someone dies. The first questions are how much would be needed, for how long, and by whom — not which product.
The main product types
- Term — coverage for a stated period at a stated premium. Coverage ends when the term ends unless it is converted or renewed, often at a higher cost.
- Whole life — permanent coverage with guaranteed elements defined in the policy. Premiums are higher, and any non-guaranteed elements such as dividends are not promised.
- Indexed universal life — permanent coverage with flexible premiums and index-linked crediting inside the policy, subject to caps, spreads, participation rates, and policy charges.
What has to be understood before buying permanent coverage
- Premium requirements: paying less than planned, or skipping premiums, can put the policy at risk.
- Policy charges: cost of insurance, administrative charges, and rider charges are deducted from the policy and generally increase with age.
- Guaranteed versus non-guaranteed values: illustrations show both. Non-guaranteed columns are assumptions, not promises.
- Illustration assumptions: a change in crediting or charges changes the outcome.
- Lapse: if the policy value cannot cover charges, coverage can end — potentially with a taxable gain.
- Loans and withdrawals: they reduce the death benefit and cash value, and loan interest accrues.
- A policy that becomes a modified endowment contract (MEC) is taxed differently, and distributions may be taxable and subject to an additional tax.
- Ongoing review: permanent policies need periodic review to confirm they remain on track.
Any decision to replace an existing policy involves a separate replacement review, including new underwriting, a new surrender period, lost benefits, and possible tax consequences.