Life Insurance In A Nutshell
WHAT IS LIFE INSURANCE?
In its basic form a life insurance policy is a contract between the policyowner and the insurance company which states that in exchange for timely payment of premiums, the company will pay a death benefit when the insured person dies. Benefits will be paid to the beneficiary(ies) named by the policyowner.
WHAT TYPE OF LIFE INSURANCE IS AVAILABLE?
There may seem to be a bewildering number of life insurance product choices out there, but there are four primary types of coverage available. They include:
Group Life Insurance: Offered Through Employers
If life insurance coverage is available through your employer, it is a good first step toward protecting your family; however, you may find the need to supplement it with individual coverage.
|Group Life Advantages||DisadvAntages|
|Relatively Cost Effective.||Maximum face amounts typically apply and may fall short of actual coverage needs|
|Medical tests and underwriting may not be required.||Coverage may end when employment is terminated.|
|Accessible at the workplace.||During employment, the employer may choose to discontinue coverage at any time.|
Term Life Insurance: Provides Coverage for a Specific Period of Time
Term's cost-effectiveness makes it the most popular form of coverage, but for those who have a lifelong need for protection, permanent life insurance may be a better choice.
|Term Life Advantages||Disadvantages|
|Typically the most cost-effective form of coverage.||Financial needs may extend beyond the specified term.|
|Often can be renewed annually after the term code.||Over time, the cost to renew coverage may continue to increase.|
|Many level term periods are available to meet short- and longer-term needs.||There is typically no cash value available in the policy.|
Whole Life Insurance: Provides Lifetime Coverage.
Whole life insurance may be a good choice for those with lifetime financial responsibilities or those who wish to transfer wealth.
|Whole Life Advantages||Disadvantages|
|Designed to last a person's entire lifetime as long as premiums are paid.||Lack of flexibility offered with other types of permanent life insurance.|
|May build cash value, which can be accessed through loans or withdrawals.||Cash value may be negatively affected by low interest rates and inflation risk|
|May pay dividends.||Typically higher premiums than term life and universal life insurance.|
Universal Life Insurance: Provides Lifetime coverage
Universal life insurance may be a good choice of those with lifetime financial responsibilities or those who wish to transfer wealth, and for people who would like flexibility built into their policy.
|Universal life Advantages||Disadvantages|
|Designed to last a person's entire lifetime as long as sufficient premiums are paid.||Coverage may not last if interest rates are low.|
|May build cash value, which can be accessed through loans or withdrawals.||Cash value may be negatively affected by low interest rates and inflation risk.|
|Flexible premiums and death benefit.||Typically higher premiums than term life insurance.|
Life insurance is issued by Symetra Life Insurance Company (SLIC) and is not available in all U.S. states or any U.S. territory. SSI and SLIC are affiliates and are both located at 777 108th Avenue NE, Suite 1200, Bellevue, WA 98004-5135.
Guarantees and benefits are subject to the claims-paying ability of Symetra Life Insurance Company.
Withdrawals or loans on modified endowment contracts (MECs) may be subject to federal income tax and a 10% IRS penalty on amounts taken prior to age 59½.