How it works

You can’t outlive coverage, as long as you pay your premiums. Offers different policies, so you can customize your coverage to meet your needs. The four main types of policy options are:

• Whole life: You pay a fixed premium (monthly or annual payment) and get a fixed death benefit (the amount of money provided when you die) for life. The policy also accumulates cash value, which you can use during your lifetime.
• Universal life: Offers a flexible premium and death benefit. This means you can change the amount you pay (and the amount of coverage you have within limits) if you need to. Most of these types of policies accumulate cash value.
• Indexed universal life: Provides many of the same benefits as a universal life policy, with one key difference—the way interest is credited to the cash value of the policy. Instead of being a fixed rate, the interest is based on stock market indexes. This means it potentially could accumulate more cash value over time.
• Variable universal life: Combines the flexible premium and death benefit of universal life with the performance of investment accounts. Because these policies rely on investment performance, they may accumulate more or less cash value than standard whole life or universal life policies.

Benefits

Most policies build cash value. A portion of the premium pays for the cost of the coverage and any remaining amount accumulates cash value. That money grows over time and can be accessed using withdrawals or policy loans, or used to reduce future premium payments.

Permanent policies offer tax advantages. In addition to providing tax-free money when you die, they also offer a way to grow your money faster in a tax-deferred account (the cash value). When done correctly, cash withdrawals from the policy generally aren’t taxed, either.

The cash value can be used in your lifetime (while still providing a benefit when you die). It can supplement your retirement savings, or help pay for things like medical expenses or your kids’ college education.

You control when and how you take payments from your policy. There’s no early withdrawal penalty, no required distributions, and payouts won’t lower your Social Security benefit.

Considerations

In exchange for the death benefit, life insurance products charge fees such as mortality and expense risk charges and surrender fees.

Withdrawals and policy loans may decrease the amount of death benefit and cash value. Surrender charges and other policy charges may apply to distributions taken from the policy. If the life insurance policy is a Modified Endowment Contract (MEC), distributions may be subject to income taxes.

Investing in variable universal life insurance involves risk, including possible loss of principal.

All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. Policy guarantees and benefits are not backed by the broker/dealer and/or insurance agency selling the policy, nor by any of their affiliates, and none of them makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company.