Life Insurance

Let’s start with the basics. Insurance transfers the risk of financial loss from you and your family to the insurance provider. With life insurance, although death is certain to occur for everyone, it is the timing of that loss that is uncertain. All life insurance policies pay a benefit upon the death of the insured. Some types of policies also offer living benefits, which can be used while the insured is still alive.  

There are two major types of life insurance: term and permanent. 

Term insurance is temporary; it ends after a certain time. Terms can be annual, or they can be anywhere from 5, 10, 20 or 30 years long. Premiums are generally less expensive than permanent life insurance. It can be compared to renting: the policy is only active for the agreed-upon term. If you pass away after the term expires, no death benefit is paid to your beneficiaries. During the term, you may be able to convert your term policy into permanent coverage, but that depends on the insurer and the type of term policy.  

Permanent life insurance, on the other hand, is designed to stay in force for your entire lifetime, and there are a myriad of available options. Different products on the market offer various ways to structure the premium payments to fit your individual circumstances and coverage needs.  

Let’s review a few of the more common types of permanent insurance. Traditional Whole Life has fixed premiums, meaning they will not change over the insured’s lifetime. Conversely, Universal Life is a more flexible policy which features adjustable premiums and coverage.  

 Both Whole Life and Universal Life allow policy owners to take loans from the cash value. Additionally, Universal Life allows withdrawals from the cash value. These are called partial surrenders. They do not necessarily require repayment, but partial surrenders may reduce the death benefit.  

Depending on the type of policy and how it is funded, permanent life insurance gives you the ability to allocate the cash component into market indices or subaccounts. These types of policies include Equity-Indexed Universal Life and Variable Universal Life. These have the potential for higher rates of return versus fixed accounts, however they can be very complicated, and the death benefit is not always guaranteed.  

There are many coverage options available, and these are just a few. Our expert team is here to help you navigate through the process of determining what kind of insurance and how much coverage is necessary for you and your family. We understand the nuances of the different policy options, and we shop the market for you to ensure you can make the best choice for your family’s unique needs. Talk with your Larson advisor today to see how you can diversify your portfolio through a life insurance policy.