As we prepare for our retirement, it is important that we are aware of the types of Life Insurance available today to balance our individual blueprint for the future.

There were primarily four types of Life Insurance  coverage.

Whole life Insurance: -   Allows one to build a Cash Value on a tax deferred basis which can be used to supplement ones retirement. Because it is Guaranteed to last throughout ones lifetime it is usually the most expensive type of Life Insurance.

 Universal Life Insurance: – Allows one to purchase Life Insurance whose performance is tied to interest rates and which can be designed to last  for the rest of ones life. But because it was  based on interest rates which have greatly fluctuated over the years, Its coverage is  NOT Guaranteed to last for the rest of ones life.

Variable Life Insurance:- Allows an individual to use the various indexes of the stock market to determine how long an individuals life Insurance coverage will last.  Depending on the performance results of the stock market index chosen by the Insured the length of time  ones life insurance will last and how large or small their accumulated cash Value will amount to was dependant on that performance .  This product  because it was  based on market performance was NOT Guaranteed.

Term Insurance: – Allows an individual to purchase a fixed amount of Life Insurance for a Guaranteed premium and a Guaranteed death benefit  for a Guaranteed period of time . The time period can be 1 year least expensive , 5 , 10 15, 20 or 30 years, the most expensive.  Term Insurance has No opportunity to accumulate any Cash Value  and must end at age 80, which is why it is far less expensive than any of the other above mentioned types of Insurance contracts.  It is best used for a short period of time only.

        Most insurance sold over the last 20-25 years has been Universal Insurance the type whose Death Benefit was tied to an Interest rate, and whose coverage period was Not Guaranteed.  This type of Life Insurance  first made its appearance in the Mid 1980s as a result of  interest rates at Banks and CDs  paying in the vicinity of 15% . People unfortunately assumed that interest rates would always stay in that range and as a result of the consumer purchasing  and the salesperson selling those  products  based on a reduced  projected interest rate of  7-8%. However even those  numbers proved to be  too high as current interest rates have for the last few years paid  in the
4-5% interest rate range.  As a result  many a consumer wound up purchasing a Life Insurance contract that they were under the misimpression would last for the rest of their lives . However due to a much lower interest rate actually  earned by these policies over the last 20 plus years , these contracts have been expiring significantly sooner than had been anticipated.  The  end result being that many individuals are left without the valuable coverage that they thought they would have when they first originally purchased their contracts. 
     Many more individuals are now unfortunately on a ongoing basis  first finding out that their Life Insurance contracts are expiring far sooner than they had originally thought. In order to prevent this from happening to you and your Family it is absolutely important to review your current Universal Life Insurance contracts by obtaining whats known as a historic projection directly from your Life Insurance Company . This information as well as your annual statement will assist you in  determining  exactly how long your current  Life Insurance contract will last based on Actual performance rather than on what it was projected to earn.

      Today the Life Insurance Industry as well as many of its consumers and salespeople  learned a very hard lesson .  That being that  Guarantees do matter .  As a result  many Life Insurance companies have now switched to a Guaranteed universal contract, where the Death Benefit and the time the contract would stay in force for is contractually Guaranteed.
Although the premium is of course higher it is in my opinion well worth the extra premium.  The good news is that in many cases if the Insured is still in good health , he or she may do a 1035 Tax Free exchange of the cash value from their existing Non Guaranteed product into one of the new Guaranteed universal Iife Insurance products .

    It was important for you to keep your Life Insurance in force for the rest of your Life when you originally purchased your contract , therefore  I can not stress the importance of reviewing your current life Insurance portfolio with an experienced Life Insurance professional to make certain that your current contract does not expire before you do.
     
    Should you have any questions or need further assistance feel free to contact the writer at the link below.