There is a life insurance route made for every walk of life. However, there is a specific type of policy known as permanent life insurance that may meet your needs. These types of life insurance plans never expire, so they will last the entire life of the policyholder.1 Read on to find out how permanent life insurance works, the different types of policies available, and what Aflac has to offer. Show
What is a Permanent Life Insurance Policy?Permanent life insurance plans usually have the basic components of other types of life insurance policies, like the death benefit and some type of savings element.2 The name refers to the fact that these policies are meant to last indefinitely, or until the policyholder passes. Types of Permanent Life InsuranceThere are a few different ways one can secure a permanent life insurance policy. First, you must determine which type of plan makes the most sense for your unique needs. Here, we offer Aflac® Life Solutions – Whole Life. Aflac does not offer universal life insurance, but we do offer portable whole life plans tailored to your personal needs, and the ability to skip a medical exam. Whole Life InsuranceA common type of permanent life insurance is whole life insurance. Aflac offers whole life insurance that lasts the policyholder’s entire life, builds cash value in a secure account, and has regularly scheduled premiums to keep the policy active. Universal Life InsuranceAnother type of permanent life insurance policy is universal life insurance. The main difference between whole and universal life insurance is that premium payments can be adjusted over time with universal life insurance. You may be able to scale your rates down or skip a payment if you need to pay for other large expenses, like college tuition or a mortgage. This benefit can give you greater flexibility, but it may negatively impact premium payments over time.3 In these life insurance plans the beneficiary only gets the death benefit when the policyholder passes.4 Universal life insurance may be particularly helpful if you are able to work with a financial professional that can help you determine how to best invest your cash value. The two types of universal life insurance are indexed and variable.5 Aflac does not offer universal life insurance, but we can point you toward our whole life insurance policy if you have different coverage goals in mind. Chatting with an agent about your options can make this decision easier. Variable Universal Life InsuranceVariable universal life insurance has flexible premiums and a savings component, but more factors influence how the savings can grow. The savings portion, or cash value, grows based on the investment methods that you choose.6 There is usually a minimum and maximum growth rate allowed in this type of permanent life insurance policy. More variables lead to more risk but can also lead to more reward.7 Indexed Universal Life InsuranceThe second type of universal life insurance is indexed universal life insurance. This type of policy has the same basic parts as a permanent life insurance policy, but the cash value grows based on a chosen stock market index.8 If the chosen index is performing well, the account will grow. If not, some companies allow it to grow at a minimum rate.9 How Much Does Permanent Life Insurance Cost?Like all life insurance plans, permanent life insurance costs depend on a variety of factors like age, medical history, family size, and location. To get a better idea of what your plan might cost, try our life insurance cost calculator. Last Updated 6/23/2022 Overview Life insurance provides financial protection for loved ones should the policyholder die. Once a policy is issued, an insurer may not cancel it based on a change in the policyholder’s health status. There are several types of life insurance, allowing consumers to find a policy type that works for their personal situation. Term Life Insurance Term life insurance provides coverage over a specified period of time. Typically, term insurance policies are written for 1, 5, 10, or 20 years, or to a specified age (such as 65). Term policies only pay a death benefit to the beneficiary if the policyholder dies during the specified term and so is a good choice when the policyholder needs protection for a temporary time or a specific need. Term insurance has the advantage of being more affordable than permanent insurance, particularly in the early policy durations. There are a few different types of term life insurance policies:
Whole Life Insurance Whole life insurance provides a fixed amount of insurance coverage over the life of the insured, with the benefits payable only upon the insured’s death. Whole life policies are designed to build tax deferred cash value, which is the accumulation of premiums collected less applicable expenses and applicable insurance charges and they allow for borrowing against the cash value of the policy. As mandated by state law, whole life policies contain nonforfeiture values payable in cash or some other form of insurance in the event the policy lapses from nonpayment of required premiums or the policy owner decides to surrender the coverage. There are several types of whole life insurance policies.
Universal Life Insurance Universal life insurance is permanent life insurance combining term insurance with a cash account earning tax-deferred interest. Under most contracts, premiums and/or death benefits can fluctuate at policyholder discretion. The policy stays in effect as long as the cash value is sufficient to cover the cost of insurance and loans can be taken against the cash value of the policy. There are also variable universal life insurance products which are kept in an insurer's separate account. The interest accrued under these contracts are not guaranteed and may in fact be negative since interest is a function of the change in the market value of the separate account assets. Recent years have seen the rise of indexed universal policies, which have both fixed and variable features. Under these policies, interest credits are linked to external index of investments, such as bonds or the S&P 500. These index products do provide an interest rate guarantee. Status Life insurance and annuities are regulated by state insurance commissioners. The NAIC encourages states to adopt model laws and regulations designed to inform and protect insurance consumers. The NAIC Life Insurance Disclosure Model Regulation (#580) requires insurers to deliver to purchasers of life insurance information that will improve the buyer's understanding of the policy and ability to select the most appropriate plan for the buyer's needs. The NAIC Life Insurance Illustrations Model Regulation (#582) provides rules for life insurance policy illustrations that will protect consumers and foster consumer education. The NAIC Consumer Credit Insurance Model Regulation (#370) protects the interests of debtors and the public by providing a system of rate, policy form, and operating standards for the transaction of credit life insurance. The NAIC Life Insurance Illustration Issues (A) Working Group, created in 2016, continues to explore how the narrative summary required by Section 7B of Model (#582) and the policy summary required by Section 5A(2) of Model (#580) can be enhanced to promote consumer readability and understandability. This includes how they are designed, formatted and accessed by consumers. The Working Group is currently discussing draft proposals to amend Model #580 to incorporate a policy overview requirement that encourages (not mandates) the use of a template by providing a safe harbor if the template is used. The NAIC Life Actuarial (A) Task Force was formed to identify, investigate and develop solutions to actuarial problems in the life insurance industry. After adoption of the Standard Valuation Law (#820) by 46 states representing 87.5% of industry premium prior to July 1, 2016, the Standard Valuation Law became operative on January 1, 2017. The Valuation Manual is revised annually to add clarity to existing requirements and enact new requirements. The Task Force has adopted revised Generally Recognized Expense Table (GRET) factors for 2021. Can you skip payments on a universal life policy?The difference between whole life and universal life insurance is that, as your financial situation changes, you can increase or decrease your premiums, or death benefit payout amount. You can also skip premium payments as long as the cash value will cover the cost of your insurance for that month.
What happens if I miss payment life insurance?What happens if you miss a payment on your insurance policy? In short - your insurance policy can be cancelled, and you are not covered. Insurers call this a “lapse”. Missing a premium payment means that if something happens such as you become ill or pass on, the claim may not be paid.
What does a policyholder allow in a universal life insurance policy?Universal life insurance can offer a guaranteed death benefit, allows you to tap into the policy's cash value, and may give you the flexibility to adjust your premium payments and death benefits.
Does a universal life insurance policy have a fixed surrender value?This can be a good strategy if you want to maintain permanent coverage even when you have a smaller income during retirement. The downside is that if your cash value runs out, you can get stuck paying the full cost of insurance and there's no surrender value to the policy.
|