.
Different
types of Life Insurance
Life insurance provides a degree of
financial protection against the certainty of death and can help survivors
achieve specified financial objectives. Life insurance death benefits are
usually income tax free and can be used to complete a retirement plan,
generate lifetime income, pay off the mortgage, and provide funds for
childcare, college educations and more. Life insurance policies that
accumulate cash value can often provide tax-advantaged money to help meet
retirement or emergency cash needs.
Many factors are involved in determining
the amount and type of life insurance that's right for you. To help people
better understand life insurance, Principal Life developed the From Here
to SecuritySM program - complete with a step-by-step
educational booklet and interactive calculator. These tools, along with
your financial representative, can help you identify the amount and
specific types of life insurance that will help you achieve your financial
goals.
Types of life insurance available from
Principal Life include:
Universal Life Insurance
- Delivers flexible death benefits and
flexible premiums (as long as the cash values are enough to cover
insurance costs)
- Usually includes a cash value account
that accumulates at a floating rate of interest, with a minimum rate
guarantee
- Accumulates cash value that may be used
to help pay for the cost of insurance, riders and other policy expenses
- May provide secondary guarantees such as
no-lapse protection that allows for you to dial in your coverage period
from 10 years to age 100
Variable Universal Life Insurance
- Combines the flexibility of universal
life with the performance of investment accounts - with a focus on
accumulating cash values
- Is performance-based and may outperform
or underperform a traditional whole life or universal life policy
- Has flexible death benefits and flexible
premiums (as long as the cash value of the policy is adequate)
- Directs net premium to investment
accounts, with potential growth in cash value and death benefits tied to
the accounts' performance, except in the fixed account there is no
guaranteed rate of return and you could lose money
Survivorship Life Insurance
- Covers two lives, where the death
benefit is payable on the death of the second life
- Is commonly used in estate planning,
where the first spouse to die leaves his or her estate to the surviving
spouse, utilizing the unlimited marital estate tax deduction; the estate
then becomes taxable upon the death of the second spouse
Term Insurance
- Provides protection for a specific term
(typically one, five, ten or twenty years)
- Produces a death benefit that is
generally free from income taxes
- Is often renewable after the policy term
without evidence of insurability
- Usually costs less than permanent
insurance in the short-term
- Can usually be converted to permanent
insurance with the same company during part of the life of the policy
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