Designed to create the lowest premium per death benefit for a guaranteed but limited amount of time, typically between 10 and 30 years. Some Term policies contain convertibility features allowing the insured to convert the policy to a permanent one without additional underwriting or insurability questions.
Whole life insurance
Provides a death benefit that lasts the lifetime of the insured, guaranteeing a benefit is paid at the death of the insured. These policies can be designed to purchase a maximum amount of death benefit for premium paid or to minimize the death benefit and maximize cash value accumulation to the IRS limits to insure the cash value and death benefit cannot be taxed in the future. Cash value accumulation in whole life policies is not subject to volatility like market investments because it is based largely on actuarial science. This makes high cash value whole life an excellent compliment to traditional investments to forge through the bear markets in retirement. The tax free death benefit is also a powerful tool in advanced estate planning especially given recent and future proposed legislative tax changes.
indexed universal life insurance
Unlike whole life these plans earn returns in the form of dividends from stock indexes with a floor and cap rate insuring competitive growth with no losses. They can be designed to maintain a desired death benefit for the life of the insured or maximize cash value accumulation inside the policy which can be borrowed tax free much like a ROTH IRA as can whole life. Life insurance also provides an immediate death benefit and even a disability benefit if you choose. Not only are cash value loans tax-free, they are not 1099 reportable to the IRS. Funds are also accessible without penalty at any age unlike most traditional investments for both whole life and universal life.