Life Insurance

Life insurance typically provides life-long protection, and is known by a variety of terms:

• Whole Life
• Universal Life
• Variable Universal Life

As long as you pay the necessary premiums, the death benefit always will be there. These policies are designed and priced for you to keep over a long period of time.

If you don't intend to keep the policy for the long term, low-cost term insurance may be a better option for you.

Most permanent policies, including whole life, universal life, and variable universal life, have a feature known as the cash value or cash surrender value. This feature, which is not found in most term insurance policies, provides some options:

• If the policy is canceled, in total or in part, the insured may receive cash value as a lump sum of money. There may be little or no cash value if the policy is surrendered in the early years.
  
• If the insured can no longer pay the premiums, they may use the cash value to continue their current insurance protection for a specific period of time or to provide a lesser amount of protection to their lifetime.
  
• In most cases, the insured may borrow from the insurance company, using the cash value of the life insurance as collateral. Unlike loans from most financial institutions, the loan is not dependent on credit checks or other restrictions. If the loan remains unpaid upon the death of the insured, beneficiaries will receive a reduced benefit.

Keeping important family documents organized and up to date may not always be at the top of your mind. But doing so can help save your loved ones time and stress following your death or disability and help ensure that your assets are allocated according to your wishes.

Related Information

The cash values of many life insurance policies may be affected by a company's future experience, including mortality rates, expenses and investment earnings.

Face value typically refers to the death benefit of the policy, meaning how much beneficiaries receive upon the death of the insured. Cash surrender value is the amount of money that has accumulated (tax deferred) inside the policy and is the amount of money the owner would receive (before taxes) if the policy were cancelled.

Cash surrender value is different from cash value or accumulated value in that most policies have surrender charges for 10 to 20 years that reduce the total "cash value" or "accumulated value" down to the cash surrender value.