Term Insurance – Inexpensive life insurance that provides coverage at a fixed rate of payments for a limited period of time. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.
Whole Life – A life insurance policy which is guaranteed to remain in force for the insured’s entire lifetime, provided required premiums are paid, or to the maturity date. Premiums are fixed, based on the age of issue, and usually do not increase with age. Normally you pay premiums until death, except for limited pay policies, which may be paid-up in 10 years, 20 years, or at age 65. Also, sometimes called “straight life,” or “ordinary life.” Whole life insurance belongs to the cash value category of life insurance, which also includes universal life, variable life, and endowment policies.
Indexed Universal Life – A type of fixed universal life insurance product, which usually provides a downside guarantee of 1% or less, but earns potentially high upside interest crediting, based on the performance of an outside stock index (such as the Standard and Poors 500, a.k.a. S&P 500). Indexed life products have a floor of zero, so a consumer’s money is always protected from downturns in the market. However, indexed life also has upside interest crediting potential of 15% or more (although still limited).
Indexed Annuities – An Indexed Annuity is a type of tax-deferred annuity whose credited interest is linked to an equity index — typically the S&P 500 or international index. It guarantees a minimum interest rate (typically between 1% and 3%) if held to the end of the surrender term and protects against a loss of principal. An equity index annuity is a contract with an insurance or annuity company. The returns may be higher than fixed instruments such as CDs, money market accounts, and bonds but not as high as market returns.
Long Term Care – An insurance product that helps provide for the cost of long-term care beyond a predetermined period. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.Individuals who require long-term care are generally not sick in the traditional sense, but instead, are unable to perform the basic activities of daily living such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking. About 70 percent of individuals over age 65 will require at least some type of long-term care services during their lifetime.
Disability Insurance – A form of insurance that insures the beneficiary’s earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work. For example, the worker may suffer an injury, illness or condition that causes physical impairment or incapacity to work. It encompasses paid sick leave, short-term disability benefits (STD), and long-term disability benefits (LTD). Statistics show that in the US a disabling accident occurs on average once every second. In fact, nearly 18.5% of Americans are currently living with a Disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.