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Life Insurance Made Simple

In all its forms life insurance has one core benefit it pays an income-tax-free death benefit directly to your beneficiary when you die.

 

Life insurance also gives you options that can reduce taxes immediately, build tax-advantaged income for retirement and/or provide assets to offset estate taxes.

The two major types of insurance coverage are term insurance and cash value insurance

Term Insurance

Provides protection for a specific time period

Generally less expensive than cash value, term insurance is similar to renting a property rather than owning. You pay for it during the term of the policy (e.g. five, 10, 15 years, etc.) and when the term expires so does your policy (with no equity).

Generally purchased to cover specific needs (e.g. children until they become adults, a mortgage until it is paid off, or other short-term obligations)

 

Cash Value Insurance

Can provide coverage for a lifetime while enabling you to potentially build up cash value.  The cash equity you build can be accessed for emergencies and other needs.

 

Four common types of cash value insurance include:

 

Variable universal life 

typically designed for people with a longer investment time horizon as investment options will fluctuate in value with the market (similar to the way a mutual fund investment would) and therefore carries higher risk.

 

Variable second-to-die

often used for estate planning purposes, insuring two lives and paying the death benefit after the death of the second insured. The fact that one policy covers two lives often provides premium saving over two individual policies.

 

Whole life

offering a guaranteed death benefit and guaranteed cash value (albeit at lower values than you might earn in long-term variable account)

 

Universal life

with the flexibility of variable universal life, but with a secured fixed rate of return for investors who prefer less risk

 

To help determine which type of life insurance you need (and how much you may require) consult with your professional financial advisor for recommendations.

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This information is provided for informational purposes only.  The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor.  The views expressed may not be suitable for every situation.

American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer.

This communication is published in the United States for residents of  North and South Carolina only; and this advisor is licensed only in  the states of North and South Carolina." 
Roy P. Janse 
Financial Advisor 
--------------------------- 
American Express 
Financial Advisors, Inc. 
IDS Life Insurance Company 
1150 Haywood Road 
Greenville, SC 29615 
Phone: (800) 554-0805 x141 
Fax: (864) 234-7139 

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