Life Insurance Comparison

While pricing is important, often a policy’s true value lies in the underlying features provided by the plan. Here are key features to look for when comparing plans with your advisor.

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Time Span 10-20 yearsTypically these plans come in 10-20 year terms, and are renewable to age 75 or 85. LifeTraditional universal life policies stay in force for life provided the monthly charges are covered. LifePolicies stay in force for life provided the monthly charges are covered. LifePolicies stay in force for life provided premiums continue to be paid, either by the policy owner or using the cash values of the policy.
Flexible Premium Schedule Premiums are typically flat for the duration of the initial term, and increase at each renewal, remaining flat during each term. Premiums are flexible. Typically, only the Cost of Insurance needs to be covered, but you can also pay more to invest in the tax deferred fund of the policy. Premiums are flexible. Typically, only the Cost of Insurance needs to be covered, but you can also pay more to invest in the tax deferred fund of the policy, or to purchase additional paid up coverage with cash values. Premiums are set at the beginning of the policy, and must be paid regularly, either by the policy owner, or by using automatic loans against the cash values of the policy or by surrendering the PUA coverage.
Stop and Go Premiums Premiums for term policies must be paid regularly, otherwise the term policy lapses. Provided you pay more than the minimum premiums, cash value begins to build in the tax deferred fund of the policy, allowing for premium holidays, because the insurer deducts monthly insurance charges from the fund. Provided you pay more than the minimum premiums, cash value begins to build in the tax deferred fund of the policy, allowing for premium holidays, because the company deducts monthly insurance charges from the fund. With EquiBuild hybrid life, even when the fund value is zero, the insurer will make automatic loan advances against the guaranteed cash values in the policy to cover the monthly charges. Whole life policies are designed to build up cash values. When a premium is missed, the insurer will make automatic premium loans (APL) against the cash values or surrender existing Paid Up Additional (PUA) coverage to cover any missed premium.
Selection of Investment Options, including a smoothed investment account Term policies do not include any investment options. Traditional universal life policies typically include a selection of investment options, and a small number include a smoothed return account option. EquiBuild hybrid life provides a wide selection of investment options including a smoothed return account. Some products offer a few hybrid features, but you and your advisor should look for a product with a selection of investment options, and ideally a smoothed account, which offers important cash flow flexibility for your future. While the cash values in a whole life policy result from the insurer investing a portion of the premiums in a smoothed account, whole life policies do not offer investment accounts for the direct investing of the policy owner.
Guaranteed Cash Surrender Values (GCSV) Term policies do not include any cash values. A small number of traditional universal life products include a Guaranteed cash surrender value when certain options are selected at the time of purchase. Hybrid life products, such as EquiBuild, include a built in guaranteed cash surrender value (GCSV). In addition, the policy owner may purchase additional coverage on policy anniversaries that also has GCSVs. With EquiBuild, the pricing and cash surrender values for each $1 of additional coverage that will be purchased are guaranteed when the policy is issued. All whole life products include guaranteed cash surrender values. In addition, the policy owner may purchase additional coverage on policy anniversaries that also have GCSVs. The pricing and cash surrender values for this coverage are based on the factors in effect on the date this additional coverage is purchased.
Shift from Single to Joint Last to Die Term policies don’t offer the option to shift from Single to Joint Last to Die. Some traditional universal life policies offer an option to underwrite a second life when the single life policy is being issued, to guarantee that a switch can be made in the future, from Single to Joint Last to Die coverage, regardless of the health of the added insured at the time of the switch. Some of those policies also include a contractual right to switch from Single to Joint Last to Die, but rates and availability are based on the health and lifestyle of the insured at the time of the switch. EquiBuild hybrid life offers an option to underwrite a second life when the single life policy is being issued to guarantee that a switch can be made in the future, from Single to Joint Last to Die coverage, regardless of the health of the added insured at the time of the switch. EquiBuild also includes a contractual right to switch from Single to Joint Last to Die under which, rates and availability are based on the health and lifestyle of the insured at the time of the switch. There are no contractual rights to switch from Single to Joint last to Die under a whole life policy.
Access CSV tax free in the event of disability Term policies do not have a cash surrender value. Under most traditional universal life policies, in the case of a major disability, you can access the balance of the tax deferred fund in your policy without any tax implications. In the case of a major disability, EquiBuild allows you to access the balance of the tax deferred fund, as well as the guaranteed cash values (provided you surrender the associated insurance coverage) without any tax implications. Whole life policies don't allow for tax free access to your cash values in the case of disability.
Investment option to provide a guaranteed fixed dollar monthly return for life Term policies do not offer any investment options to the policy owner. Traditional universal life policies offer a variety of investment options, but none of which include a guaranteed fixed monthly return for life. After the 10th policy year, you may invest policy funds in EquiBuild's Life Investment Option which offers a guaranteed fixed monthly return for the rest of your life. Whole life policies do not offer any investment options to the policy owner.
Initial Premiums Term policies offer the lowest initial premiums. This is due to the short duration of the terms. At the end of the term (10 or 20 years) renewing your term policy is often dramatically more expensive for the second and subsequent terms. Premiums are a fair bit more than term policies initially, but with Level Cost of Insurance (LCOI), those costs stay the same for life. Over time, the cost of renewing a term policy will become more expensive than universal life premiums. EquiBuild hybrid life can cost a bit more than traditional Universal Life. For a few dollars more this hybrid policy builds considerable early guaranteed cash values, while at the same time offering numerous additional benefits and added flexibility. Premiums for whole life are high when compared with other term and permanent policies, but offer significant long-term cash and death benefit values.
Summary The least expensive initial outlay, however premiums increase over time and coverage is temporary. Permanent coverage that can cover long term risk with accountability, and some flexibility if excess premium is paid. A product category that provides the Guaranteed Cash Surrender Values of whole life, with the accountability of universal life, and enhanced flexibility. Whole life can be effective for building long-term cash and death benefit values, however it lacks the accountability and enhanced flexibility of hybrid life.