What the majority of those searchers don’t understand is there are actually two main types of insurance policies that can offer guaranteed coverage to age 100 and beyond.
They are called:
- Whole Life Insurance
- Universal Life Insurance
Universal Life Insurance – A Cheaper Alternative
Ninety-nine percent of the permanent insurance I sell is Universal life insurance with something called a no lapse rider. In other words, you’re guaranteed not to have a lapse in coverage as long as you pay your minimum premium as stated in your policy. What I like about universal life insurance guaranteed to age 100 or 120 is that it’s easy to understand. It’s very similar to term life insurance policy, but for the rest of your life. It does have a cash value account attached to it, but if you’re just paying the minimum and aren’t looking to accumulate cash in an insurance policy, you don’t really need to understand that component. Just think of it like term to age 100.
Paying Extra for Cash Value
Whole life insurance, on the other hand, has a cash value component. You essentially overpay for the cost of insurance in the early years of your policy so that enough cash accumulates to cover the cost of insurance when you reach your 70’s and 80’s. However, it’s typically double the price as universal life insurance. Do yourself a favor and just buy universal life if you’re looking for permanent coverage. Whole life insurance is suitable for a very select few.
The nice thing about whole life is that there are no surprises. The premiums are fixed. The death benefit is fixed. The only variable is the dividends, which are not guaranteed.
Some ways you can take advantage of dividends are to:
- Use them to reduce premiums
- Take cash dividends to supplement your income
- Or buy paid-up additions with them, which increases your death benefit and generally accelerates your cash value.