The concept of life insurance is actually pretty simple – pay today to protect your loved ones after you're gone. But with so many types of life insurance out there, choosing life insurance for your situation can be hard. We can help you.
How do I choose the right life insurance product?
Coverage and features to consider
Basic protection – Need life insurance just to provide financial support to your survivors if you die unexpectedly? Term insurance generally provides coverage for a specific length of time, at a lower cost than other types of insurance.
Market participation and cash value − If you need insurance protection for the long term, want the potential to build cash value (money from which you can borrow, even during your lifetime) and have a little more money to spend, consider permanent life insurance. There are three types of permanent life insurance policies:
- Whole life insurance builds value based on a set schedule. You'll know the exact cash value of your policy at each anniversary. (If you take a loan or withdrawal from your policy, the cash value and death benefit will decrease.)
- Universal life insurance earns a fixed interest rate on the cash value of the policy. While the interest rate may change over time, it will never dip below a guaranteed minimum rate.
- Variable universal life insurance lets you invest your cash value in the stock market, so your policy value goes up or down based on the performance of your investments. The investment subaccount options in VUL policies are not offered for sale to the general public.
How long should your coverage last? Need life insurance coverage just for a specific timeframe – like while you're paying off your mortgage? Term life insurance offers protection for a set period. All other types of insurance cover you for life, as long as the premiums are paid.
Fees and charges − Before you buy, ask about the fees and charges associated with a life insurance policy, how they're calculated and what they're for.
Access to your money − Will you need to take money out of your policy in the future, for instance, to pay college tuition or as retirement income? Most whole, universal and variable universal products let you withdraw money from your policy or take loans.1 But some do restrict when you can take money, how much you can take and (for loans) the interest rate.
Flexible payments − Some universal and variable universal life products let you make flexible payments once you've paid enough to cover your policy charges.
Ready to take the next step?
Determining the right insurance coverage for your needs is an important decision. For help with understanding the types of life insurance policies and choosing life insurance, call us at 1-866-207-9160 or find an agent in your neighborhood.
As your personal situations change (i.e., marriage, birth of a child or job promotion), so will your life insurance needs. Take care to ensure these strategies and products are suitable for your long-term life insurance needs. Also, be aware that market volatility can lead to the possible need for additional premium in your policy. Investors should evaluate the impact of their financial ability to continue premium payments and the market risk associated with the variable product on the risk of lapse of the insurance policy.
Also, know that any loans, withdrawals, and surrenders, partial or whole, can adversely affect the death benefit, may have adverse tax consequences, and could result in the policy lapsing. Variable life insurance has fees and charges associated with it that include a cost of insurance that varies with such characteristics of the insured person as gender, health and age, underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your individual needs.
Before deciding on a variable life insurance policy, you should carefully consider the investment objectives, risks, charges, and expenses of the policy and its investment options. The product prospectus and underlying fund prospectus contain this and other important information. To obtain a product prospectus, variable universal life insurance quote, or underlying fund prospectus, contact your investment professional or Nationwide. Read the prospectus carefully before making a purchase.