Universal Life
Balderson Insurance is here to provide Maryland residents with several options for permanent life insurance. As an independent insurance agency, we help you shop from some of the top carriers in the state to find the policy that fits the needs of you and your family. Contact us today at (301) 874-0772 to discuss your MD permanent life insurance options.
What is permanent life insurance?
A permanent (or cash value) life insurance policy covers you for life as long as you pay the premiums. The premiums you pay are determined at the time you take out the policy based on your age, health condition and other factors and remains level (does not increase) for the life of the policy. For this reason, it is best to take out a permanent life policy while you are young and healthy, because you will have lower fixed payments regardless of what happens to you in the future.
Because it is “permanent” and does not expire after a set period, permanent life insurance is more expensive than term life insurance. However, a permanent policy also accumulates cash value as the premiums are paid and this amount can be refunded back to you in the event that you ever want to cash in the policy.
While the permanent life policy is in force, you are allowed to borrow against its cash value if you need help during a time of financial struggle. The loan accumulates interest at a fixed or variable rate (depending on the terms of the policy). If the policyholder dies, any remaining loan amount (plus interest) is deducted from the death benefit.
Permanent life insurance comes in four general forms:
- Whole Life Insurance: The most common form of permanent insurance, whole life accumulates cash value at a guaranteed rate. This gives the policyholder a guaranteed cash value over time as long as premiums are paid. Traditional whole life insurance has two variations:
- Joint Whole Life: Popular among spouses, this is a policy that provides coverage for two individuals instead of one. Commonly referred to as “first to die coverage”, the death benefit is paid to the survivor after one of the policyholders dies.
- Survivorship Life: Commonly referred to as “second to die coverage”, this policy covers two people and pays a death benefit only after both policyholders have died. Survivorship whole life insurance is often used to cover estate taxes after both spouses have passed away.
- Universal Life Insurance: This product is more flexible than whole life. With universal life insurance, the death benefit as well as the amount of premium and frequency of payment can be altered (according to the limitations spelled out in the policy). The cash value in a universal life policy is also largely determined by current interest rates, typically with a guaranteed minimum rate of 4% to 4.5%. When interest rates are low for an extended period, additional premiums might be needed to keep the policy in force.
- Variable Life Insurance: This product has a cash value and death benefits that are tied to the value of a portfolio of investments you choose. Some policies offer a minimum guaranteed death benefit, but otherwise, these values rise and fall with the value of your portfolio.
- Variable Universal Life Insurance: This is a hybrid between variable and universal life insurance combining the flexibility of the death benefit and premium in universal with the investment flexibility and risk of the variable product.
Riders can be purchased on any permanent life insurance product to cover:
- Disability: A waiver of premium can be provided should the policyholder(s) become permanently disabled.
- Accidental Death: An additional benefit (often double) can be added if the policyholder is killed in an accident. This is commonly referred to as “double indemnity.”