Carefree Insurance Group offers universal life, guaranteed issue, term and whole life products from a range of the top carriers in the industry. These products together with our special underwriting programs, create opportunities in both the preferred risk and impaired risk arenas.
Life Insurance 101
We want you to make the most informed decision possible when planning for your family's financial security. Paying low premiums should not be your only consideration when shopping for life insurance. After all, a cheap policy may not adequately protect your family over the long-haul. Consider the mortgage your spouse will have to pay, as well as the cost of your children's education, childcare expenses, healthcare, funeral expenses and so on. Expenses can add up quickly. Consulting a licensed professional with your life insurance needs can help ease the burden and provide peace of mind.
What is Life Insurance?
Life insurance is a contract between you and an insurance company and is a way to protect your family in case of your death by providing funds to pay outstanding bills, taxes and income loss. Under a Term Life contract, the insurance company promises to pay your beneficiaries a sum of money in the event that you die within a period of time defined in the contract (such as 5, 10, 15, 20 or 30 years). Under a Permanent Life contract, a portion of the money you pay in premiums is invested in a fund that earns interest on a tax-deferred basis. Over time, your policy will accumulate a "cash value" that you can use. For instance, you can borrow against the value of your policy. Moreover, you can design a Permanent Life contract that will accumulate enough cash so as to be "paid up" by a certain age (e.g., "Paid Up Age 65"). Your need for life insurance can change over a lifetime. At any age, you should consider your individual circumstances and the standard of living you wish to maintain for your dependents. In most cases, you need life insurance only if someone depends on you for support. Your life insurance premium is based on the type of insurance you buy, the amount you buy and your chance of death while the policy is in effect.
Term Life Insurance
Term insurance is like leasing a car. You purchase death benefits for a specified period -- usually 5, 10 or 20 years. When the period is over, it's like turning in the leased car. The deal is done and you walk away. Term insurance pays a specific lump sum to your designated beneficiary if you should die during the term of the policy. The policy protects your family by providing money they can invest to replace your salary, and to cover immediate expenses incurred by your death. Term life insurance is best for young, growing families, when financial needs are especially low.
Permanent Life Insurance
Permanent insurance, on the other hand, is like buying the car you plan to drive forever.As long as you pay the premiums, permanent insurance stays in force as long as you live. It provides protection for your dependents by paying a death benefit to your designated beneficiary upon your death. In addition, a portion of your premiums are deposited into a tax-deferred cash value account that you can use while you are alive. Whole Life, Universal Life and Variable-Universal Life are examples of permanent life insurance.
Return of premium term life insurance
Return of premium term life insurance (ROP) is a relatively new type of life insurance policy that offers a guaranteed refund of the life insurance premiums at the end of the term period assuming the insured is still living. This type of term life insurance policy is a bit more expensive than regular term life insurance, but the premiums are designed to remain level. These return of premium term life insurance policies are available in 15, 20, or 30-year term versions. Consumer interest in these plans has continued to grow each year, as they are often significantly less expensive than permanent types of life insurance, yet, like many permanent plans, they still may offer cash surrender values if the insured doesn't die.
Whole life insurance
Whole life insurance is a type of permanent life insurance, and is designed to remain in effect throughout one's lifetime. It is well suited to needs that do not diminish over time, such as paying estate settlement costs and taxes. Generally, the life insurance rate (or premium) for this type of policy remains the same throughout the life of the insured. During the early years of the life insurance policy, premiums are much higher than those of a term life insurance policy. As a result, and by design, these life insurance policies develop cash values which can be accessed by the owner of the policy through surrenders or policy loans. Cash values in whole life insurance policies typically include two components:
Each life insurance policy has a guaranteed cash value, which typically grows based on a pre-determined schedule during the life of the policy and which "endows" or equals the death benefit upon maturity of the policy (typically at age 100). In addition, most whole life insurance policies have a non-guaranteed cash value element, typically made up of “dividends" or "excess interest" which can enhance the value of the life insurance policy over time.
To age 100 level guaranteed life insurance
This type of life insurance policy offers a guaranteed level premium to age 100, along with a guaranteed level death benefit to age 100. Most often, this is accomplished within a Universal Life policy with the addition of a feature commonly known as a “no-lapse rider". Some, but not all, of these plans also include an "extension of maturity" feature, which provides that if the insured lives to age 100, having paid the "no-lapse" premiums each year, the full face amount of coverage will continue on a guaranteed basis at no charge thereafter.
Survivorship or 2nd-to-die life insurance
A survivorship life insurance policy, also called 2nd-to-die life insurance, is a type of coverage that is generally offered either as universal life or whole life insurance and pays a death benefit at the later death of two insured individuals, usually a husband and wife. It has become extremely popular with wealthy individuals since the mid-1980's as a method of discounting their inevitable future estate tax liabilities which can, in effect, confiscate an amount to over half of a family's entire net worth! Congress instituted an unlimited marital deduction in 1981. As a result, most individuals arrange their affairs in a manner such that they delay the payment of any estate taxes until the second insured's death. A "2nd-to-die" life insurance policy allows the insurance company to delay the payment of the death benefit until the second insured's death, thereby creating the necessary dollars to pay the taxes exactly when they are needed! This coverage is widely used because it is generally much less expensive than individual permanent life insurance coverage on either spouse.