Term, Whole, and Universal Life Insurance: Why Your Business Should Offer All Three

Posted on: October 7, 2019 by Javier iSure

Term, whole, universal? Should businesses really offer all three of these group life insurance coverages? The answer is yes, and the reason is simple: each employee has their own unique situation and goals. It is important that you allow them to meet their needs by offering both flexible and consistent policies.

Let’s take a closer look at each of these types of group life insurance coverage, and how they can be of benefit to your employees.

Term Life Insurance

Term life insurance covers a set period of time, with the option of paying for coverage only when you think you might need it. Unlike permanent life insurance varieties, however, it doesn’t accumulate any cash value.

With this policy, terms are chosen (typically 10, 20 or 30 years) when the policy is purchased. The payout, called the death benefit, and the cost, or premium, stay the same throughout the term. When the term expires, so does the policy. If death occurs before the term ends, the policy pays a death benefit to the beneficiaries.

This policy offers flexibility for those only concerned about life insurance throughout a particular time frame, such as when children are still dependents, there’s a mortgage to pay, and there is not yet enough money in savings to serve as a financial safety net. If you die within the term, your beneficiaries receive the payout. The payout could replace the individual’s income and help families cover the costs of the services, such as childcare. As a result, this form of coverage is popular with younger individuals who are still in the process of building their families and savings.

Whole Life Insurance

Whole life insurance is indefinite until the date of the individual’s death, with a fixed rate over the life of the policy, to secure lower premiums if purchased at a young age. It accumulates value over time so you can borrow against it or take withdrawals.

As the name implies, whole life is meant to cover for one’s entire life. It has a cash-value component, offering a guaranteed premium, interest rate, and death benefit for the entire life of the policy. The cash value grows tax-deferred and typically allows for loans against the policy.

Like all permanent life insurance policies, whole life provides lifelong coverage and includes an investment component. Whole life is the most straightforward form of permanent life insurance since premiums remain consistent throughout the life, the death benefit is guaranteed and the cash value account grows at a guaranteed rate. 

However, because these policies are guaranteed to provide a payout at some point (while term life insurance policies often do not), they tend to be more costly than term life insurance policies.

Universal Life Insurance

Universal life insurance is a permanent policy that covers an entire lifetime, also with a cash-value component. Rather than simply choosing a specific term and putting 100% of the premium toward the policy, part of the premium is put into a cash account, which earns interest and accumulates tax-deferred value.

Universal life insurance offers more flexibility in the fact that payments can be temporarily put to a halt in a cash emergency as long as the cash value can cover the cost of the insurance. You might also be able to increase or decrease the death benefit over time, and take tax-free loans against the cash value in the policy. 

Life insurance provides a financial safety net for families and it is crucial that you have group life insurance on hand so employees are given the option of what one will best suit them. 

About iSure Insurance Brokers

After serving leaders in the Greater Miami market for more than three decades, iSure Insurance Brokers has become the provider of choice for discerning commercial clients and individuals alike. Because no two insurance programs are or should be alike, you can be sure that iSure will craft a comprehensive approach to protection that is as unique as you are. We welcome the opportunity to protect what you have worked so hard to build. Please contact us at (305) 223-2533 to learn more about what we can offer you.

Posted in: Blog Employee Benefits Life Insurance