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Insurance

Life Insurance

Life insurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the policy owner's death. In return, the policy owner (or policy payer) agrees to pay a stipulated amount called a premium at regular intervals.

Insured events that may be covered include:

  • death
  • accidental death
  • illness

Life based contracts tend to fall into two major categories:

  • Protection policies - designed to provide a benefit in the event of a specified event, typically a lump sum payment.
  • Investment policies - the main objective is to facilitate the growth of capital by regular or single premiums.

Types of Life Insurance

Life insurance may be divided into two basic classes – temporary and permanent or following subclasses - term, universal, whole life, variable, variable universal and endowment life insurance.

 Related Life Insurance Products

Riders are modifications to the insurance policy added at the same time the policy is issued. These riders change the basic policy to provide some feature desired by the policy owner. A common rider is accidental death, which used to be commonly referred to as "double indemnity", which pays twice the amount of the policy face value if death results from accidental causes, as if both a full coverage policy and an accidental death policy were in effect on the insured. Another common rider is premium waiver, which waives future premiums if the insured becomes disabled.

Joint life insurance is either a term or permanent policy insuring two or more lives with the proceeds payable on the first death.

Survivorship life or second-to-die life is a whole life policy insuring two lives with the proceeds payable on the second (later) death.

Single premium whole life is a policy with only one premium which is payable at the time the policy is issued.

Modified whole life is a whole life policy that charges smaller premiums for a specified period of time after which the premiums increase for the remainder of the policy.

Group life insurance is term insurance covering a group of people, usually employees of a company or members of a union or association. Individual proof of insurability is not normally a consideration in the underwriting. Rather, the underwriter considers the size and turnover of the group, and the financial strength of the group. Contract provisions will attempt to exclude the possibility of adverse selection. Group life insurance often has a provision that a member exiting the group has the right to buy individual insurance coverage.

Comparison of Types of Life Insurance

  Term Whole Life Universal Life Variable Life Variable Universal Life
Premium Premiums increase at each renewal Level Flexible Level Flexible
Coverage Usually renewable until at least age 70; for some policies, up to age 95 For life For life For life For life
Death benefit Guaranteed Guaranteed May be guaranteed, depending on policy Guaranteed May be guaranteed, depending on policy
May increase with dividends* Can be increased or decreased Varies relative to cash value investment returns Can be increased or decreased; varies relative to cash value investment returns
Cash value None Guaranteed Guaranteed minimum interest rate Not guaranteed Not guaranteed
May increase with dividends* Varies based on interest rates Fluctuates with subaccount performance Fluctuates with subaccount performance
Policy loans allowed? Not applicable Yes Yes Yes Yes
May be able to borrow up to 100% of total cash surrender value less annual loan interest rate Same as whole life, but usually available at lower net interest rate (i.e., pay the interest rate and get a credit back to the policy) Same as whole life, but usually available at lower net interest rate (i.e., pay the interest rate and get a credit back to the policy) Same as whole life, but usually available at lower net interest rate (i.e., pay the interest rate and get a credit back to the policy)
Cash withdrawals allowed? Not applicable No Yes No Yes
Cash value account growth No cash value account Insurer determines guaranteed cash value and declares dividends based on performance of its general investment portfolio* Insurer determines cash value interest crediting rates based on current interest rate returns to the company Cash value account growth depends upon the investment performance of the subaccounts you choose Cash value account growth depends upon the investment performance of the subaccounts you choose

*Dividends are not guaranteed.

Note: Any guarantees associated with payment of death benefits, income options, or rates of return are subject to the claims-paying ability of the insurer. Policy loans and withdrawals will reduce the policy's cash value and death benefit and may cause the policy to lapse.  Withdrawals may be subject to surrender charges and income tax, and a 10% penalty may apply to withdrawals from a modified endowment contract if made under age 59½.

Note: Variable life and variable universal life insurance policies are offered by prospectus, which you can obtain from your financial professional or the insurance company. The prospectus contains detailed information about investment objectives, risks, charges, and expenses. You should read the prospectus and consider this information carefully before purchasing a variable life or variable universal life insurance policy.

Long Term Care Insurance

 

Long-term care refers to the ongoing services and support needed by people who have chronic health conditions or disabilities.  It is not only provided by nursing homes.  The most common type of long-term care is home-based care.  Long-term care services may also be provided in a variety of other settings, such as assisted living facilities and adult day care centers.

Understandably, many people put off planning for long-term care.  Although it's hard to face the fact that health problems may someday result in a loss of independence, if you begin planning now, you'll have more options open to you in the future.

The odds of needing long-term care are high.  Approximately 40 percent of people will need long-term care at some point during lifetimes after age 65. 

Like other types of insurance, long-term care insurance protects you against a specific financial risk - in this case, the chance that long-term care will cost more than you can afford.  In exchange for your premium payments, the insurance company promises to cover part of your future long-term care costs.  Long-term care insurance can help you preserve your assets and guarantee that you'll have access to a range of care options.

If you are interested in learning more about long-term care insurance, please call us at 1-888-547-6541 or email us at info@bankofmissouriinvestments.com .  You may also visit your nearest branch location for more information.

Long Term Care Insurance 

More Information:

Long-Term Care Needs Calculator