Employee Life and Disability Insurance

Individual Life Insurance

Employer-provided life insurance and individual life insurance policies are completely different products. People choose to buy individual life insurance for many reasons, including cash growth, creating an estate, consumer protection, and estate tax liquidity. However, the main reason for purchasing life insurance is to continue to provide financial security for loved ones in the event of death.

High Risk Cases

Individuals who are at high-risk, whether from existing medical conditions or from a high danger job, may not easily qualify for individual life insurance. However, there are insurance companies that cater specifically to high-risk cases, but that high risk translates into higher premiums.

Types of Life Insurance

When purchasing individual life insurance, there are two types to choose from: permanent life or term life.

Permanent Life Insurance

For long-term protection, permanent life insurance could be the best bet. It's relatively simple. Pay the premiums and the beneficiaries receive the benefit when the insured dies. Permanent life insurance lasts for the insured's entire life and builds a cash value.

Let's take a look at some permanent life insurance facts:

• Premiums can be fixed or varying, depending on the policy.
• The death benefit is tax-free to the beneficiaries.
• The cash value of the policy increases with time and it grows tax-deferred.
• It may be possible to take out a loan or a withdrawal against the cash value of the policy to pay for certain expenses. Of course, policy loans and withdrawals decrease the death benefit, so the beneficiaries could be left with less when the insured dies. Also, keep in mind that interest may be charged on any such loans.
• Another option with permanent life is that it may be possible to secure a life-long income if the policy's cash value is converted to an annuity.
• Last but not least, the insurance policy may be canceled and the cash value used however the insured wants. But there is a catch. If the cash value total is more than what is paid in premiums, the insured could be taxed on part of the cash value.