| It will help you greatly to make better decision if | | | | The cash value accumulated after years which |
| you understand most common types of life | | | | can be taken out or borrowed against |
| insurance policies in the market and their pros and | | | | Enjoy tax free compound growth on the |
| cons. | | | | investment |
| There are two types of individual life insurance | | | | Option of paid up early |
| policies: Term and Permanent | | | | Con: The most expensive type of insurance due |
| Term Life: | | | | to high overfunding amount required |
| As name suggests, term life covers specific time | | | | The payment amount is decided and the schedule |
| period, say Term 10 (10 years), Term 20 (20 | | | | is inflexible to change |
| years) etc, up to usually when you are 85 years | | | | The insurance company control the investment |
| old. You might see Term 100. It is actually a form | | | | choices and returns |
| of permanent insurance since it covers 100 years. | | | | Suitability: Would be a good choice if you have |
| Most of term insurance is guaranteed renewable | | | | substantial and stable monthly income, want to |
| and convertible to permanent policy during the | | | | take advantage of tax shelter benefit, and don't |
| coverage period without further medical proof. | | | | have time to manage the investment. The cash |
| Pro: The least expensive type of insurance during | | | | value can be used for retirement funding. |
| coverage period | | | | Universal Life - also considered as hybrid policy |
| Con: The premium will increase dramatically upon | | | | Pro: Provide permanent protection. No renewal or |
| renewal after the coverage period; | | | | conversion required |
| There will be no coverage after 85 years old | | | | Options to decide deposit amount based on your |
| The policy has no cash value | | | | financial situation |
| Suitability: it is the best choice if you need large | | | | Flexible payment schedule |
| amount of coverage with low cost for a specific | | | | Options to choose and change investment vehicle |
| period of time, such as personal debt which will be | | | | Options of paid up early or accumulate cash value |
| paid off in a certain period of time (mortgage), or | | | | Enjoy tax free compound growth on the |
| financial support for children up to specific age, or | | | | investment |
| your income before retirement at certain age | | | | Con: Certain level of investment knowledge is |
| Permanent Life Insurance: | | | | required to make investment decision |
| This type of insurance provides permanent | | | | Suitability: Anyone who has permanent insurance |
| protection. It includes Universal Life and Whole | | | | needs and certain knowledge of investment. It is |
| Life. In both policies, the premium consists of basic | | | | most popular among business owners. Can be |
| cost of insurance and over funding, which will be | | | | used for business as funding for partnership |
| invested for future cash value. The return on the | | | | agreement. |
| investment is tax sheltered. | | | | Before you start shopping for the suitable policies |
| Whole Life: | | | | and rates, the most important thing is to know |
| Pro: Provide permanent protection. No renewal or | | | | what you need and how much you can afford. To |
| conversion required. | | | | prepare the answers for some basic questions is |
| Premium guaranteed same throughout lifetime. | | | | highly recommended. |