Whole Life Insurance Policies

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When you buy life insurance, you make a promise to your loved ones; a promise that they will have financial security when you can’t provide it. So when you’re choosing a life insurance company, you need one with the financial strength to back that promise; an industry leader with a wide variety of products—including one that’s right for you. life insurance with limited payment

Whole life insurance from State Farm® gives you the security of knowing loved ones will be taken care of in the event of your premature death. That’s because Whole life insurance provides a guaranteed death benefit your loved ones can use as they choose: For college, to pay off a mortgage, or

maybe to settle credit card debt. But planning for your family’s future shouldn’t mean you can’t benefit during your own lifetime. That’s why State Farm Whole life insurance also helps build cash values you can use in your lifetime. You could tap into your policy’s cash value to:

Help pay for your children’s education.

Add to your retirement income.

Provide funds for any emergency expense that may arise.

Cash value you can use for your own needs

Loans and withdrawals – A Whole Life policy builds cash value that can grow into a sizeable

asset. You can take loans or make withdrawals from your cash value for any number of reasons.1

Although dividends are not guaranteed, whole life policies may pay dividends, which you can withdraw for your own needs.2

Allows more spending during retirement – Many people are hesitant to spend their assets during retirement, since they would like to leave a legacy behind them. A permanent life policy creates an estate that can last a lifetime, so even if you spend most of your retirement savings, you could leave behind an inheritance.

Cash value could lower the actual cost of insurance – Affordable premiums often make a term policy an attractive choice. But when you consider the cash value offered by a permanent policy, and subtract it from the total premiums paid, then the total cost of a permanent policy could be less. And since cash value accumulates over time, your total cost will be lower the longer you have your policy.

1Unpaid loans and withdrawals will reduce the guaranteed death benefit and policy cash value. Loans also accrue interest.

2Dividends are a return of premium and are based on the actual mortality, expense, and investment experience of the Company.

LIMITED PAY LIFE INSURANCE:

One of the less common kinds of permanent life insurance is limited pay life insurance. Unlike many other kinds of insurance in which premiums are payed for as long as the policy remains in force, limited pay life insurance can remain active long after the premiums are payed. Instead, the premiums are all payed over a pre-set time period. Premiums are often paid out in their entirety over either a ten or twenty year period. Once all the premiums are paid up, no more payments are required to keep the policy active.

Instead of Instead of paying out upon death, many limited pay policies pay out when the policy holder

reaches age sixty-five. This is a key difference, as the value of many policies is inaccessible or would deplete the value of the policy until the policy holder has died.

Limited payment life insurance, sometimes referred to simply as limited pay life insurance, is really a way of having the best of all worlds with a whole life policy. You pay a premium for a predetermined number of years and you have your policy for the rest of your life. Here is how the limited payment life insurance policies work.

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The Face Amount

This policy has a death benefit that is guaranteed to stay level for as long as you own it even if you choose to keep it until age 100. The face amount is usually paid out income tax free to the beneficiary of your choice. It can be paid in one lump sum or in the form of a monthly income. If you choose to have payment made in income form you have many options to choose from.

Life Income

Limited payment life insurance policy proceeds made as a life income is one of the many choices. If you make this choice the life insurance company will pay this income to your beneficiary for as long as s/he lives. Upon the death of this beneficiary

there is no more income paid even if payment has only been paid for only one month. Look at it this way, if the beneficiary lived a long life the insurance company would be on the hook for a lot more than the face amount of the policy. On the other hand a short life would mean the heirs would lose. This in my humble opinion a life income payment with no certain is not a very good choice...

A better choice would be a life income with a certain period. The proceeds of your limited payment life insurance can be paid out in life income form with, for example, 5 years certain, 10 years certain or 20 years certain. Let us say you chose to take a life income with 20 years certain your beneficiary would be paid a lesser income for his or her life but upon death, if death occurred after one year for example, the income has to be continued for another 19 years. To put it another

way the income must be paid for a minimum of 20 years.

Fixed Period Income

A fixed period income simply works this way. You tell the insurance company to pay the proceeds of your limited payment life insurance policy to your beneficiary in equal amounts over a period of 10 years, for example, upon your death. The amount paid out would be more than the lump sum insurance amount.

Fixed Amount Income

The proceeds of your limited payment life insurance policy can also be paid to your beneficiary in fixed amounts. You tell the insurance company to pay, for example, $1000 per month to your spouse until the proceeds are exhausted. This always amounts to

considerably more than had the payments been made in a lump sum.

Interest Option

You can choose to have the lump sum that would be paid upon your death held by the insurance company and only the interest paid out each year. At a given time in the future you would have the lump sum paid.

The limited payment life insurance policy is a whole life based policy and therefore has cash values which accumulates at a guaranteed minimal rate of interest. If you should be in need of cash you may take a loan from your policy which usually is limited to about 80% of the cash value. If you are unable to come up with the premiums the automatic premium loan provision will kick in and use a

portion of your cash value to keep the policy in force...

Your limited payment life insurance policy also accrues dividends. Dividends, however, are not guaranteed and depend on the performance of the life insurance company.

If a dividend is earned by your limited payment life insurance policy it can be paid to you in cash. The life insurance company will mail you a check.

Dividends can be applied to the reduction of premiums. The amount necessary to keep the policy in force would be less than the premium contracted for in that year.

Dividends can be used to purchase paid up additions. Paid up additions are single premium policies of the same type as the base policy. They

have cash values and participate in dividends if any dividends are declared.

Available waiver of premium rider and accidental death benefit rider can be added to your limited payment life insurance policy if you should so choose.