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Introduction to American Life Insurance Types of Prices and Premiums and Comparison of Advantages and Disadvantages of Each Type of Insurance (2023 version)

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Introduction to the history of American life insurance

In the U.S. family and individual life insurance market, the main types of life insurance are as follows:

  • Term term life insurance
  • Whole Life Savings Participating Insurance
  • Universal Life Universal Insurance (including SUL)
  • GUL, Guaranteed Universal Life, Guaranteed Universal Life Insurance (including GVUL/GIUL)
  • VUL, Variable Universal Life, investment universal life insurance (including PVUL/SVUL)
  • IUL, Indexed Universal Life, Indexed Universal Life Insurance (including PIUL/SIUL)

XNUMX. Introduction to basic insurance types: Term, term life insurance

Term, Called in ChineseTerm life insurance or term insurance,Refers to a period of time (usually 10 years, 15 years, 20 years, or 30 years)Fixed rateLife insurance products that provide insurance.

After this insurance expires, it is no longer guaranteed to provide protection at the previous rate.At this time, the customer must give up the insurance, or re-accept the evaluation of the insurance company, and carry out further insurance based on the new premium price standard or other conditions.

If the insured person dies during this period, the insurance company pays death compensation to the beneficiary.

Term insuranceAppeared around 1850, it is the oldest life insurance product in history, and it is also the foundation and prototype of various life insurance products in various countries in the modern world.

Almost all life insurance companies will issue term life insurance products under the company's brand name, and market competition is unprecedentedly fierce.

Term term life insurance prices and premiums

Term insurance,is trueAccidental deathThis situation,The cheapestGuarantee methods and products.

35-year-old who applied for $50Term insuranceFor insurance policies, the basic premium is usually around $60/month.

American Life Insurance Guide ©️ ProvidedOnline pricing tool for term life insuranceFor consumers to inquire and compare.

TermPros and cons

advantage Disadvantage
☑️The cheapest premium, as low as $20/month ❌Single function, guarantee is limited by timeliness
☑️ Provide death compensation ❌Renewal costs and renewal conditions have increased sharply

Learn more about the introduction and comparison of advantages and disadvantages of term life insuranceTerm Life Insurance Recommendation Thematic Series

XNUMX. Introduction to whole life insurance types: Whole life, savings and dividend-type whole life insurance

whole life, Chinese is often calledSavings insurance, Participating insurance.It is a life insurance policy contract that provides policyholders withLifetime guarantee.

whole lifeAppeared in the 20s and introduced the "Cash ValueThe basic concept of "" laid the foundation for the development of various insurance products in the future.

Specifically, it is the premium you paid. After paying a fixed insurance cost, the remaining part is converted into a cash value.Insurance companies will regularly pay dividends based on the company's profitability.Over time, the cash value in the insurance will increase.Insurance companies usually promise a given guaranteed rate of return, such as the guaranteed annual rate of return for the cash value part of 4%.

whole lifeSavings insuranceIt is a continuation of Term term insurance, which meets the new needs of consumers and makes up for some shortcomings of Term term insurance.

Savings and dividend insurance in many parts of Asia and Hong Kong belong towhole lifeInsurance this type of insurance.

Whole Life life insurance prices and premiums

whole lifeWhole life insurance prices and premiumsMuch higher thanTerm products.According to the age at the time of insurance and the guaranteed rate of return,whole lifeThe insurance policy can calculate the lifetime premium. Therefore, the basic cost of this policy is fixed and does not increase with age.Insured persons usually need to pay premiums throughout their lives, and they can also be designed according to different design schemes and paid at the age of 10, 20 or 65.

35-year-old who applied for $50whole lifeSavings insuranceFor insurance policies, the basic monthly premium is usually around $1000.

according toAmerican Life Insurance Guideposted2022Q3 data reportPointed out thatThe average annual premium for each policy is $4,074.55% of Whole Life is mainly based on "Final Expense"The market target is sold.

Whole Life Savings InsurancePros and cons

advantage Disadvantage
☑️Lifetime protection and claims ❌Premium is expensive
☑️ Cash value function ❌Compulsory delivery of insurance, inflexible cash value
☑️Fixed premium ❌When the market environment is good, the rate of return is low
☑️ Guaranteed rate of return
☑️Tax preferential policies

Learn more about WholeLife's history and comparison of advantages and disadvantages

XNUMX. Universal Life, universal insurance, flexible whole life insurance

Universal Life, Called in ChineseUniversal Life Insurance,orUniversal insurance, Usually abbreviated asUL insurance.

It is a lifetime life insurance product, which appeared in the 80s and was mainly sold in the United States. Universal Life universal insurance met the strong demand of consumers for capital flexibility at that time and made up for some of the shortcomings of Whole Life's savings and dividend insurance types.

Customers can deposit cash in the insurance policy, and the premium part that exceeds the current insurance cost will be credited to the cash value part of the insurance policy.The insurance company operates this fund, and the policyholder receives dividends from the insurance company.

How much of this return rate is determined by the insurance company - if this rate of return is linked to stocks, bonds or financial indexes, it forms the amount we will introduce laterVULOrIUL insuranceType - For the traditional Universal Life insurance, the insurance company usually provides the policyholder with a minimum guaranteed rate of return. If the insurance company's annual market rate of return is greater than the guaranteed rate of return, the policyholder will receive the corresponding dividend.And if the customer doesn't pay the premium, the insurance company deducts the premium from the cash value.

Universal Life Insurance Price and Premium

Universal Life InsuranceThe prices and premiums are flexible.This type of insurance and its derivatives work well in the Irrevocable Life Insurance Trust (ILIT).

Generally speaking, under the same insured amount,Universal Life InsuranceThe basic premium may be 1/2 to 1/3 of Whole Life savings insurance.

Universal Life InsurancePros and cons

advantage Disadvantage
☑️Lifetime protection and claims ❌The rate of return is uncertain
☑️ Cash value function ❌Complexity brought by flexibility
☑️Flexible premium
☑️Minimum rate of return and market rate of return
☑️Tax preferential policies

Learn more about the advantages, disadvantages and history of Universal Life insurance

XNUMX. Guaranteed whole life insurance types: Guaranteed Universal Life, GUL insurance

Guaranteed Universal Life, Referred to asGUL Insurance, Called in ChineseLifetime protection universal insurance.

GUL InsuranceIt was developed by Universal Life.Its main function is to provide policyholders with relatively low premiumsGuaranteed claimsLifetime protection.

Among all universal insurance products,GUL InsuranceIt is the only type after paying premiums in accordance with the agreed payment plan,There is no need to worry about the types of insurance that will end the insurance.

For example, if a customer buys a copyGUL Insurance, The insured amount is 100 million U.S. dollars, the selected 10 years are paid in full, and the annual premium is 2 U.S. dollars.So as long as the customer pays the premium normally, regardless of the market plummeting or skyrocketing, no matter when the policyholder dies, his beneficiary will receive a death compensation of 100 million US dollars.

GUL insurance prices and premiums

GUL InsuranceThe prices and premiums are relatively cheap,Of all types of insurance,Lowest premiumLife insurance type of life insurance.In the U.S. marketGUL Insurance TypesThe price of the same kind of whole life insurance in the world,Most competitive.

according toAmerican Life Insurance Guideposted2022Q3 data reportPointed out thatThe average annual target premium per UL policy is $5,515. 55% of UL universal insurance is based on"Guaranteed to keep(No Lapse Guarantee)-GUL"The market target is sold.

GUL InsurancePros and cons

advantage Disadvantage
☑️Lifetime protection and claims ❌Only "guarantee" function
☑️There is no risk of breaking the guarantee ❌Single cash value function
☑️ Low-cost lifetime insurance
☑️Tax preferential policies

(>>>Related reading:Raiders|GUL/GIUL/GVUL Premium Price Comparison and Functional Ultimate Evaluation )
Learn more about who is suitable for GUL insurance?

XNUMX. Investment insurance types: Variable Universal Life, VUL insurance

Variable Universal Life, Referred to asVUL insurance, Often called in ChineseInvestment universal insurance, securities investment insurance, fund insurance.

VUL insuranceEvolved from Universal Life,It combines the protection function of Universal Life (universal life insurance) with the investment account function of the securities market.

VUL insuranceThe difference from Universal Life (universal life) is that customers can use the cash value to select different investment objects in the investment targets provided by the insurance company, so as to obtain corresponding investment returns. When the market goes up, the upper limit is not capped. When it's good, the cash value benefits can fully cover the annual insurance policy protection costs and get more cash value benefits.

Due to full participation in the market, investment returns closely follow market performance.If the cash value account loses too much in the financial market, the policyholder must add more cash to maintain the validity of the policy.VUL insuranceThe product requires relatively high investment experience and risk management capabilities of the policyholders and insurance financial advisors.

VUL insurance prices and premiums

VUL insuranceThe prices and premiums of the company have greater flexibility.If it is only the basic insurance cost part of maintaining the policy and additional clauses, the protection cost price of VUL insurance is almost the same as that of universal insurance products.

In terms of cost, compared with other insurance types, VUL insurance has more management fees for securities funds.

However, the actual investment of VUL insurance depends on the purpose of the insured. VUL insurance is usually treated as a medium and long-term investment asset because of its tax incentives and unlimited premiums.

due toVUL insuranceWith the flexibility of universal insurance and investment functions, the policyholder can put any amount of money from $0 to the upper limit set by the IRS in the policy.

VUL insurancePros and cons

advantage Disadvantage
☑️Lifetime protection and claims ❌Taking market risk
☑️Participate directly in market transactions ❌No guarantee
☑️There is no cap on the return rate limit ❌Additional asset management fees
☑️Tax preferential policies

Learn more about the principles, advantages and disadvantages of VUL insurance premium financing. Applicable groups

XNUMX. Indexed insurance types: Indexed Universal Life, IUL insurance

Indexed Universal Life, Referred to asIUL insurance, Often called in ChineseIndex life insurance, or index insurance.

IUL insuranceIt is also a derivative of Universal Life. It officially appeared in 1997 and is a universal life insurance that guarantees lifetime.

IUL insurance(Index insurance) has all the basic features and flexibility of universal insurance.The important difference is that it also provides support for the cash value part.IUL insuranceThe cash value is directly linked to several major market indexes: US S&P 500, Hong Kong Hang Seng Index, Germany 30DAX Index, etc.

IUL insurance(Index insurance) The investment income is linked to the trend of these indexes, providing cash value guarantee (Floor) and income ceiling (Cap).If the index falls, the insured's cash value is protected by 0% income.If the index rises, the policyholder enjoys the corresponding income.Insurance company forIUL insuranceBoth have given the upper limit of the annual rate of return strategy. In the first half of 2023, the market benchmarkS & P 500 Indexmainstream productsPostcode , 在9%-10% floating around.

IUL insurance prices and premiums

IUL insuranceThe prices and premiums of the company also have great flexibility.If it is only to maintain the basic insurance cost part of the policy and additional clauses, the cost price of IUL insurance is usually similar to the price of universal insurance.

Generally speaking, under the same insured amount,IUL insurance保费可能是Whole Life储蓄型保险险种的1/2到1/3。35岁申请$50万的IUL insuranceFor insurance policies, the basic monthly premium is usually around $400.

according toAmerican Life Insurance Guideposted2022Q3 data reportPointed out thatThe average annual target premium for each index policy is $13,162.77.9% of index insurance is based on"Cash value accumulation(Cash Accumulation)"of financial needs are purchased by individuals and families.

Like VUL insurance, the actual investment of IUL insurance premiums depends on the policyholder’s insurance goals and strategies.IUL insurance alsoSupplements used in the U.S. personal marketTax-free retirement plans,Family wealth inheritance planning and estate planning.

IUL insurancePros and cons

advantage Disadvantage
☑️Lifetime protection and claims ❌Uncertain return rate
☑️ Guaranteed capital and provide the lowest income ❌The return on investment is capped
☑️Highest premium flexibility
☑️Tax preferential policies

Learn more about the advantages, disadvantages and history of IUL insurance

Article summary

From Term term life insurance, which only provides death compensation, to continuous cost reductionGuaranteed claims GUL insurance, To now provide rich and diverseRiderOfIULIndex-based insurance. Over the past century, the types of life insurance in the U.S. market have been continuously updated and upgraded, and products have been continuously introduced.Generally speaking, different insurance brands often have different types of insurance that they are good at operating.

risk-of-us-life-insurance-product

For the same type of life insurance, even under the same company brand, there may be different product lines to meet the different needs of the market.We hope that consumers can cooperate with professionals according to their own situation and needsBroker or Insurance Financial Advisor, to determine which type of life insurance you need and the correspondingInsurance Products.

>>>Click to enter【Insurance Product Center and Product Function Evaluation】Section

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