Valuable Insights and Insurance Resources
At AASEC Insurance Services, we believe that informed clients make the best decisions. Our resources offer valuable information, tools, and insights to help you understand and navigate the complexities of insurance. Learn more about our customizable term life insurance plans, health insurance options, and Medicare coverage. Whether you’re new to insurance or seeking to expand your knowledge, we’re here to support you every step of the way.
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What is Final Expense Life Insurance?
Although it’s marketed as a policy for final expenses, this type of policy is just a permanent life insurance policy with a small death benefit. It’s called final expense insurance because it’s aimed at people who want just enough coverage to pay those expenses.
Final expense policies are usually either simplified or guaranteed issue policies, and most people who apply will be approved. Most policies have no medical exam, and many also have no medical questions. There are limits on the amount of coverage available.
Final expense insurance: Is it right for you?
Final expense insurance is a type of whole life insurance that's designed to pay for funeral and other final expenses. It's simple and easy to qualify for with a modest death benefit, making it an affordable option for those who don't want to leave a financial burden for family.
Final expense insurance is whole life insurance with a small death benefit intended to cover funeral and other final expenses. Final expense policies don’t require a medical exam and are easy to qualify for; many don't even ask medical questions.
A final expense policy eases the burden of end-of-life costs on your family; the average funeral cost is around $8,000, and other final bills can include medical expenses and long or short-term care costs.
We recommend getting final expense life insurance if:
You are a senior or retired: If you are in your golden years and are no longer eligible for traditional coverage, final expense insurance ensures that your funeral, burial, and other related expenses are taken care of without depleting your savings or retirement funds.
Your savings are limited: You haven’t saved enough to cover end-of-life expenses, final expense insurance can provide a financial safety net for your family.
An individual has any serious health concerns: Even people with serious medical conditions are eligible for final expense insurance, making it a viable option for people with health conditions that prohibit them from getting traditional coverage.
You should opt for traditional life insurance if:
You’re young and in good health. Younger, healthier individuals who qualify for traditional term or whole life insurance can get more extensive coverage at a more affordable price. Final expense insurance costs more for less coverage.
You have significant savings or investments. If you have substantial savings, investments, or other financial assets set aside, you likely don’t need a separate final expense insurance policy.
You need substantial coverage. Final expense insurance typically offers lower coverage amounts, up to $50,000. If you need a policy with a higher payout, traditional life insurance or IUL is a better fit — this coverage can go into the millions.
What is Indexed Universal Life Insurance (IUL): How does It Work?
Indexed universal life insurance policies typically pay interest based on the movement of underlying stock and bond indexes.
Indexed universal life vs. whole life insurance
| Feature | Whole life | Indexed universal life |
| Policy duration | Permanent. | Permanent. |
| Cash value earnings calculation | Fixed rate. | Stock and bond indexes, as well as fixed interest rate options. |
| Flexible premiums and death benefit | No. | Yes. |
| Cash account value can decline | No. | Yes, if growth is low, fees are high, and you pay minimum or no premiums. |
What is indexed universal life insurance (IUL)?
Indexed universal life (IUL) insurance is a type of permanent life insurance, meaning it has a cash value component along with a death benefit. The money in a policyholder's cash value account can earn interest by tracking a stock market index selected by the insurer.
You may also have a fixed-rate account and can choose how much you want to go into each account.
Although the interest rate derived from the equity index account can fluctuate, the policy does offer an interest rate guarantee, which limits losses. Most IULs also have cap gains. These policies are more volatile than fixed universal life policies, but less risky than variable UL insurance policies because no investment is made in equity positions.
Key Features
IUL insurance offers these main features, among others:
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- Permanent, lifelong coverage when premiums are kept up to date.
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- Flexible premiums, and possibly a flexible death benefit.
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- Cash value, along with potential growth of that value through an equity index account.
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- Cash value can be partially allocated to a fixed interest option.
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- Minimum interest rate guaranteed, but there may also be a cap on gains, typically around 8%-12%.
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- Cash value built up can be used to lower or potentially cover premiums without subtracting from your death benefit.
Upgrade your policy with riders
All permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
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- Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
-
- Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
-
- Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
What Is Term Life Insurance?
Term life insurance is designed to be one of the most affordable options available for life insurance to cover temporary financial obligations.
It’s designed to cover specific debts, like a mortgage or a child’s college education.
Term life insurance is a contract between a policyholder and an insurance company that if the insured person passes away within the time period of the policy, the insurer will pay a death benefit to the beneficiaries named on the policy.
If you’re buying term life insurance, you have two main decisions to make: the length of the term and the coverage amount.
Key Features of Term Life Insurance
The key features of term life insurance are:
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- It’s generally the cheapest way to buy life insurance.
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- Term life insurance policies have a specific length of time when rates are locked in.
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- Term Life has no cash value in the insurance policy unlike permanent policies.
How a Term Life Insurance Policy Works
A term life insurance policy’s annual costs remain the same every year for the level term period, such as 10 or 20 years. Once the level term period is over, individuals can often renew the policy, but at higher rates each year you renew.
The policy expires if you outlive the length of the policy without renewing. You receive none of the premiums paid into the policy unless you bought a return of premium term life insurance policy.
Many individuals buy term life insurance for income replacement. They’re looking for life insurance that will provide funds for a family to pay expenses for a certain number of years if they were no longer there to work and earn money. Term life can be used for:
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- Covering years of a mortgage, so another borrower does not have to sell or move from the house.
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- Paying off specific debts that would be passed on otherwise.
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- Funding their children’s expenses until they have graduated from college, to make sure they have funds for tuition and living expenses.
The policyholder will choose both the length of the term say 10 – 20 years and the coverage amount, such as $500,000.
If the insured person dies while coverage is in force, the beneficiaries receive the policy’s death benefit. If the insured person lives longer than the policy’s term and doesn’t renew it, the coverage ends.
You may be able to convert the term life policies to a permanent life policy, such as a whole life or universal life insurance. This is a useful tactic if you realize you want longer life insurance coverage and don’t want to shop for a new policy, perhaps because your current health would make it difficult.
What Is Whole Life Insurance?
Whole life insurance provides coverage throughout the entire life of the insured person. In addition to paying a tax-free death benefit, whole life insurance also contains a savings component in which cash value may accumulate. Interest accrues on a tax-deferred basis.
Whole life insurance policies are one of several types of permanent life insurance policies, meaning the insured is cover for their entire life. Universal life, indexed universal life, and variable universal life are some others. With AASEC you can choose from a whole life insurance policy that works for you from many of the industry’s best life insurance companies.
KEY TAKEAWAYS
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- Whole life insurance lasts for the insured's lifetime, as opposed to term life insurance, which is for the specified number of years.
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- Most whole life policies feature level premiums, meaning the amount you pay every month never change.
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- Whole life insurance has a cash savings component, known as the cash value, which the policy owner can draw on or borrow from.
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- The cash value of a whole life policy typically earns a fixed rate of interest.
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- Withdrawals and outstanding loan balances reduce death benefits.
Upgrade your policy with riders
All permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
-
- Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
-
- Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
-
- Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
What is Universal Life Insurance?
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- Universal life insurance is a type of permanent life insurance with greater flexibility.
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- It has a cash value component you can use during your lifetime.
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- Universal life gives you the flexibility to increase or decrease your death benefit.
If you have dependents, life insurance is crucial to protect your loved ones from financial hardship if you pass away. There are various types of life insurance policies, including universal life insurance.
This policy stands out because it allows you to adjust your premiums and coverage amount based on your changing financial needs. However, universal life isn't for everyone due to its price and complexity.
Understanding universal life insurance
Term and whole life insurance hybrid
Universal life insurance shares features from a term policy and whole life insurance. Like whole life insurance, it offers permanent coverage and a cash value component. Like term life insurance, it allows you to adjust your death benefit and, therefore, your premiums throughout your life.
The cash value component
Cash value is unique to a permanent life policy. In a traditional universal life policy, a portion of your premium earns interest on a tax-deferred basis, growing your policy. Since universal life insurance offers adjustable premium payments, you can pay higher premiums to build more cash value.
The cash value of a permanent life insurance policy can be used during your lifetime for financial milestones such as paying your children's college tuition, funding a business, or purchasing a second home. Many people use their cash value as additional income in retirement.
Upgrade your policy with riders
All types of permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
-
- Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
-
- Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
-
- Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
How does universal life insurance work?
Potential for cash value growth
A traditional universal life insurance policy's cash value is typically invested in your insurance company's general portfolio. It earns interest based on current money market rates and other economic conditions, which can fluctuate over time. However, many insurers set a guaranteed minimum interest rate, ensuring the cash value won't fall below a certain threshold, even if market rates are low.
Indexed universal life (IUL) and variable universal life (VUL) are also types of universal life. An IUL's cash value grows based on the performance of a specific stock market index, such as the S&P500. A VUL invests your cash value in subaccounts that mirror the performance of underlying investments, similar to mutual funds. These types of universal policies come with higher risk due to market volatility but also offer the potential for increased returns.
Flexible death benefits and premiums
Universal life insurance also allows you to increase or decrease your death benefit based on your current financial situation. For example, if you lose your job, you can call the insurance company to decrease your death benefit, lowering your payments.
However, the flexibility of a universal life policy adds to its complexity. Reducing or skipping premiums can cause your cash value to drop. If your cash value drops below a certain threshold, it can result in your policy lapsing or ending. That said, universal life insurance requires more oversight to ensure your coverage stays active.
Cash value loans and withdrawals
Universal life insurance allows you to take early withdrawals or life insurance loans. Loans are tax-free but must be repaid with interest; otherwise, they reduce the death benefit. If you choose not to repay it, your death benefit will go down.
If you decide you don't want your permanent life insurance policy anymore, you can cancel your policy to get your cash value back. Be aware that you no longer have coverage once you cancel your policy and liquidate your cash value.
"If you cash the policy in," Williams says, "there's no more death benefit; you are literally canceling the policy. This is also known as cash value surrender, giving up a permanent life insurance policy with cash value." As a result, your beneficiaries won't receive a death benefit when you pass away.
You should discuss any early withdrawals with a tax professional. Depending on how much you withdraw and other factors, penalties may apply.
Upgrade your policy with riders
All permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
-
- Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
-
- Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
-
- Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
Whast is Universal Life Insurance?
-
- Universal life insurance is a type of permanent life insurance with greater flexibility.
-
- It has a cash value component you can use during your lifetime.
-
- Universal life gives you the flexibility to increase or decrease your death benefit.
If you have dependents, life insurance is crucial to protect your loved ones from financial hardship if you pass away. There are various types of life insurance policies, including universal life insurance.
This policy stands out because it allows you to adjust your premiums and coverage amount based on your changing financial needs. However, universal life isn't for everyone due to its price and complexity.
Understanding universal life insurance
Term and whole life insurance hybrid
Universal life insurance shares features from a term policy and whole life insurance. Like whole life insurance, it offers permanent coverage and a cash value component. Like term life insurance, it allows you to adjust your death benefit and, therefore, your premiums throughout your life.
The cash value component
Cash value is unique to a permanent life policy. In a traditional universal life policy, a portion of your premium earns interest on a tax-deferred basis, growing your policy. Since universal life insurance offers adjustable premium payments, you can pay higher premiums to build more cash value.
The cash value of a permanent life insurance policy can be used during your lifetime for financial milestones such as paying your children's college tuition, funding a business, or purchasing a second home. Many people use their cash value as additional income in retirement.
Upgrade your policy with riders
All types of permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
-
- Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
-
- Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
-
- Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
How does universal life insurance work?
Potential for cash value growth
A traditional universal life insurance policy's cash value is typically invested in your insurance company's general portfolio. It earns interest based on current money market rates and other economic conditions, which can fluctuate over time. However, many insurers set a guaranteed minimum interest rate, ensuring the cash value won't fall below a certain threshold, even if market rates are low.
Indexed universal life (IUL) and variable universal life (VUL) are also types of universal life. An IUL's cash value grows based on the performance of a specific stock market index, such as the S&P500. A VUL invests your cash value in subaccounts that mirror the performance of underlying investments, similar to mutual funds. These types of universal policies come with higher risk due to market volatility but also offer the potential for increased returns.
Flexible death benefits and premiums
Universal life insurance also allows you to increase or decrease your death benefit based on your current financial situation. For example, if you lose your job, you can call the insurance company to decrease your death benefit, lowering your payments.
However, the flexibility of a universal life policy adds to its complexity. Reducing or skipping premiums can cause your cash value to drop. If your cash value drops below a certain threshold, it can result in your policy lapsing or ending. That said, universal life insurance requires more oversight to ensure your coverage stays active.
Cash value loans and withdrawals
Universal life insurance allows you to take early withdrawals or life insurance loans. Loans are tax-free but must be repaid with interest; otherwise, they reduce the death benefit. If you choose not to repay it, your death benefit will go down.
If you decide you don't want your permanent life insurance policy anymore, you can cancel your policy to get your cash value back. Be aware that you no longer have coverage once you cancel your policy and liquidate your cash value.
"If you cash the policy in," Williams says, "there's no more death benefit; you are literally canceling the policy. This is also known as cash value surrender, giving up a permanent life insurance policy with cash value." As a result, your beneficiaries won't receive a death benefit when you pass away.
You should discuss any early withdrawals with a tax professional. Depending on how much you withdraw and other factors, penalties may apply.
Upgrade your policy with riders
All permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
-
- Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
-
- Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
-
- Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
What is Indexed Universal Life Insurance (IUL):
Indexed universal life insurance policies typically pay interest based on the movement of underlying stock and bond indexes.
Indexed universal life vs. whole life insurance
| Feature | Whole life | Indexed universal life |
| Policy duration | Permanent. | Permanent. |
| Cash value earnings calculation | Fixed rate. | Stock and bond indexes, as well as fixed interest rate options. |
| Flexible premiums and death benefit | No. | Yes. |
| Cash account value can decline | No. | Yes, if growth is low, fees are high, and you pay minimum or no premiums. |
What is indexed universal life insurance (IUL)?
Indexed universal life (IUL) insurance is a type of permanent life insurance, meaning it has a cash value component along with a death benefit. The money in a policyholder's cash value account can earn interest by tracking a stock market index selected by the insurer.
You may also have a fixed-rate account and can choose how much you want to go into each account.
Although the interest rate derived from the equity index account can fluctuate, the policy does offer an interest rate guarantee, which limits losses. Most IULs also have cap gains. These policies are more volatile than fixed universal life policies, but less risky than variable UL insurance policies because no investment is made in equity positions.
Key Features
IUL insurance offers these main features, among others:
-
- Permanent, lifelong coverage when premiums are kept up to date.
-
- Flexible premiums, and possibly a flexible death benefit.
-
- Cash value, along with potential growth of that value through an equity index account.
-
- Cash value can be partially allocated to a fixed interest option.
-
- Minimum interest rate guaranteed, but there may also be a cap on gains, typically around 8%-12%.
-
- Cash value built up can be used to lower or potentially cover premiums without subtracting from your death benefit.
Upgrade your policy with riders
All permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
-
- Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
-
- Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
-
- Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
How does indexed universal life insurance work?
Indexed universal life insurance works similarly to universal life. One pays a premium in exchange for lifelong coverage that can build cash value over time. Part of the premium payment goes toward the cost of insurance — i.e., paying out the death benefit — and other fees. The rest is added to the cash value, adjustable premiums and death benefit. As with Universal Life, IUL premiums are adjustable. If you ever decide to skip a premium payment or underpay, the cost of insurance and policy expenses are deducted from your cash value. Individuals that need permanent life insurance protection but wish to take advantage of possible cash accumulation via an equity index might use IULs as key person insurance for business owners, premium-financing plans, or estate-planning vehicles.
Upgrade your policy with riders
All permanent life insurance, offer riders that can be added to the policy. Some examples of riders include:
Waiver of premium: Pause your premium payments if you are sick, hurt, or disabled
Long-term care: Use the policy's death benefit toward assisted living (such as in-home care or a nursing facility) during your lifetime.
Family rider: Puts the entire family under one policy
Each rider has an additional cost that increases the premium on your policy, but it's usually cheaper than having multiple policies.
Term vs. Whole Life Insurance: What’s The Difference?
Life insurance policies can be put into two main buckets: term life and cash value life insurance. An example of cash value life insurance is whole life insurance. There are other cash value choices, too.
Knowing the main differences between term vs. whole life insurance will help you zero in on the best life insurance for you.
There are two main differences between term and whole life insurance: Premiums and cash value.
Term life insurance lets you lock in level premium payments for the term length, such as 20 years. Many term life policies allow you to renew after the level term ends, but the renewal rates are usually more expensive.
Term life insurance is generally the most affordable type of life insurance because you are buying purely life insurance coverage. There is no cash value within a term life insurance policy.
If you decide to end a term life policy, you can simply stop paying premiums. If your policy expires while you are still alive, there is generally no refund of premiums.
Whole life insurance has fixed premiums, you generally pay for the duration of the policy. A whole life policy will build cash value at a steady, fixed rate. You may take this money out via a policy loan or a withdrawal.
If you decide to end the policy, you should notify the insurer so that you can get the cash value of the policy.
Key Differences Between Term Life Insurance and Whole Life Insurance
| Term Life Insurance | Whole Life Insurance |
| Locks in level premiums for a specific period, such as 10, 15, 20 or 30 years | Locked in fixed premiums for the life of the Policy |
| Coverage for the length of the term (after which many can renew at a higher rate) | Coverage for as long as you live, as long as you pay Premiums |
| Most affordable life insurance option | Significantly more expensive than term life insurance |
| No cash value | Builds cash value you can access while you’re alive |
| Guaranteed death benefit | Guaranteed death benefit, but the amount can be reduced if you’ve taken out the cash value |
| No surrender value if you end the policy | Surrender value possible if you end the policy |
Comparing the Cost of Term vs. Whole Life Insurance
It’s impossible to make an apples-to-apples cost comparison of term life vs. whole life insurance because the policy features are so different. If you’re looking for a long stretch of coverage with term life, look at 30-year term life policies.
Whether you decide to buy term or whole life insurance, your life insurance quotes will be affected by:
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- Your age, gender and employment.
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- The amount of coverage.
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- The individuals current and past health history.
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- Family’s health history (parents and siblings).
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- Prescription drug history.
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- Other factors such as your driving record.