There are two main types of life insurance we focus on: term life insurance and permanent life insurance.

1. Term life insurance: This type of insurance provides coverage for a specific period of time, usually ranging from one to thirty years. If the policyholder dies during the term of the policy, their beneficiaries receive a death benefit payout. However, if the policyholder outlives the term of the policy, the coverage ends and no payout is made.

2. Permanent life insurance: This type of insurance provides coverage for the entire lifetime of the policyholder. It includes different types such as:

a. Whole life insurance: This policy provides coverage for the entire life of the policyholder, and also includes a savings component that builds cash value over time.  This type of plan is more useful for children and for people age 55 and over who are looking for some type of burial protection.

b. Universal life insurance: This policy also provides coverage for the entire life of the policyholder, and includes a savings component that can be invested to grow over time.  Typically the savings component of this plan, grows at an average current interest rate of between 4-5%.

c. An indexed universal life (IUL) plan is a type of permanent life insurance policy that provides death benefit protection and also has a savings component with the potential for cash value growth.

With an IUL plan, the policyholder pays a premium into the policy, and a portion of the premium is used to pay for the cost of insurance, while the remaining portion is invested in an indexed account. The indexed account is linked to a stock market index, such as the S&P 500, and the policyholder can earn interest based on the performance of the index.

One of the key features of an IUL plan is that the policyholder’s account value is protected from market downturns, as they are not invested directly in the stock market. Instead, the policyholder’s interest is credited based on the performance of the index, subject to a minimum guaranteed interest rate.

The policyholder may have the option to adjust their premium payments or death benefit, subject to certain limitations and requirements. Additionally, the policyholder may have the option to withdraw or borrow from the policy’s cash value, which can be used for any purpose.

d.  A participating whole life insurance plan (Infinite Banking / Debt Free Life) is a type of permanent life insurance policy that provides death benefit protection and also allows the policyholder to participate in the profits of the insurance company.

With a participating whole life insurance plan, the policyholder pays a premium into the policy, and a portion of the premium is used to pay for the cost of insurance, while the remaining portion is invested by the insurance company. The investments made by the insurance company may include a range of assets such as stocks, bonds, and real estate.

If the investments of the insurance company perform well, the policyholder may receive dividends, which are a share of the profits. These dividends can be paid in cash, used to reduce the premium payments, or reinvested to increase the policy’s cash value.

Participating whole life insurance plans may also include a guaranteed minimum interest rate, which ensures that the policy’s cash value will grow over time. The policyholder may also have the option to borrow against the policy’s cash value or withdraw it in case of an emergency.

It is important to note that the dividends paid by the insurance company are not guaranteed and can fluctuate based on the performance of the company’s investments. The policyholder should carefully review the policy terms and consult with a financial professional before purchasing a participating whole life insurance plan.

The type of life insurance that is right for an individual depends on their personal needs and financial goals. It is important to consider the coverage amount, premium cost, and other factors before selecting a life insurance policy.