CEDAR POINT FEDERAL CREDIT UNION
Serving Southern Maryland since 1945

Insurance

Life insurance is a contract which guarantees payment to a beneficiary after the death of the person who is insured. Guarantees associated with annuities and life insurance products are based on the claim-paying ability and financial strength of the issuing insurance company. It can be used for a number of needs — including family protection, business planning, supplemental income and estate and charitable planning. One of the most attractive features of life insurance is its death benefit is free of federal income tax, and if properly structured, free of federal estate tax.

Term Life
Term life insurance policies are designed to provide temporary protection at an affordable cost — particularly in the earlier years. The contract between the policy owner and the insurance company is for a specific period of time or “term.” Term policies deliver pure death benefit protection and appeal to those seeking cost-effective, temporary coverage.

Level Premium Term Insurance
Those who prefer their premium remain the same or “level” for a specific period of time, such as 5, 10 or 20 years, may choose to purchase a level term policy. The death benefit is also level, meaning the death benefit remains the same throughout the life of the policy. These policies may also include a conversion provision, allowing you to convert the policy to permanent insurance.

Whole Life
Whole life is a type of permanent life insurance. Permanent life insurance policies combine death benefit protection with the ability to build wealth within the policy, which is referred to as the “cash value.” While all permanent policies are designed to last a lifetime, different types are suited to specific needs, including tax and non-tax planning strategies.

Whole life policies pay a death benefit, specified at the time the policy is purchased. The premiums paid into the policy are level, which means the premium amount never changes. A whole life policy also has a guaranteed cash value. In addition, some whole life policies are “participating,” which means they could receive dividends each year.

Universal Life
Universal life is a type of permanent life insurance. Permanent life insurance policies combine death benefit protection with the ability to build wealth within the policy, which is referred to as the “cash value.” While all permanent policies are designed to last a lifetime, different types are suited to specific needs, including tax and non-tax planning strategies.

Universal life insurance offers significant flexibility – to change the level of coverage, or to stop and resume premium payments. As a result, universal life policies can be adjusted to meet the owner’s changing needs. In addition, universal life insurance builds up cash value based on declared credited interest rates.

Variable* universal life is a type of permanent life insurance. Permanent life insurance policies combine death benefit protection with the ability to build wealth within the policy, which is referred to as the “cash value.” While all permanent policies are designed to last a lifetime, different types are suited to specific needs, including tax and non-tax planning strategies.

Variable* universal life policies provide universal life insurance protection, but also investment flexibility. This type of insurance is designed for those who are comfortable taking on investment risk. The cash value of these policies has access to variable investments, such as money market, stock and bond funds. These policies typically also include access to a fixed-interest account, which helps balance the investments.

*For more complete information about a particular variable policy, including charges and expenses, please obtain a prospectus from the issuing life insurance company or your financial advisor. Read it carefully before investing or sending money.

Please note: There are no guarantees associated with variable sub-accounts and their value will fluctuate with changes in market conditions. Policy may be worth more or less when redeemed.

Joint or Survivorship Life
Survivorship life is a type of permanent life insurance. Permanent life insurance policies combine death benefit protection with the ability to build wealth within the policy, which is referred to as the “cash value.” While all permanent policies are designed to last a lifetime, different types are suited to specific needs, including tax and non-tax planning strategies.

Survivorship life insurance policies are designed to cover two lives, instead of one. These policies, available in whole life, universal life and variable universal life designs, pay a benefit after the death of the last insured to die. Typically, couples buy them to provide their children with assets to pay estate taxes or to provide coverage when one partner is considered “uninsurable.” Survivorship life can also be a cost-effective way to insure two lives with one policy instead of two.

This page was updated:
September 18, 2007 15:45