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Insurance Protection

You can’t avoid all risks in life. Insurance can play a key role in helping preserve your assets and achieve your financial goals. It’s all about keeping an eye on both assets and liabilities. Insurance allows you to transfer a risk from your balance sheet to an insurer’s.  Find out you may want to consider insurance as part of your investment plan.

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Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.

Term Life Insurance

Term life insurance provides coverage for a specific period, such as 10, 20, or 30 years, and pays a death benefit if the insured passes away during that term. It is generally the most affordable type of life insurance because it offers pure protection without a cash value component. Premiums are typically level for the duration of the term, making it predictable and easy to budget. Individuals often choose term life insurance to cover temporary needs, such as income replacement, mortgage protection, or funding children’s education.

 

Permanent Life Insurance

Permanent life insurance provides lifelong coverage and includes a cash value component that grows tax-deferred over time. Unlike term insurance, it does not expire as long as premiums are paid, making it a valuable tool for long-term financial planning. The cash value can be accessed through loans or withdrawals, offering flexibility for emergencies or supplemental retirement income. People choose permanent life insurance for estate planning, wealth transfer, and creating a guaranteed legacy for beneficiaries.

 

Whole Life Insurance

Whole life insurance is the most traditional form of permanent life insurance, offering guaranteed death benefits, fixed premiums, and a guaranteed cash value growth schedule. Policyholders can also receive dividends from participating policies, which can be used to reduce premiums, purchase additional coverage, or accumulate as cash. Whole life is often considered a conservative option because of its stability and predictability. It is commonly used for estate planning, funding trusts, or providing lifelong financial security.

 

Variable Life Insurance

Variable life insurance combines permanent coverage with investment options for the cash value component. Policyholders can allocate cash value among various sub-accounts, similar to mutual funds, which means growth potential is tied to market performance. While this offers higher upside potential, it also introduces investment risk, including possible loss of cash value. Individuals who are comfortable with market volatility and want both protection and growth opportunities often consider variable life insurance.

 

Fixed Universal Life Insurance

Fixed universal life insurance offers flexible premiums and adjustable death benefits, along with a cash value component that earns interest at a fixed rate. This flexibility allows policyholders to increase or decrease coverage and adjust payments within certain limits. The fixed interest crediting provides stability, making it appealing to those who want predictability without giving up flexibility. It is often chosen by individuals seeking a balance between permanent protection and moderate cash value growth.
 

Indexed Universal Life Insurance (IUL)

Indexed universal life insurance credits interest to the cash value based on the performance of a market index, such as the S&P 500, but without direct market participation. Policies typically include a floor to protect against losses and a cap on maximum credited interest. This structure allows for potential growth while limiting downside risk, making IULs attractive for those seeking tax-advantaged accumulation with some market-linked upside. Many use IULs for supplemental retirement income and legacy planning.
 

Variable Universal Life Insurance (VUL)

Variable universal life insurance combines the flexibility of universal life with the investment options of variable life. Policyholders can adjust premiums and death benefits while investing the cash value in sub-accounts tied to market performance. This offers significant growth potential but also exposes the policyholder to investment risk and requires active management. VULs are often used by individuals with higher risk tolerance and a desire for both protection and aggressive cash value growth.

Traditional Long-Term Care Insurance

A traditional LTC policy is designed specifically to cover the costs of long-term care services, such as nursing home care, assisted living, or in-home care. These policies typically reimburse for qualified care expenses once eligibility criteria—such as the inability to perform two or more activities of daily living—are met. Premiums are generally paid annually or monthly and may increase over time, though some policies offer inflation protection. Employers and individuals consider traditional LTC insurance for its focused coverage and ability to protect retirement assets from the high costs of extended care needs.
 

Annuity with Long-Term Care Benefit

Although not insurance, this is an option when exploring options for long term care. An annuity with an LTC benefit combines a fixed or indexed annuity with a rider that provides additional funds for long-term care expenses. This approach allows individuals to leverage their existing assets for both income and potential care needs, often without the “use it or lose it” concern of traditional LTC policies. If long-term care is never needed, the annuity still provides income or a death benefit to beneficiaries. People choose this option for its flexibility, tax advantages, and ability to address multiple financial goals with one product, with a primary purpose for providing income in retirement.
 

Life Insurance with LTC or Critical Illness Rider

Life insurance policies can include riders that allow policyholders to access a portion of the death benefit if they require long-term care or experience a critical illness. This feature provides financial support during a health crisis while preserving some benefit for heirs if care is not needed. Premiums are generally level, and the policy offers both protection and liquidity. Clients often select this option when their primary purpose is having life insurance coverage but also desire a safety net for potential care costs.
 

Hybrid (Asset-Based) LTC Policy

A hybrid LTC policy combines life insurance or an annuity with a built-in long-term care benefit, typically funded with a single premium or limited payments. These policies guarantee that if LTC benefits are not used, the remaining value passes to beneficiaries as a death benefit. Unlike traditional LTC insurance, premiums are generally guaranteed and not subject to future increases. Individuals often choose hybrid policies for their predictability, ability to preserve wealth, and elimination of the “use it or lose it” concern, with a primary purpose for providing dedicated income for long term care costs.

Disability insurance provides income replacement if you become unable to work due to illness or injury. Policies can be short-term or long-term, with benefits typically replacing 50–70% of your income during the disability period. This coverage is critical for protecting your financial stability, as the risk of disability during a working career is often higher than the risk of premature death. Individuals and employers use disability insurance to safeguard income and maintain financial security during unexpected health challenges.

Riders are optional features that can be added to a life insurance policy for an additional cost, allowing you to customize coverage to meet specific needs. They can provide extra protection, flexibility, or benefits beyond the standard death benefit. While riders can enhance a policy, they should be selected carefully based on your goals and budget.
 

Common Life Insurance Riders Include:


  • Long-Term Care Rider: Allows access to a portion of the death benefit to pay for qualified long-term care expenses.
  • Critical Illness Rider: Provides a lump-sum payment if diagnosed with a covered serious illness (e.g., cancer, heart attack).
  • Chronic Illness Rider: Offers benefits if you cannot perform certain activities of daily living due to chronic conditions.
  • Waiver of Premium Rider: Waives future premiums if you become totally disabled, keeping the policy in force.
  • Accidental Death Benefit Rider: Pays an additional benefit if death occurs due to an accident.
  • Return of Premium Rider: Refunds premiums paid if the insured outlives the term of the policy (common in term life).
  • Child Term Rider: Provides term coverage for children under the parent’s policy, often convertible to permanent coverage later.

Key Person Insurance

Key Person Insurance protects a business against the financial loss that could occur if a critical employee, owner, or executive dies or becomes disabled. The business owns the policy, pays the premiums, and is the beneficiary, using the proceeds to cover expenses such as recruiting and training a replacement or offsetting lost revenue. This coverage helps maintain stability during a transition and reassures lenders and investors. Companies often choose Key Person Insurance to safeguard against the disruption caused by losing someone essential to operations or strategy.

Buy-Sell Agreement Funding

A Buy-Sell Agreement is a legally binding contract that outlines how ownership interests will be transferred if an owner dies, becomes disabled, or exits the business. Life insurance or disability insurance is commonly used to fund these agreements, ensuring liquidity when it’s needed most. This approach prevents forced sales, protects the company’s financial health, and provides fair value to the departing owner or their heirs. Businesses adopt this strategy to ensure continuity and avoid disputes during ownership transitions.

Guarantees are based on the claims-paying ability of the issuing insurance company. Guarantees apply to minimum income from an annuity; they do not guarantee an investment return or the safety of the underlying investment choices.
The death benefit and cash value will be affected by any outstanding loans or withdrawals at the time of surrender.
Unlike variable life insurance, indexed universal life (IUL) policies are typically structured so they are not securities registered with the SEC. Nor are the sales in IULs regulated by the SEC or FINRA Regulation, Inc.
Fixed insurance may have a higher initial interest rate which is guaranteed for a limited time period only. At the end of the guarantee period, the policy may renew at a lower rate or higher premium.
Fixed annuities may have a higher initial interest rate, which is guaranteed for a limited time period only. At the end of the guarantee period, the contract may renew at a lower rate.
Each annuity feature may incur additional cost.
Taxable distributions (and certain deemed distributions) are subject to ordinary income tax, and if made prior to age 59 ½ also may be subject to a 10% additional tax. Early surrender charges also may apply.
Unlike variable annuities, fixed indexed annuities are typically structured so that they are securities registered with the SEC. Nor are the sales in indexed annuities regulated by the SEC or FINRA Regulation, Inc.
Wells Fargo Advisors does not provide legal or tax advice.
Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.