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Weekly Market Commentary

5/20/2025

Life Insurance 101: Which Type is Right for You?

If you have met with one of our professionals, you know that we typically discuss life insurance. Life Insurance is a critical element of financial and legacy planning which can help you make sure what you want to happen, will happen. There are numerous types of life insurance and the best fit for each person depends on their personal situation.

What is life insurance?
Essentially, life insurance is a contract between an insurance company (insurer) and a policy owner.  Life insurance policies offer a death benefit in exchange for paying premiums to the life insurance provider during the duration of the policy.  As long as the policy is in force, a life policy typically pays out a tax-free death benefit when an insured dies.

There are two main types of life insurance:

  1. Term life insurance is purchased for a specific “term” or period of time, commonly 10, 20, or 30 years. Therefore, a payout only occurs if the insured’s death event occurs during a specific period.  If the insured outlives the policy, there is no payout. Ideally, when buying a term life policy, you match the term to cover the financial obligation you’re covering.  For example, a new parent may buy a 20-year term policy to cover the time period in which their child is financially relying on them.  Term life insurance is the most affordable type of life insurance and does a good job of protecting for life expenses that have a certain end date (i.e. birth of a child, mortgage, debt, college, etc.)  Because of its affordability, term life insurance is the best choice for most people.  However, permanent life insurance makes sense for complex financial situations or the need for lifelong coverage.
  2. Permanent life insurance is intended to never expire.  It provides coverage for the insured person’s lifetime as long as premiums continue to be paid.  These policies have a component known as “cash value” which makes them more expensive than term insurance. A portion of your premiums accumulate in the account and grow over time.  Once you’ve built up enough cash value, you can borrow against the account or surrender the policy for cash.  There are many different subcategories of permanent life insurance.  Below are the most common permanent options:
    1. Whole life insurance – this type of insurance typically lasts until the death of the insured as long as you pay the premiums on the policy.  Essentially, your premiums stay the same over the lifetime of the policy and you get a guaranteed rate of return on the cash value.
    2. Universal life insurance is a type of permanent life insurance that offers flexibility in premiums and the cash value account earns interest based on a variable rate set by the insurer.
    3. Variable life insurance is another type of permanent life insurance with a flexible death benefit while also offering adjustable premium payments.  This type of policy relies on mutual fund and/or bonds as investments, which means there is more risk and potential for growth compared to other permanent options.

Permanent life insurance policies are much more complicated than term policies. They should be reviewed at least every 5 years.  Policy loans, changes in interest rates and the cost of insurance could result in a lapse of your policy or reduced death benefits.  Also, if you accumulate cash value in your life insurance policy you may be able to find an alternative to keeping the cash in your policy that will better suit your needs.

What is a better fit for you, term or permanent life insurance?
The appropriate insurance coverage depends on your unique financial situation. A large portion of clients we work with find that a term life policy is the best for their needs, but there are certain situations where permanent policies may be a better choice.

 

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This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.

This material was prepared by Nathan Wyatt for the Investment Service Center’s use.

ART Tracking #: 736265-02-02

Last week, investors received data offering a first read on whether tariffs are starting to push prices higher. At first glance, they don’t seem to be, with headline CPI rising just 0.2% m/m—a surprisingly soft outcome given the inflationary nature of tariffs.

The softness, however, was largely driven by cooling services inflation, which accounts for most of the CPI basket. Goods, which are subject to tariffs, make up only a fifth. Core goods prices rose 0.2% m/m—again below expectations, but enough to turn the y/y reading positive for the first time since Dec. 2023. Digging deeper, some tariff-induced price pressures emerged, though unevenly. While some import-heavy categories like audio equipment (8.8%) and auto parts (2.2%) saw sharp m/m gains, others, such as autos and apparel, showed surprising weakness.

Two factors help explain this uneven pass-through. First, many businesses appear to have built up inventory ahead of tariffs. As shown in the chart, categories like home furnishings, chemicals, and autos saw inventory growth in March well above 12-month averages, providing a buffer that has delayed price hikes. Second, producers are absorbing some costs. The Producer Price Index fell 0.5% m/m in April—the largest drop in five years—suggesting that despite higher input costs from tariffs, producers are holding back on price hikes.

Looking ahead, inventories will eventually run down. If tariffs persist, even at reduced levels, goods inflation could rise into the summer. A sooner-than-expected fiscal boost also presents an upside risk. All of this should keep the Fed patient. Meanwhile, international stocks continue to hold appeal, extending their lead over U.S. equities, where valuations once again appear stretched.



Chart of the Week: Source: Census Bureau, FactSet, J.P. Morgan Asset Management.

Thought of the Week: Source: BLS, Census Bureau, FactSet, J.P. Morgan Asset Management. 

Abbreviations: Cons. Sent.: University of Michigan Consumer Sentiment Index; CPI: Consumer Price Index; EIA: Energy Information Agency; FHFA HPI: - Federal Housing Finance Authority House Price Index; FOMC: Federal Open Market Committee; GDP: gross domestic product; HPI: Home Price Index; HMI: Housing Market Index; ISM Mfg.
Index: Institute for Supply Management Manufacturing Index; PCE: Personal consumption expenditures; Philly Fed Survey: Philadelphia Fed Business Outlook Survey; PMI: Purchasing Managers' Manufacturing Index; PPI: Producer Price Index; SAAR: Seasonally
Adjusted Annual Rate
 
Equity Price Levels and Returns: All returns represent total return for stated period. Index: S&P 500; provided by: Standard & Poor’s. Index: Dow Jones Industrial 30 (The Dow Jones is a price-weighted index composing of 30 widely-traded blue chip stocks.) ; provided by: S&P Dow Jones Indices LLC. Index: Russell 2000; provided by: Russell Investments. Index: Russell 1000 Growth; provided by: Russell Investments. Index: Russell 1000 Value; provided by: Russell Investments. Index: MSCI – EAFE; provided by: MSCI – gross official pricing. Index: MSCI – EM; provided by: MSCI – gross official pricing. Index: Nasdaq Composite; provided by: NASDAQ OMX Group.

MSCI EAFE is a Morgan Stanley Capital International Index that is designed to measure the performance of the developed stock markets of Europe, Australasia, and the Far East.

Bond Returns: All returns represent total return. Index: Bloomberg US Aggregate; provided by: Bloomberg Capital. Index: Bloomberg Investment Grade Credit; provided by: Bloomberg Capital. Index: Bloomberg Municipal Bond 10 Yr; provided by: Blomberg Capital. Index: Bloomberg Capital High Yield Index; provided by: Bloomberg Capital.

Key Interest Rates: 2 Year Treasury, FactSet; 10 Year Treasury, FactSet; 30 Year Treasury, FactSet; 10 Year German Bund, FactSet. 3 Month LIBOR, British Bankers’ Association; 3 Month EURIBOR, European Banking Federation; 6 Month CD, Federal Reserve; 30 Year Mortgage, Mortgage Bankers Association (MBA); Prime Rate: Federal Reserve.

Commodities: Gold, FactSet; Crude Oil (WTI), FactSet; Gasoline, FactSet; Natural Gas, FactSet; Silver, FactSet; Copper, FactSet; Corn, FactSet. Bloomberg Commodity Index (BBG Idx), Bloomberg Finance L.P.
 
Currency: Dollar per Pound, FactSet; Dollar per Euro, FactSet; Yen per Dollar, FactSet.
 
S&P Index Characteristics: Dividend yield provided by FactSet Pricing database. Fwd. P/E is a bottom-up weighted harmonic average using First Call Mean estimates for the "Next 12 Months" (NTM) period. Market cap is a bottom-up weighted average based on share information from Compustat and price information from FactSet's Pricing database as provided by Standard & Poor's.
 
MSCI Index Characteristics: Dividend yield provided by FactSet Pricing database. Fwd. P/E is a bottom-up weighted harmonic average for the "Next 12 Months" (NTM) period. Market cap is a bottom up weighted average based on share information from MSCI and Price
information from FactSet's Pricing database as provided by MSCI. Russell 1000 Value Index,
 
Russell 1000 Growth Index, and Russell 2000 Index Characteristics: Trailing P/E is provided directly by Russell. Fwd. P/E is a bottom-up weighted harmonic average using First Call Mean estimates for the "Next 12 Months" (NTM) period. Market cap is a bottom-up weighted average based on share information from Compustat and price information from FactSet's Pricing database as provided by Russell.
 
Sector Returns: Sectors are based on the GICS methodology. Return data are calculated by FactSet using constituents and weights as provided by Standard & Poor’s. Returns are cumulative total return for stated period, including reinvestment of dividends.

Style Returns: Style box returns based on Russell Indexes with the exception of the Large-Cap Blend box, which reflects the S&P 500 Index. All values are cumulative total return for stated period including the reinvestment of dividends. The Index used from L to R,
top to bottomare: Russell 1000 Value Index (Measures the performance of those Russell 1000 companies with lower price-to book ratios and lower forecasted growth values), S&P 500 Index (Index represents the 500 Large Cap portion of the stockmarket, and
is comprised of 500 stocks as selected by the S&P Index Committee), Russell 1000 Growth Index (Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values), Russell Mid Cap Value Index (Measures
the performance of those Russell Mid Cap companies with lower price-to-book ratios and lower forecasted growth values), Russell Mid Cap Index (The Russell Midcap Index includes the smallest 800 securities in the Russell 1000), Russell Mid Cap Growth Index (Measures the performance of those Russell Mid Cap companies with higher price-to-book ratios and higher forecasted growth values), Russell 2000 Value Index (Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values), Russell 2000 Index (The Russell 2000 includes the smallest 2000 securities in the Russell 3000), Russell 2000 Growth Index (Measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted growth values).

Past performance does not guarantee future results.
 
Diversification does not guarantee investment returns and does not eliminate the risk of loss.
 
Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial
instrument. The views and strategies described may not be appropriate for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the program explores the implications of current economic data and changing market conditions.

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ART Tracking #:  738733-1