Protective Life Insurance Company is one of the top life insurance companies in the U.S. In the following Protective Life review, we will take a close look at the company’s products and ratings to help you decide if Protective is the right fit for you, based on your own need, goals and objectives.
Review of Protective Life Insurance Company
Before we proceed to our review of the various products Protective Life offers, let’s take a moment to learn more about the Company.
About Protective Life
Protective Life was founded in 1907. The Company’s headquarters are located in Birmingham, Alabama, with products available in all 50 states.
Protective Life is part of the Protective Life Group and is a private stock insurance company. Protective Life Group is also the parent company of West Coast Life Insurance Company and Protective Life and Annuity Insurance Company.
Protective Life Group
2801 Highway 280 South
Birmingham AL 35223
Protective Life Insurance Company Ratings
Protective Life Insurance Company is one of the highest rated life insurance companies as is evidenced by its strong financial ratings from the following rating agencies.
Protective Life Ratings as of May 1, 2018:
- A.M. Best rating: A+
- Fitch rating: A+
- Moody’s Investor Service rating: A1
- Standard and Poor’s rating: AA-
- Comdex Ranking: 90
Protective Life Corporation Products
Protective Life Insurance Company and Protective Life Insurance and Annuity Insurance Company, under the Protective Life Corporation umbrella, offer Life Insurance and Annuities.
- Term Life
- Universal Life
- Indexed Universal Life
- Variable Universal Life
- Survivorship Universal Life
Protective Life offers a full range of annuities, including:
- Fixed Annuities
- Indexed Annuities
- Variable Annuities
- Immediate Annuities
Protective Life Insurance Policies
When it comes to life insurance, you will usually hear the so-called “experts” pit term life vs whole life, but that is a simplistic view of life insurance. Protective Life Insurance Company offers many different types of life insurance coverage, including term and universal life.
Benefits of Term Life Insurance
- Lower Premiums Initially
- Income Replacement
- Mortgage Loan Protection
Benefits of Permanent Life Insurance
Among the many advantages of life insurance are:
- Tax Benefits
- Tax Deferred Cash Value Growth
- Tax Free Death Benefit
- Business Continuation and Succession
- Buy Sell Agreements
- Key Man Insurance
- Corporate Incentives
- Executive Bonus (Section 162) Plans
- Non-Qualified Deferred Compensation Plans
- Split Dollar Life Insurance
- Estate Planning
- Estate Preservation
- Legacy Creation
- Wealth Building
- Infinite Banking
Protective Life Insurance Policies [Plans and Features]
Life insurance products are issued by Protective Life Insurance Company, Birmingham, Alabama and Protective Life and Annuity Insurance Company in New York.
Term Life Insurance
Protective Life is known in the industry as the low price leader for its term life policies. But Protective Life is unique in that its term life insurance is called Custom Choice UL. In other words, its term life is actually universal life that doubles as convertible term insurance.
The Custom Choice UL policy offers term lengths ranging from 10 years up to 30 years. Where the policy really shines is that upon the expiration of the term, the coverage continues at the same premium. Rather than your coverage ending like a typical term policy, Custom Choice UL simply lowers the death benefit over time but your premium remains the same.
Alternatively, you can also choose to convert your policy to a permanent insurance option before the term expires into one of the Company’s other universal life insurance products.
Income Provider Option Endorsement
One rider you may want to consider if you are looking at Protective Life’s Custom UL is the income provider option. With this option, you, the insured/owner of the policy, choose how you want your life insurance beneficiary to receive the death benefit income payout.
With the income provider option, you are able to decide how much money and how often your beneficiaries receive from your death benefit. A big advantage would be form anyone who wants to provide income protection for a loved one but does not want to give them a blank check or large lump sum payment.
By spreading your death benefit out over a period of years, you will help preserve the money and may even help you qualify for a lower life insurance premium at the same time.
Permanent Life Insurance
Protective Life offers several types of universal life insurance policies, including indexed universal life and variable universal life.
Similar to whole life, universal life can offer lifetime coverage. The main difference between whole life vs universal life is the flexibility inherent in universal life insurance. With most universal life policies, the premium payments can be increased or decreased and the death benefit can be increased or decreased.
Indexed Universal Life
Protective Life’s Protective Indexed Choice UL provides lifetime coverage, with the potential for higher cash value growth than ordinary whole life.
Indexed Universal Life is not an investment in the market. Rather, it is a way to earn higher crediting based on the performance of a specific index. For example, the benefits of an IUL include the opportunity to earn a higher return on your cash value based on the IUL’s participation rate and cap rate.
The participation rate of the policy determines how much your policy participates in the return of the tracked index. For example, a 100% participation rate would return 100% of the index gains, minus any fees or costs.
The cap rate is the maximum amount of return that will be credited to your policy. Cap rates vary by policy and index chosen, but typically range from 9-14%, with potential uncapped policies also available. A cap rate has a guarantee minimum that the carrier can lower it to. For the Protective IUL policy, the minimum guaranteed cap rate is 3%.
Another benefit of IUL policies is that there is also a floor, which is the minimum interest that will be credited. The floor prevents the policy from participating in negative market returns. For example, if the floor is 0% and the stock market crashed 40%, the policy will return 0%, rather than take the hit on the full 40% stock market loss.
In addition to flexible premium payments inherent with an IUL policy, you can also choose 2 different death benefit options. Death benefit option A is a level death benefit, i.e. it stays the same. Death benefit option B is an increasing death benefit.
Protective Indexed Choice UL offers both an indexed strategy account and fixed account. The indexed account tracks the performance of the S&P 500 Index. The fixed account has an interest rate periodically fixed by the Company.
Protective Life’s IUL offers several different riders, such as Accelerated Benefit Riders, ExtendCare Rider, Income Provider Option Endorsement, Disability Benefit Rider and Children’s Term Rider.
The ExtendCare rider is an optional accelerated death benefit. It basically acts as a chronic illness rider, allowing you to tap into your policy’s death benefit if you are diagnosed with a qualifying chronic illness.
The ExtendCare rider is not long-term care insurance. Rather, it is an alternative that can provide needed financial help if you suffer a chronic illness, which is defined as being unable to perform 2 of 6 Activities of Daily Living or have a severe cognitive impairment that threatens your health and safety.
You can choose elimination periods ranging from 90 days to 365 days. Once you are deemed eligible, you will receive a monthly income benefit for 12 months. At the end of the 12 month period, you will need to re-certify. The maximum lifetime benefit is 100% of the death benefit.
Variable Universal Life
Protective Life offers Protective Investors Choice VUL. Variable UL policies are similar to regular universal life insurance with one primary exception, VUL policies allow direct investment options through sub-accounts similar to mutual funds. These investment sub-accounts allow you to participate in the specific returns of the market you are invested in.
The main pros and cons of variable universal life are that since you have the benefit of potential unlimited gains, you also bear the risk of potential unlimited loss. Taking market losses can affect the amount of premium due on your policy. If you cannot make your premium payment due to increased amounts owed, your policy may lapse and you would lose your insurance coverage.
Survivorship Life Insurance
Protective Life also offers survivorship life insurance which covers the life of two insureds. The policy pays out upon the passing of the surviving insured. It is a great option if you are looking to use second to die life insurance for estate planning.
Additional Benefits of Permanent Life Insurance
Permanent life insurance is so much more than simply a death benefit. The following are a few of the benefits of cash value life insurance.
Tax free life insurance policy loans
You can borrow against your life insurance, using your cash value as collateral. You have the option of taking our a loan from the insurance company or you might find better terms from a local bank, increasing your potential for positive arbitrage.
Tax deferred cash value growth
Cash value accumulation grows tax deferred. And if you utilize the policy correctly you will never need to pay taxes on the cash value growth.
Tax free death benefit
The death benefit from life insurance is not taxable in most situations. However, one way a death benefit is taxed is if your estate exceeds the federal estate tax exemption limit, which is $11.2 million in 2018.
Protective Life Insurance Review Conclusion
Protective Life is a fantastic company, particularly when it comes to the Custom UL product offering. But there is no perfect life insurance company and it pays to shop around for the best carrier and policy for you. At the end of the day, your best policy will depend on many factors, including your specific needs, goals and objectives. Give us a call today for a free strategy session and see if Protective Life is the right fit for you.