Everything You Should Know About Life Insurance!

 Permanent insurance, as the name implies, provides coverage for the duration of the insured's life. This also generates cash value, which is beneficial for tax purposes because there are no tax implications if you loan money to yourself using this cash value. Few policies may allow for tax-free withdrawals in general. In most circumstances, though, if you take the cash value, you just have to pay taxes on the premiums (the amount that has grown), which is excellent. Just make sure your agent understands that the cash value cannot exceed the death benefit, or the cash value will be subject to 10% taxes! When you withdraw, you may be charged a surrender fee, so please check with an agent who can help you with these details. 

Traditional Whole Life: Pay a set premium to be covered for the rest of the insured's life, including the accumulation of cash value.

Single-Premium Whole life insurance is a type of insurance that covers you for the rest of your life for a single lump sum payment (usually that 1 lump sum is very large in order to get a great death benefit).

Participating Whole Life Insurance is similar to traditional whole life insurance in that it provides you dividends that you can use as cash or has the option of paying your dividends for you! There is no guarantee that you will get dividends; this is contingent on the insurance company's performance.

Payment Restrictions Whole Life Insurance: Whole life insurance has fewer payments, but it has a higher premium because you are paying for a shorter period of time.

Universal life insurance has unbundled pricing variables and adjustable premiums with flexible face amounts (death benefits). For example, if you pay X, you are protected.

Indexed Universal Life (IUL): A flexible premium/benefit plan with a cash value that is linked to the performance of a certain financial index. The crediting rate (percentage of increase) of most insurance firms will not fall below zero.

Variable Life Insurance: The death benefit and cash value fluctuate based on the success of investment options held in a separate account. In most cases, insurance policies guarantee that the benefit will not be less than a certain amount.

Variable Universal Life Insurance (also called Flexible Premium Variable Life Insurance & Universal Life II/2): A combination of Variable and Universal which has premium/death benefit flexibility as well as investment flexibility.

Last Survivor Universal Life Insurance (also called Survivorship or "Second to die" Insurance): Covers 2 people and the death benefit is only paid when both insurers have died. This is FANTASTIC and somewhat a necessity for families that pay estate taxes (usually High-Net-worth individuals). A benefit that is added to your policy is referred to as a rider. This adds unique components to the policy that may be mixed and matched. There are SO MANY sorts of riders that I'd have to create a whole essay on them (and insurance companies frequently introduce new types of riders), but I'd like to mention the most common (and, in my opinion, the most significant) that you should strongly consider when buying a policy. Riders add to the premium expense, but don't dismiss them; they could save your life!

If you are fully and permanently disabled, you will get a monthly income under the Disability Income Rider. You are assured a certain amount of money. Pay attention to this aspect since, depending on the policy, you will be paid either on the length of the impairment OR the rider's time frame.

Guaranteed Insurability Rider: Allows you to buy more coverage at regular intervals based on your age or policy years without having to check your insurance eligibility.

Level Term Rider: This rider adds a specific amount of term insurance to your permanent policy. This rider can increase your policy's death payout by 3-5 times. It's not a bad deal at all

Premium Rider Waiver: If you become disabled and are unable to work or make an income, the waiver will exclude you.

Accelerated Death Benefit Rider: If an insurer is diagnosed with a terminal illness, they will get 25-40% of the standard policy's death benefit (The decision is made between the insurer and the insurance company). This will reduce the death benefit, but depending on your financial situation or way of life, this rider should not be overlooked and should be seriously evaluated.

Long-Term Care Rider: This rider will provide monthly payments if the insurer's health forces them to stay in a nursing facility or get care at home. Please keep in mind that long-term care insurance can be purchased independently for added protection.



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