Traditional whole life insurance, also known as ordinary life or straight life, is a type of permanent (cash value) insurance that provides coverage for your entire life. This kind of policy is sometimes described as plain vanilla insurance. You pay a fixed amount, known as a level premium, each payment period (monthly, quarterly, semiannually, or annually), and a guaranteed death benefit goes to your beneficiary when you die. Your premium amount is guaranteed to remain level for as long as you live, even if the insurance company's costs rise. When you reach old age, your premium will not increase over the amount you paid when you started the policy.
Cash value, or permanent, life insurance is life insurance that is designed to be kept until your death--whenever that may be. Part of your premium pays for the "pure" insurance coverage and expenses, and the balance is held by the insurance company in a cash value account. The type of permanent life insurance you buy (e.g., whole, universal, variable) will influence the pace at which the cash value portion of your policy grows. The interest and earnings grow tax deferred until you withdraw the funds, and may be part of the income-tax-free death benefit if you die. However, these policies may require a higher cash outlay than term life policies.
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posted in Financial Planning, Insurance, Lump Sum, Pension, Retirement Planning
A growing family, by definition, means growing financial obligations — both in the present and in the future. Raising children can increase your insurance needs and heightens the urgency for being properly prepared.
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posted in Financial Planning, Insurance, Lump Sum, Pension, Retirement Planning
An estimated 721,000 vacation homes sold last year. That's down nearly 22% from the year before.¹
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An insurance deductible is the amount you, the insured, pay before any claim is paid by your insurance carrier. Depending upon the type of insurance, a policy may set the amount of deductible, or offer you the ability to select a deductible amount.
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posted in Financial Planning, Insurance, Lump Sum, Pension, Retirement Planning
Because long-term care insurance (LTCI) is a relatively new product, policies are not standardized. This can make it especially difficult to compare policies when you're shopping for this type of insurance. However, comparing LTCI policies is a lot easier when you know what to look for and follow a few simple guidelines.
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posted in Financial Planning, Insurance, Lump Sum, Pension, Retirement Planning
Understanding the threat of estate taxes on your life insurance proceeds is the first step in protecting these funds from unnecessary taxation. The next steps are determining the appropriate ownership of your policy and selecting a beneficiary. Although there are other alternatives, a life insurance trust can help avoid potential threats to the policy's proceeds.
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A life insurance policy illustration is a text-and-graphics presentation of how a life insurance policy will perform at a selected interest rate, with an assumed number of predetermined premium payments and a "current" and "guaranteed" cost of insurance and expenses. A life insurance policy illustration is not a legal document--legal obligations are contained in the policy itself.
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If you're thinking about buying life insurance for your child, consider the decision carefully. The main purpose of life insurance is to replace income lost after someone dies, and there's little doubt that your income could decrease upon your child's death, due to lost time at work or lost productivity. However, you should also consider protecting your child's future by purchasing more life insurance for you and your spouse.
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posted in Financial Planning, Insurance, Lump Sum, Pension, Retirement Planning
