Life and Annuities
Are you prepared?
Families could have to make several important decisions soon after the death of a loved one. Along with those decisions, expenses from burial planning, debt balances, and out-of-pocket health care bills can quickly add up. Survivors could find themselves not only grieving, but left in debt.
No one likes to think about this now. But early planning can give you peace of mind knowing that you have taken care of your final expenses so your loved ones don't have to. Our Final Expense whole life insurance policy can help minimize the emotional and financial burden a loss could have on your family. It can help fund your final wishes.
Planning for Tomorrow, Today
Funeral arrangements, medical bills, and outstanding debts can leave expenses for a family after a death. Costs vary, so consider your expected expenses, existing coverage, and available resources when planning.
We help families compare life insurance options based on their needs and budget. For final expense coverage, ask about:
- Available death benefit amounts
- Premiums and whether they can change
- Health questions or medical exam requirements
- Waiting periods and any limits on early policy benefits
- Renewal terms and exclusions
Final Expenses may include:
- Funeral expenses
- Cemetery costs
- Medical bills
- Outstanding loans (credit card debt)
Who needs life insurance?
Many people may assume that if you don't have children, you don't need life insurance. This isn't necessarily true. There are many key reasons to have a life insurance policy that you may not have considered.
Although it's unpleasant to think about, if you were to die prematurely how would your loved ones handle the loss financially? Who would pay for your funeral? Would your loved ones be financially equipped to settle your debts on their own?
A good rule of thumb to follow is if anyone would be negatively impacted by your death, you should consider the need for life insurance. If you have dependents, such as a spouse, children, or an elderly parent, the need for protection is even greater. A life insurance policy provides a cash payout (a death benefit) to your family in the event of your death. The cash can be used to replace your income so that the people who depend on you can meet their financial obligations. Dealing with a loss is already difficult enough. Adding financial burden to this difficult time only compounds the difficulties loved ones will face.
Term Life Insurance
Term assurance provides life insurance coverage for a specified term. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.
Various insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. Common types of term insurance include level, annual renewable and mortgage insurance.
Level term policy features a premium fixed for a period longer than a year. These terms are commonly 5, 10, 15, 20, 25, 30 and even 35 years. Level term is often used for long-term planning and asset management as premiums remain constant year to year, allowing for long-term budgeting. At the end of the term, some policies contain a renewal or conversion option. With guaranteed renewal, the insurance company guarantees it will issue a policy of an equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time. Some companies however do not guarantee renewal, and require proof of insurability at the time of renewal. Renewal that requires proof of insurability often includes a conversion option that allows the insured to convert the term policy to a permanent one, possibly compelling the applicant to agree to higher premiums. Renewal and conversion options can be very important when selecting a policy.
Whole Life Coverage
Whole life insurance may be used for burial or final expense planning. The available death benefit, premium, and eligibility requirements depend on the policy and insurer.
Whole life insurance is designed to provide lifelong coverage when the policy's requirements are met. It can include cash value and policy loan options. Review premium requirements, loan costs, and the effect of borrowing on the death benefit with the insurer before choosing a policy.
Universal Life Coverage
Universal life insurance (UL) is a relatively new insurance product, intended to combine permanent insurance coverage with greater flexibility in premium payment, along with the potential for greater growth of cash values. There are several types of universal life insurance policies which include interest sensitive (also known as "traditional fixed universal life insurance"), variable universal life (VUL), guaranteed death benefit, and equity indexed universal life insurance.
A universal life insurance policy includes a cash value. Premiums increase the cash values, but the cost of insurance (along with any other charges assessed by the insurance company) reduces cash values. However, with the exception of VUL, interest is paid at a rate specified by the company, further increasing cash values. With VUL, cash values will be and flow relative to the performance of the investment sub-accounts the policy owner has chosen. The surrender value of the policy is the amount payable to the policy owner after applicable surrender charges, if any.
Universal life insurance addresses the perceived disadvantages of whole life, namely that premiums and death benefit are fixed. With universal life, both the premiums and death benefit are flexible. Except with regards to guaranteed death benefit universal life, this flexibility comes with the disadvantage of reduced guarantees.
What is an annuity?
An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid. Annuities are most often bought for future retirement income. Only an annuity can pay an income that can be guaranteed to last as long as you live.
An annuity is neither a life insurance nor a health insurance policy. It's not a savings account or a savings certificate. You shouldn't buy an annuity to reach short-term financial goals.
Your value in an annuity contract is the premiums you've paid, less any applicable charges, plus interest credited. The insurance company uses the value to figure the amount of most of the benefits that you can choose to receive from an annuity contract. This guide explains how interest is credited as well as some typical charges and benefits of annuity contracts.
A deferred annuity has two parts or periods. During the accumulation period, the money you put into the annuity, less any applicable charges, earns interest. The earnings grow tax-deferred as long as you leave them in the annuity. During the second period, called the payout period, the company pays income to you or to someone you choose.