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518-869-3535 Toll Free 888-869-3535Life Insurance FAQs
FAQ's for Life Insurance
What are the Advantages of the Death Benefit?
What are the Advantages of Living Benefits?
What Types of Life Insurance Can I Buy?
Term Life Insurance
Whole Life Insurance
What is Universal Life Insurance
How Much Life Insurance is Enough?
When I have “Life Changes” - Should My Policy Change?
Life Changes - So Should Your Policy
How much life insurance should an individual own?
What about purchasing life insurance on a spouse and on children?
Should term insurance or cash value life insurance be purchased?
How does mortgage protection term insurance differ from other types of term life insurance?
Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage?
What are the Advantages of the Death Benefit?
Provides income tax-free money to your named beneficiary(s) that can be used to pay funeral expenses, debt, tuition, estate taxes or virtually any financial need you leave behind. Can provide business security by enabling partners to buy out the interests of a deceased partner and prevent a forced liquidation.
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What are the Advantages of Living Benefits?
The cash value growth of a permanent life insurance policy is tax-deferred1, which means you do not pay taxes on the growth of the cash value unless the money is withdrawn. Loans or withdrawals can be taken against the cash value of a permanent life insurance policy to help with expenses, such as college tuition or the down payment on a home. 1Accumulated growth may be taxable upon withdrawal. If the policy is a Modified Endowment Contract (MEC), tax penalties may apply prior to age 59. Consult a tax advisor on your specific situation. 2Policy loans and withdrawals reduce cash value and the death benefit and may be subject to other charges outlined in the contract.
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What Types of Life Insurance Can I Buy?
There are several different types of life insurance products available. The most common include:
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Term Life Insurance
Term provides life insurance protection for a specified period of time. If you do not currently have life insurance, term can be a good place to start. It's generally less expensive than permanent life insurance, and is available in varying term periods with fixed premiums from a one- (annual renewable term) to 20-year period (level term). Furthermore, term insurance is sometimes convertible to permanent coverage, providing you with flexibility as your needs change.
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Whole Life Insurance
Whole life is a form of permanent life insurance that remains in force during the insured person's lifetime, provided premiums are paid as specified in the policy. Whole life insurance can build cash value.
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What is Universal Life Insurance
Universal life is a form of permanent life insurance characterized by its flexible premiums, flexible face amounts and unbundled pricing structure. Universal life can build cash value, which earns an interest rate that may adjust periodically, but is usually guaranteed not to fall below a certain percentage.
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How Much Life Insurance is Enough?
Life insurance is a crucial step in planning for your future. Not only can life insurance fulfill promises made to your family if you are no longer around, there are several life insurance policies that provide benefits while you are living.
Back to top
When I have “Life Changes” - Should My Policy Change?
As events happen in your life, your life insurance coverage may need to change to adapt to your current needs. Some life changes that may require you to reevaluate your coverage include: marriage, divorce, a new baby, purchase of a new home and retirement.
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Life Changes - So Should Your Policy
Your need for life insurance is dependent on your personal and financial needs. As your life changes, your life insurance coverage may need to change as well to adapt to your current needs. Some life changes that may require a policy "tune-up" include: You recently married or divorced You have a new child or grandchild Your health or your spouse's health has deteriorated You are providing care or financial assistance to a parent Your child or grandchild requires assistance or long-term care You recently purchased a new home You are planning for a child or grandchild's education You are concerned about retirement income You have refinanced your home mortgage in the past six months You or your spouse recently received an inheritance
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How much life insurance should an individual own?
"Rule of thumb" suggests an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account when determining the right amount of life insurance for you and your family. Important factors include: Income sources (and amounts) other than salary/earnings Whether or not you are married and, if so, what is your spouse's earning capacity The number of individuals who are financially dependent upon you The amount of death benefits payable from Social Security and from an employer-sponsored life insurance plan Whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need, etc.) Calculating the correct amount of life insurance to buy is not as simple as it appears. We recommend contacting us for help determining the right amount of coverage. As independent agents, we are unbiased advisors that will help you avoid buying too much, show you appropriate optional coverage's for your need and recommend a company that will best serve your interests.
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What about purchasing life insurance on a spouse and on children?
In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s). It is of utmost importance that the income-earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance. This should be done before contemplating the purchase of life insurance on children or on a non-wage-earning spouse. Life insurance on a non-wage-earning spouse is often recommended for the purpose of paying for household services lost due to this individual's death. In a dual-earning household, it is important to protect the income earning capacity of both spouses .
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Should term insurance or cash value life insurance be purchased?
This is a difficult question -- one whose answer will vary depending on your personal circumstances. First, recognize that in any life insurance purchasing decision, two questions must be answered: 1. "How much life insurance should I buy?" 2. "What type of life insurance policy should I buy?" The first question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way you can be afford is through the purchase of term insurance, since term insurance has a lower premium. If your ability to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the second question -- what type of policy to buy. Important factors affecting this decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.
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How does mortgage protection term insurance differ from other types of term life insurance?
The face amount under mortgage protection term insurance decreases over time, consistent with the projected annual decreases in the outstanding balance of a mortgage loan. Mortgage protection policies are generally available to cover a range of mortgage repayment periods, e.g., 15, 20, 25 or 30 years. Although the face amount decreases over time, the premium usually remains the same. Further, the premium payment period often is shorter than the maximum period of insurance coverage -- for example, a 20-year mortgage protection policy might require that level premiums be paid over the first 17 years.
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Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage?
Yes. An existing policy, either term or cash-value life insurance, can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of the insured's death. Although a lender may offer a mortgage protection term policy to you, the lender rarely requires it. Credit life insurance is frequently recommended in conjunction with the taking out of an installment loan when purchasing expensive appliances or a new car, or for debt consolidation. Is credit life insurance a good buy? Credit life insurance is frequently more expensive than traditional term life insurance. Further, if you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost.
Back to top
What are the Advantages of the Death Benefit?
What are the Advantages of Living Benefits?
What Types of Life Insurance Can I Buy?
Term Life Insurance
Whole Life Insurance
What is Universal Life Insurance
How Much Life Insurance is Enough?
When I have “Life Changes” - Should My Policy Change?
Life Changes - So Should Your Policy
How much life insurance should an individual own?
What about purchasing life insurance on a spouse and on children?
Should term insurance or cash value life insurance be purchased?
How does mortgage protection term insurance differ from other types of term life insurance?
Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage?
What are the Advantages of the Death Benefit?
Provides income tax-free money to your named beneficiary(s) that can be used to pay funeral expenses, debt, tuition, estate taxes or virtually any financial need you leave behind. Can provide business security by enabling partners to buy out the interests of a deceased partner and prevent a forced liquidation.
Back to top
What are the Advantages of Living Benefits?
The cash value growth of a permanent life insurance policy is tax-deferred1, which means you do not pay taxes on the growth of the cash value unless the money is withdrawn. Loans or withdrawals can be taken against the cash value of a permanent life insurance policy to help with expenses, such as college tuition or the down payment on a home. 1Accumulated growth may be taxable upon withdrawal. If the policy is a Modified Endowment Contract (MEC), tax penalties may apply prior to age 59. Consult a tax advisor on your specific situation. 2Policy loans and withdrawals reduce cash value and the death benefit and may be subject to other charges outlined in the contract.
Back to top
What Types of Life Insurance Can I Buy?
There are several different types of life insurance products available. The most common include:
Back to top
Term Life Insurance
Term provides life insurance protection for a specified period of time. If you do not currently have life insurance, term can be a good place to start. It's generally less expensive than permanent life insurance, and is available in varying term periods with fixed premiums from a one- (annual renewable term) to 20-year period (level term). Furthermore, term insurance is sometimes convertible to permanent coverage, providing you with flexibility as your needs change.
Back to top
Whole Life Insurance
Whole life is a form of permanent life insurance that remains in force during the insured person's lifetime, provided premiums are paid as specified in the policy. Whole life insurance can build cash value.
Back to top
What is Universal Life Insurance
Universal life is a form of permanent life insurance characterized by its flexible premiums, flexible face amounts and unbundled pricing structure. Universal life can build cash value, which earns an interest rate that may adjust periodically, but is usually guaranteed not to fall below a certain percentage.
Back to top
How Much Life Insurance is Enough?
Life insurance is a crucial step in planning for your future. Not only can life insurance fulfill promises made to your family if you are no longer around, there are several life insurance policies that provide benefits while you are living.
Back to top
When I have “Life Changes” - Should My Policy Change?
As events happen in your life, your life insurance coverage may need to change to adapt to your current needs. Some life changes that may require you to reevaluate your coverage include: marriage, divorce, a new baby, purchase of a new home and retirement.
Back to top
Life Changes - So Should Your Policy
Your need for life insurance is dependent on your personal and financial needs. As your life changes, your life insurance coverage may need to change as well to adapt to your current needs. Some life changes that may require a policy "tune-up" include: You recently married or divorced You have a new child or grandchild Your health or your spouse's health has deteriorated You are providing care or financial assistance to a parent Your child or grandchild requires assistance or long-term care You recently purchased a new home You are planning for a child or grandchild's education You are concerned about retirement income You have refinanced your home mortgage in the past six months You or your spouse recently received an inheritance
Back to top
How much life insurance should an individual own?
"Rule of thumb" suggests an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account when determining the right amount of life insurance for you and your family. Important factors include: Income sources (and amounts) other than salary/earnings Whether or not you are married and, if so, what is your spouse's earning capacity The number of individuals who are financially dependent upon you The amount of death benefits payable from Social Security and from an employer-sponsored life insurance plan Whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need, etc.) Calculating the correct amount of life insurance to buy is not as simple as it appears. We recommend contacting us for help determining the right amount of coverage. As independent agents, we are unbiased advisors that will help you avoid buying too much, show you appropriate optional coverage's for your need and recommend a company that will best serve your interests.
Back to top
What about purchasing life insurance on a spouse and on children?
In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s). It is of utmost importance that the income-earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance. This should be done before contemplating the purchase of life insurance on children or on a non-wage-earning spouse. Life insurance on a non-wage-earning spouse is often recommended for the purpose of paying for household services lost due to this individual's death. In a dual-earning household, it is important to protect the income earning capacity of both spouses .
Back to top
Should term insurance or cash value life insurance be purchased?
This is a difficult question -- one whose answer will vary depending on your personal circumstances. First, recognize that in any life insurance purchasing decision, two questions must be answered: 1. "How much life insurance should I buy?" 2. "What type of life insurance policy should I buy?" The first question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way you can be afford is through the purchase of term insurance, since term insurance has a lower premium. If your ability to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the second question -- what type of policy to buy. Important factors affecting this decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.
Back to top
How does mortgage protection term insurance differ from other types of term life insurance?
The face amount under mortgage protection term insurance decreases over time, consistent with the projected annual decreases in the outstanding balance of a mortgage loan. Mortgage protection policies are generally available to cover a range of mortgage repayment periods, e.g., 15, 20, 25 or 30 years. Although the face amount decreases over time, the premium usually remains the same. Further, the premium payment period often is shorter than the maximum period of insurance coverage -- for example, a 20-year mortgage protection policy might require that level premiums be paid over the first 17 years.
Back to top
Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage?
Yes. An existing policy, either term or cash-value life insurance, can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of the insured's death. Although a lender may offer a mortgage protection term policy to you, the lender rarely requires it. Credit life insurance is frequently recommended in conjunction with the taking out of an installment loan when purchasing expensive appliances or a new car, or for debt consolidation. Is credit life insurance a good buy? Credit life insurance is frequently more expensive than traditional term life insurance. Further, if you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost.
Back to top
