Term life insurance provides a death benefit only. It does not build cash value.
Three Types of Term Insurance:
Annual Renewable Term
Death benefit remains level. Premium increases annually since there is an increased likelihood of death.
Level Term
Both the death benefit and the premiums remain level for a predefined period of time; usually, five, ten fifteen, or twenty years.
Decreasing Term
The death benefit decreases each year even though the premiums remain level. This type of term is often used to cover a mortgage or other loan with a decreasing balance.
Characteristics of Term Insurance
Low cost in the beginning
Premiums increase over time
Can help to meet specific short-term needs.
Has no cash value
Lasts a specific period of time?no more; no less.
Variable Life Insurance
Variable life insurance is a flexible life insurance product that is offered by a prospectus.
Variable life insurance has a term insurance foundation and an investment fund. The policy owner gets to choose which type of investment vehicle in which the cash value will be placed. The following are types of investment vehicles from which the policy owner can choose:
Money Market Account
Corporate Bond Portfolio
Common Stock Portfolio
Government Securities
Fixed Account
Insurance agents must be properly licensed to sell securities in order to sell variable products which are sold by prospectus. Be certain that you CAREFULLY read the prospectus before purchasing any variable product.
Charitable Giving Through Life Insurance
If there is a charity in which you would like to really make a difference, you might want to consider the option of leaving life insurance proceeds to a favorite charity.
What are some of the advantages?
With a life insurance policy, the proceeds are guaranteed. Of course, it is very important to remember that any guarantee is based solely on the assets and financial ability of the company that issues the insurance policy. You pay the premium in monthly installments which may be tax deductible as a charitable contribution. A small outlay creates a meaningful amount. Your other assets are not affected. Life insurance proceeds are not subject to federal taxes or included in probate.
If this sounds like an interesting idea for you to pursue; discuss it with your professional insurance agent or financial planner. You may also need to seek the advice of an attorney. For a brief outline of the tax consequences, see Tax Results of Charitable Gifts.
Disability Income...The Basics
A disability policy is designed to replace lost income when a policyholder is unable to work due to a covered accident or illness.
Disability policies generally have:
1. A waiting period-A waiting period in disability insurance is like a deductible on your car insurance. The difference is that while a deductible for auto insurance is expressed in dollars ($250, $500, etc.), a waiting period for disability insurance is expressed in time, such as 60 days, 90 days, or longer. It is the amount of time that you must wait before benefits will be paid. The longer the time period, the lower the premium. A benefit period can be two years, five years, etc. The most comprehensive policy is one that pays benefits to Age 65.
2. An occupational classification-Depending on the occupational classification, the premium and the benefit period will be determined.
3. A monthly benefit amount-A monthly benefit amount can be up to 60% of the present income. Benefits are tax free on an individual policy. The older you are, the more disability insurance will cost, but once a premium has been established, it is likely to stay the same throughout the life of the policy.
Long Term Care Policies - The Basics
Long-term health care includes much more than just nursing home care for the elderly. Today's long-term care can refer to a wide variety of:
Health care
Rehabilitative services
Personal care
Social services
For people who, due to illness or disability, need special assistance with daily activities. One of the most common times that people use a convalescent nursing facility is when they need continued medical care and rehabilitation therapy during recuperation from an illness or injury after being discharged from the hospital.
How Much Does Long Term Health Care Cost?
The cost for a convalescent center stay ranges from $30,000 to $40,000 per year. Some experts predict that this number will reach $83,000 by the year 2010.
What About Medicare and Medicaid?
Medicare policies contain only a limited amount for Skilled Nursing Care and nothing for care that is considered Intermediate or Custodial.
Medicaid is a federal and state program that covers medical bills for the needy. If you qualify, it will pay for your long-term care expenses. In order to qualify for Medicaid, you will have to have essentially no assets.
