Life Insurance

Who should have life insurance?

Life insurance is recommended for individuals who are the primary earner within their household, or who have people who depend on them for financial supports, such as a spouse, children, or elderly parents. It can also be a good option for people who have debts, like a mortgage or student loan debts, that another person would have to assume upon their death.

What does life insurance cover?

Life insurance covers a wide array of expenses, including:

• Mortgages
• Student loans and other co-signed debts
• College expenses
• Living expenses for your family
• Burial expenses
• Estate taxes
• Loans from family members

Lost income from death of wage earner.

Who can be a beneficiary of my life insurance?

A beneficiary is a person or entity named as the recipient of your life insurance’s death benefits. Your beneficiary can be a family member, like a spouse or child, and you can choose more than one beneficiary and designate how you would like the benefits split up among them. Your beneficiary can also be a business or Trust.

What does my beneficiary need to do to collect my life insurance?

To receive the benefits from your life insurance, your beneficiary or beneficiaries will need to provide the insurer with a proof of death and a copy of the contract in order to disburse the benefit. It is important to let your beneficiary or beneficiaries know prior to your death of your life insurance plan, as that will help them prepare in case there are any delays of complications that later arise when it is time for them to receive the benefits.

Do I have to pay taxes on my life insurance premiums?

Yes, your life insurance premiums are not tax-deductible.

When is the best time to purchase life insurance?

When you purchase life insurance depends on your financial needs. For example, someone who is just starting a family might want to consider life insurance, as they will soon have more people relying on them.

What are the different types of life insurance policies?

• Term life insurance. This is the most basic type of life insurance. You pay a premium and
  in return, the insurance guarantees to pay your beneficiary a lump sum of money if you
  die while the policy is in effect.
• Permanent life insurance. This type of life insurance never expires, and includes a cash
  value component that grows or shrinks over the life of the policy, allowing you to borrow
  against your policy or cancel the policy for part of the cash value.
• Whole life insurance. With this type of life insurance, you pay a set premium amount and
  the cash value component grows at a guaranteed set rate.
• Universal life insurance. This type allows you to adjust the premium of benefit amount.
  Additionally, the cash value component earns interest at a variable rate set by the insurer,
  and you can use the cash value component to pay or reduce your premiums.
• Variable life insurance. With this type of life insurance, you pay a set premium amount
  and can invest in the cash value component of your policy among the insurance
  company’s portfolio of investments. However, because the cash value component is
  invested, you risk losing cash value over the life of the policy.
• Variable universal life insurance. Like with universal life insurance, this type of policy
  allows you to adjust the premium of benefit amount. Like variable life insurance, you can
  also invest the cash value portion of the policy among the insurance company’s portfolio
  of investments. Due to the investment of the cash value portion, there is still a risk of
  losing cash value over the life of the policy.
• Indexed Universal Life Insurance. The cash value is not invested in the stock market.
  The cash value receives credits that correlate to the performance of an external financial
  market. The financial market are usually the S&P 500, Dow Jones, Gold or Bonds. This
  is referred to indexing to market performance. When the financial market increases the
  cash value of the Indexed Universal Life is credited with a portion of the market increase.
  When the financial markets lose value the cash value of the Indexed Universal Life does
  not lose value. This is possible because the cash value of the Indexed Universal Life is
  indexed to the financial market and not invested in the financial market.