What is Life Insurance?
Life insurance can offer your family financial protection while living and in the event of death.
What types of insurance are there?
There are three common types of insurance; term, whole life and universal life.
Term is coverage for a set number of years.
Whole life is permanent coverage for the life of the policy.
Universal Life is flexible permanent coverage for the life of the policy.
How much life insurance do I need?
There are many questions you should ask yourself. The most important being how much of the family income do I provide? If I were to die, how would my survivors who depend on me financially get by? Will my family be able to pay final expenses and repay my debts?
Some insurance experts will suggest you purchase as much as you can afford or at least five to eight times your current income.
Who can take out a policy on my life?
Someone who has an “insurable interest” can purchase an insurance policy on your life. Those with an insurable interest generally are members of your immediate family. In some circumstances your employer or business partner might also have an insurable interest.
What happens to the cash value after the policy is fully paid up?
The cash value will be used by the company to pay premiums until you die. If you take cash value out of the policy, there may not be enough to pay premiums. The company could require you to resume paying premiums, or reduce the amount of the death benefit.
What happens to the cash value in my policy once I die?
The insurance company will pay the death benefit. Your beneficiaries can collect no more than the state death benefit. Any loans that are not repaid (plus interest) will be subtracted from the death benefit. However, your beneficiary could end up with less than the face amount of the policy. There are some exceptions where some whole life policies will pay both the death benefit and the cash value when you die.
I had a loved one pass away but I am not sure if they actually had life insurance. Is there any way to find out?
Yes, there is a Life Insurance Policy locator that helps beneficiaries find lost life insurance policies of the deceased and connect them with unclaimed death benefits.
What is a will and why is it important to have?
A will is a legal document that states who should receive your assets after you die.
It is important to have a will to help choose a guardian for minor children and name an executor to settle your affairs.
What is a Trust?
A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
Trusts usually avoid probate. It may not be considered part of the taxable estate if it is an irrevocable trust so fewer taxes may be due upon your death.