Life insurance is one essential part of any financial planning. One of the many reasons people buy life insurance products is to replace the income that would cease after the death of a wage earner in the household. The proceeds generated by a life insurance policy also help to ensure that one’s dependents are not overly burdened with debt after you die. A properly purchased policy could mean the difference between your dependents being forced to sell assets to pay outstanding bills or taxes and holding on to important items like one’s home or business. One of the most important features of life insurance is that death benefit amount is not subject to income tax for the beneficiaries. In addition, the death benefit amount for a life policy owned by a C corporation may also be included in the alternative minimum tax calculation.
Before purchasing life insurance, an individual should compile a personal financial summary and review their family's needs. There are a many factors to consider when making a determination on how much protection you should carry. These include but are not limited to:
While there is no perfect substitute for a careful financial evaluation of the amount of coverage needed, one standard rule of thumb used, is to buy life insurance that equals five to seven times the annual gross income of the earner.
There is little doubt that purchasing life insurance is not like buying any other product. Every time you pay the premium, you are buying the future financial security of your family that only a life insurance policy can provide. While it has many uses, a few of the highlights include, helping to ensure that, when you pass, your dependents maintain the financial resources they need to protect their most valued assets, like their home and the needed income to run a household.
Choosing which life insurance product is a decision that important, but can often seem complicated. As with any major purchase, it is critical that you understand the needs and options available. At Williams Insurance, one of our experienced professional Life Insurance Agents, can guide you through which products are right for you. We have been helping Fullerton CA Residents and the surrounding areas make conservative safe decisions for over 75 years.
There are many types of Life Insurance policies but main types we suggest are Term and Permanent. A Term Life policy provides protection for an agreed upon period of time. Meanwhile, a permanent life policy provides lifelong protection. To learn more about the intracacies of term and permanent life insurance have a conversation with one of our Agents.
If you forget to make a premium payment, you normally are given a 30 day grace period in order for you to pay the premium. Once the grace period expires, your life policy coverage will lapse. In certain cases, depending on your policy, you may be allowed to reinstate it upon receipt of evidence of insurability. On a permanent life policy, sufficient cash value of your policy could give you an opportunity, with your authorization, to draw from the policy’s cash surrender value to keep that policy in force. Since there is no cash value from which to draw, this would not apply to a term policy. In regards to flexible premium policies, premiums may be reduced in some cases, or even skipped if you maintain sufficient cash values in your policy. Be aware, this will result in lower policy cash values.
You can often add Provisions or riders that provide benefits to a policy that will waive premium in the event of you becoming disabled. One such rider is a waiver of premium for disability. If you become totally disabled for a period of time specified in the policy, you will not be required to pay premiums until your disability ends.
Here are a few specific riders offered by some insurance companies:
When you purchase the policy, find out the effective date. Many times this is a different date than the date of issue.
You may be eligible under certain circumstances to receive a part or all of your death benefit to help cover major medical expenses and long term care. Any benefits paid out early will be deducted from the amount paid out to your beneficiaries at the time of death.
Medical tests permit insurers to charge accurate premiums that mirror the level of risk the company is assuming. Some medical conditions are easily managed by medication and treatment and allow the company to accept risks that may not otherwise qualify without testing.
Consider your situation before cancelling a current life policy. Always verify your new life policy is in effect and no premium is due prior to cancelling.
The answer is usually yes. Here are some options you may wish to study: