How much insurance do I need?

• In addition to protection, what else can I accomplish with my life insurance?

• Why should I choose a reputable insurance company?

• How much will life insurance cost me?

• How can I save money when buying life insurance?

• What if I already have insurance coverage?

• What are the tax advantages of life insurance?

• How do I know what term to select?

• What term lengths are available?

• Can I convert my policy from term to permanent?

• What are some of the reasons for converting to a permanent life insurance policy?

• Can I renew my term life policy after the initial term expires?

• Will my beneficiaries have to pay income tax on my policy's death benefit?



How much insurance do I need?
If you were to pass away, consider what your spouse and dependents would need in order to cover day-to-day as well as larger expenses, to live comfortably and have financial stability. Don't forget to include savings for college and retirement. Also consider the effect of inflation over time; the amount needed twenty years from now is likely to be significantly higher than today.



In addition to protection, what am I trying to accomplish with my life insurance?
Some life insurance policies can help you pay for major expenses like college tuition and estate expenses, or provide additional income for retirement or emergencies. Remember that Term Life Insurance pays a death benefit only, while different types of Permanent Life Insurance -- Whole, Universal, and Variable Universal Life - can supplement your income through withdrawals or loans against a policy's cash value.



Why should I choose a reputable insurance company?
In addition to being financially secure, the life insurance company you choose should have a good claims payment history, good customer service and competitive pricing. We encourage our clients to make sound and informed financial decisions by reviewing independent ratings by sources such as Standard and Poor's, A.M. Best, Moody's, Fitch, and Weiss Ratings.



How much will life insurance cost me?
Premium rates for life insurance are typically based on factors such as: age, sex, height and weight health status, including whether or not you smoke or participate in high-risk activities or occupations.

The type of policy you purchase will also affect the amount of the premium. Rates for term insurance are typically lower, at least at younger ages. Premium rates for permanent policies like Whole Life are typically higher at earlier ages, but do not increase as you age. Lastly, paying premiums monthly or quarterly rather than annually will result in higher premiums.



How can I save money when buying life insurance?
You can lower your premiums and save money in the long run by purchasing now while you are young. Premiums for the same coverage increase the older you become. The longer you wait, the more you risk developing a health condition that could increase your premium further, or make you un-insurable.

If you want Permanent Life but you're on a budget, consider some Term for now. You can save money initially by buying some Term Life in combination with Permanent Life. Then later, if your budget increases, consider converting the Term policy to Permanent Life. Consider group life insurance offered through your employer. It may be available at a low cost. But keep in mind that your group coverage may end or become more expensive when you leave your job.



What if I already have insurance coverage?
If you already have a life insurance policy, it's a good idea to review it every few years to make sure it still meets your needs. Check to make sure all beneficiaries and other information are current. Do any of the "ifs" below pertain to you? If so, it might be time to speak with your representative. If you...
Were recently married or divorced
Have a child or grandchild who was recently born or adopted
Provide care or financial help to a child or parent
Want to ensure that financial resources are available to provide assistance or long-term care for a loved one
Purchased a new home recently
Have children or grandchildren who are about to enter college
Refinanced your home mortgage in the past six months
Receive an inheritance
Retired or your spouse has retired
Have started a business

What are the tax advantages of life insurance?
Death benefits are generally income tax-free. In the case of Permanent Life Insurance policies, cash values accumulate on an income tax-deferred basis. That means that you would not have to pay income tax on any earnings in the policy as long as the policy remains in effect. In addition, most policy loans and withdrawals are not taxable. However, if you surrender your policy or it lapses, you may have income to the extent that distributions and/or withdrawals exceed your policy basis (i.e., total premiums paid less prior distributions).

Pursuant to IRS Circular 230: The information contained in this website is not intended to (and cannot) be used by anyone to avoid IRS penalties. This website supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor.



How do I know what term to select?
Every life situation is different, so you will need to take your personal obligations into account. Things to consider could be the number of years you have left on your mortgage, or if you have children, the number of years until they complete college. For example, if you have young children and plan to send them to college, you may want to consider at least a 20 year term life policy.



What term lengths are available?
Depending on your age, level term life insurance protection is available for 10, 15, 20 or even 30 years.

Can I convert my policy from term to permanent?
Yes, you can convert all or some of your term coverage to a permanent policy for a lifetime of coverage.

 

What are some of the reasons for converting to a permanent life insurance policy?
Unpredictable events can leave you in a great deal of debt later in life as a consequence of paying for your grandchild's college education or purchasing a vacation home. Inheriting significant wealth also calls for action to plan the taxes and estate settlement costs. Permanent policies allow accumulation of cash value tax advantages that can supplement your retirement at times of need.



Can I renew my term life policy after the initial term expires?
You can renew your policy annually after its initial term expires, up to age 95 (80 in New York). Note, however, that premiums will likely be much higher after the initial term, and will continue to rise each subsequent year. If you anticipate needing coverage much beyond the initial term, consider buying Permanent Life instead, or converting to Permanent Life.

Will my beneficiaries have to pay income tax on my policy's death benefit?
Your death benefit will generally be free from income taxes. It is guaranteed as long as the policy remains in force.