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Life Insurance Policies

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“Being under insured is the greatest gamble in life one can take, if you lose your family will pay!”

“Your car is insured, your boat is insured, your house is insured, are you?”

The first step to learning about life insurance, is understanding its necessity and importance. Life insurance is essential for a number of different reasons.

It is a financial instrument that allows you to protect your family and loved ones when you're gone and also a tool to finance your objectives from education to retirement while you are alive.

Types of Life Insurance...

 

Shopping life insurance is a very serious and complicated process, most financial professional would recommend you arrange a meeting with a qualified person who has diverse knowledge and access to multiple carriers to help insure the product or direction you go with any form of insurance permanent or term meets your long term needs and goals. “Getting a quote for permanent insurance especially over the phone before some serious fact finding would be like calling a car broker and asking for a price on a car.” This rate could vary widely and you will most likely get what you are paying for. Cheap and Quality can only be found together in the dictionary.

 

One of our founders/owners Steve Friedman who has over 400 million of life insurance in place has been helping to meet the needs of clients and business owners will meet with anyone free of charge in his office. He can be reached at 949 916-5210 ext 22 or e-mail him at Steve@jwcinsurance.com, so he can book a meeting in either his Laguna Hills or Newport Beach offices.

 

“Why the average American will spend several hours a year planning for their vacations which usually last a week, but are unwilling to spend a hour a year planning for their retirement which will last 20-40 years and there death which has a 100% chance of happening someday has always been a mystery to me”

 

“Being a has been jock, I have learned some valuable lessons on teamwork/game plans and building strategies for success. I like nothing better than to help my clients map out a plan or strategy for success.” - Steve Friedman

 

Term Life Insurance

Term Policies provide life insurance for a specified period of time. These policies provide benefits in the event of death, but they generate no cash value. Keep in mind that the cost of term insurance increases as you get older, which may make it more expensive than cash value insurance in the long run. Most companies will not sell term insurance to an applicant for a term that ends past his or her 80th birthday.

 

Benefits of Term Life Insurance provides life insurance for a specific period of time, or “term”. Term life insurance provides only “pure” insurance protection and does not have the savings feature typically found in most permanent "cash-value" life insurance policies.

 

This type of insurance offers the users a choice of terms from 1 year renewable up to 30 year terms. The renewable options are usually only available for the shorter terms, 1 to 5 years. The premium for the term remains the same throughout the term, the most popular nowadays is the 20 year term. In certain cases you can also opt for a term to a specified age, usually 65.

Term life insurance is most useful when an insured person is relatively young and the need is for temporary or short-term coverage. Young, growing families with limited income and a high insurance need represent one situation where term life insurance works very well. Situations where a need will decline over time, such as with a home mortgage, are also good candidates for term life insurance.

 

The younger you are when you take out a term policy, the cheaper the premiums. Because the premiums will not increase over the term, the longer the term the more money you save. Thus a young person can have a very high insurance death benefit for a relatively small premium up to the age of 65.

 

Another benefit may be “Return of Premium” as some insurers have created term life with a “return of premium” feature. The premiums for the insurance with this feature are often significantly higher than for policies without it, and they generally require that you keep the policy in force to its term or else you forfeit the return of premium benefit.

 

Annual Renewable Term Life Insurance Defined

Annual renewable term life insurance is term insurance that renews every year. With term life insurance, you are covered only for the specified term of the policy. Most term life policies last between five and thirty years, at which point you either renew or no longer have coverage. However, with annual renewable term life insurance, the policy covers you only for one year, at which point you have the option to renew.

 

Benefits of Annual Renewable Term Life Insurance

Annual renewable term life insurance provides you with a flexible life insurance option. Since the policy renews on a yearly basis, there is no long-term commitment to pay premiums or buy coverage. As such, this can be a great option for people who need coverage only for a period of time, such as when they are in between jobs.

 

Annual Renewable Term Life Insurance Premiums

Affordability is another advantage of an annual renewable term life insurance policy. The premiums, initially, may be much lower than you would pay for a long-term policy. This is because there is less of a statistical chance that you will die within the yearlong period, as opposed to a higher risk that you might die over five, fifteen or thirty-year terms which are common in term life policies.

However, as you age, your premiums generally increase slightly each year. Thus, unlike standard term life insurance with a longer period, you will pay more as you age instead of having a fixed premium for the life of the policy. In addition, eventually you may age-out of being able to buy coverage, or coverage may become prohibitively expensive when you get older.

 

Disadvantages of Annual Renewable Term Life Insurance Policies

The major disadvantage of annual renewable term life insurance is the relatively short period for which you have protection. At the end of the yearlong period, you may be unable to afford the increase in premiums, especially if your premiums increase directly. Furthermore, if something happens to you- such as getting diagnosed with a terminal illness- it may be difficult or impossible to renew your policy unless the insurance contract states that the insurer must renew at a capped maximum.

 

Should You Choose An Annual Renewable Term Life Insurance Policy?

If you do not have the money to afford larger monthly payments for a longer periods of time this will fill a short term need.

 

Return of Premium Life Insurance (ROP Term)

Return of premium life insurance is a newly introduced term life insurance policy that provides both death benefit protection and a return of premium insurance feature. Return of premium life Insurance is aimed right at one of the greatest objections to term life: “I am probably not going to die, and my money will have been wasted."

Here’s how it works: If you keep your policy for the term period, at the end of that time whether 15, 20 or 30 years, the life insurance company that issued the insurance with the return of premium policy, returns the entire premium that you paid for the insurance. There also is some partial return of premium for policies canceled before the end of the term (depending on the year it’s canceled – the longer it’s kept, the higher the amount of the return.)

 

When you buy insurance with a return of premium option, you do not have to waste your money.

Unlike regular term policies, Return of Premium term life insurance rewards you for keeping the policy by giving a guaranteed return of your total cumulative premium paid on the policy during the level term period, not including substandard (extra charges for health) and rider charges (extra benefits such as disability coverage), if any, which will be paid to the policy owner at the end of the level term period if the policy is then in force.

 

Here’s an example: Male, age 35 with the best rate of preferred plus, $500,000 of 30-year return of premium term life insurance:
Annual premium = $810; Return of Premium after 30 years = $24,300 ($810 x 30yr = $24,300) The life insurance return of premium is considered income tax free, because you aren’t receiving back more than you put into the return of premium life policy. The return of premium term life insurance policies feature fully guaranteed level premiums for the first 15, 20 or 30 years.

 

 

Below are some of the various forms of Cash Value Life Insurance

Cash Value or permanent insurance pays a death benefit whenever you die - even if you live to 100! There are three major types of whole life or permanent life insurance - traditional whole life, universal life, and variable universal life, and there are variations within each type from indexed life to Adjustable Life as well. One should consult a expert before attempting to choose between the many forms of Cash Value insurance available.


Universal Life Insurance

Universal Life Insurance offers you more flexibility than whole life insurance. You may be able to increase the death benefit, if you pass a medical examination. The savings vehicle (called a cash value account) generally earns a money market rate of interest.

 

Benefits of Universal Life Insurance Universal Life is similar in some ways to, and was developed from whole life insurance. The advantage of the Universal Life policy is in its flexibility and the potential for greater cash value growth. It offers you the chance to change the policy (within limitations) to suit your changing needs.

 

If things go well, you can increase the investment part of the policy to take advantage of higher growth rates. If you find yourself with financial difficulties, you can use the accumulated cash to continue premium payment.

 

Universal Life Insurance offers you more control over your insurance needs with the following benefits:

Flexible Protection

Flexible Premiums

Tax-Free Death Benefits

Guaranteed Return


Flexible Protection

Universal Life products give you the flexibility to choose the amount of protection that best suits your family or business. It allows you to increase or decrease coverage as insurance needs change. Increased coverage may be subject to underwriting requirements.

 

Flexible Premiums

With Universal Life insurance, you control the amount and frequency of payments. Looking towards the future you have the option to increase the premium or make lump sum contributions, subject to limits as specified in the policy. The extra dollars grow tax-deferred, and may increase the cash and death benefit values.

 

Tax-Free Death Benefits

Under current tax laws governing individual life insurance, life insurance proceeds are generally income tax free to the beneficiary.

 

Guaranteed Return

Normally, there is a guaranteed minimum interest rate applied to the policy. No matter how badly the investments go by the insurance company, you are guaranteed a certain minimal return on the cash portion. If the insurance company does well with its investments, the interest return on the cash portion will increase.


Whole Life Insurance

Whole Life Insurance (also known as straight life, ordinary life, and traditional permanent insurance) has guaranteed premiums and death benefits, and a minimum interest rate, which will be credited to the funds accumulated in the policy.

 

Benefits of Whole Life Insurance With Whole Life insurance, part of your premium is applied toward the insurance portion of your policy, a small part of your premium goes toward administrative expenses, and the balance of your premium goes toward the investment or cash portion of your policy. Unlike term policies, you will not have to die to realize some portion of your investment.

 

One of the benefits of this type of policy is that the cash value portion of Whole Life insurance belongs to the insured. You can take it out in the form of policy loans or you can cash the policy in. An advantage to Whole Life is that the interest you accumulate through the investment portion of your policy is tax-free until you withdraw it.

 

You can also use the cash value to pay premiums. If unexpected expenses occur, you can stop or reduce your premiums. The cash value in the policy can be used toward the premium payment to continue your current insurance protection ? providing there is enough money accumulated.

 

Another advantage of Whole Life insurance is that the premiums are fixed. Regardless of your age or health, you pay the same amount for the coverage each year.

 

For people who take out Whole Life insurance early in life, the investment part of the premium can build up substantially, especially in later life. This can provide a very nice lump sum on retirement. You can also use any built up lump sum to cover your children's education. Whole Life policies with sufficient accumulated capital can also be used as loan guarantees for a bank.

 

Special Risk/Tough Risk: With his 16 plus years selling life Insurance Steve has access to underwriters that can simplify the process of finding the right carrier give the special need or risk. Every carrier looks at certain risks with a different eye; height & weight, diabetes, DMV report. Many a time I have seen a insured declined by one carrier only 30 or 60 days later we have them issued preferred with another carrier? What Steve has learned a along the way has paid dividends for several tough risk client of JWC’s of the years.

 

Group Life Insurance
As an employer, you are aware of the importance of employee benefits and their contribution to your business success. A Group Life insurance plan that can benefit you and your employees. In most states, we can establish a plan for employee groups of five or more, while some states require a minimum of ten employees.

 

Advantages to the Employer:

Federal income-tax deductible premiums.

Desirable fringe benefit to offer new employees.

Reduced turnover, saving your money in hiring and training costs.

Contributes to employee security, loyalty, and higher morale.

Valuable life insurance protection provided at a low group rate.

 

Advantages to the Employee:

Valuable life insurance protection provided at a low group rates.

Right to name and change beneficiaries at any time.

Waiver of Premium Disability Benefit rider is available at no extra cost.


Your agent will complete a fact finder to gather information about your business and your objectives for a group life plan. Based on the information, a Plan Design Specialist will prepare a proposal for you to consider.

 

Guaranteed Issue Life

Guarantee Issue: "The amount if group life and accidental death and dismemberment coverage an employee is eligible to elect without providing any evidence of insurability or medical questions."

 

Any amount of insurance in excess of the Guarantee Issue amount listed in your Proposal Summary requires Evidence of Insurability that an insurance carrier must accept and approve.

 

Long Term Care

Long term care insurance is something you may need if you can no longer perform everyday tasks by without assistance. As an example, there may come a time when you need help dressing yourself, feeding yourself or even bathing. Long term care also includes care needed if you had a severe cognitive impairment like Alzheimer's disease or dementia. You can receive this care in a variety of settings, including your home, an assisted living facility, adult day care, hospice facilities or in a nursing home.

 

Long term care can be covered in part or completely by long term care insurance. Most plans let you choose the amount of coverage you want, as well as where and how you want to use your Long Term Care benefits. A comprehensive plan includes benefits for all levels of care, custodial to skilled.

Disclaimer

Guarantees are subject to the claims paying ability of this issuing insurance company.

This hypothetical example is for illustrative purposes only. It is not intended to illustrate any specific product. Individual terms and results may vary.