What is the tax treatment of life insurance death benefit proceeds?
In general, life insurance death benefits are paid in a lump sum, so they are usually not subject to income taxation. If a settlement option is used other than the lump sum option, then the interest earned on the principal death benefit is taxable.
Life insurance proceeds are generally exempt from income taxation. However, they ARE subject to estate and inheritance taxes.
» Back to Top
What is the difference between whole life and universal life insurance?
In general, life insurance death benefits are paid in a lump sum, so they are usually not subject to income taxation. If a settlement option is used other than the lump sum option, then the interest earned on the principal death benefit is taxable.
Life insurance proceeds are generally exempt from income taxation. However, they ARE subject to estate and inheritance taxes.
» Back to Top
What is the advantage of level term life insurance vs. yearly renewable term life insurance?
While yearly renewable term life insurance has a lower initial premium, the premium rises each year. The advantage of level term life insurance is that the premiums remain level over a specified period of time. Yearly renewable term life insurance is only cost effective for a few years, so if you need insurance protection for a few years a level term life insurance policy could end up costing you less.
The longer the level premium policy is for, the more expensive it is. Therefore, it is important to consider the length of the level premium period according to what will suit your needs. If the primary purpose of the benefits from your policy is to support very children in their teens, a 10-year level premium may be appropriate. However, if these children are very young you should probably consider a 20-year level premium.
Most policies require you to re-qualify with medical underwriting after the level premium period expires in order to receive a favorable premium. If you do not or cannot re-qualify, the premium typically rises dramatically after the expiration of the level premium period.
» Back to Top
“Guaranteed” refers to a fixed annual premium you pay on your policy.
For example, a fully guaranteed 30-year term means that your premium is guaranteed to remain the same, or level, for a full 30 years as long as you pay the premium. The coverage, or death benefit, remains level as well. As long as you pay the premium, the insurance company cannot cancel your policy or raise your premium for the length of the term. The same is true for 10-year, 15-year, 20-year, and 25-year guaranteed terms.
Partially guaranteed term policies are not recommended because your rates could change during the length of your policy.
» Back to Top
When does my life insurance coverage begin?
Once your policy has been issued and all of the delivery requirements have been returned to the insurance company, your life insurance coverage begins. Delivery requirements may include a statement of health, premium payment, delivery acknowledgement form and/or amendment of application.
Conditional coverage (temporary coverage) during the underwriting process may also be available with some insurance companies. In cases where conditional coverage is available, coverage begins once you have completed the medical exam and the completed application has been returned to the insurance company with a premium payment.
The coverage is reliant upon you qualifying at the rate you applied for and a few other factors. Read the conditional receipt of your life insurance application for additional information.
» Back to Top
How do I apply for a policy?
First things first, get your application started. You can call a personal representative and complete the process in a matter of minutes, or you can fill out an online application request form. A personal representative will then review your profile and get your application started.
Next, a representative from the insurance company you've selected will call you to verify your information and schedule your free medical exam.
Finally, complete a short paramedic exam in your home or office. This exam is at your convenience and at no cost to you. The exam, which is an insurance company requirement, includes blood and urine samples and should take no more than 15-20 minutes. All information is confidential, and you will have access to the results.
The medical examiner then collects your application and sends it to the insurance company.
» Back to Top
Should I get a policy for my kids?
A lot of companies do not offer separate policies for children. Most do offer "child riders" policies however. One flat fee can be applied to the parents' coverage for each child (current and future). Children can be covered for up to $10,000. Options may vary per state.
» Back to Top
Should I get coverage for my spouse?
There are strong arguments for obtaining life insurance for both income earning spouses and stay-at-home spouses.
The financial losses of losing a stay-at-home spouse could include: final expenses, time away from work for the surviving spouse, increased child care costs, settling outstanding debts and more.
In general the rule of thumb is to buy at least half of the amount of term life coverage for a stay-at-home spouse as was bought for the income earning spouse.
» Back to Top
How do I get the right price on the best policy for me?
It's simple to get a great price on the policy best suited for your needs. Answer all of the questions on your application honestly, complete your medical exam (at no cost to you) and return any forms required by the insurance company. The insurance company should take care of everything else.
» Back to Top
I've had some health issues. Can I still get insurance?
Many companies specialize in insuring people with less than perfect health. Cancer survivors and those with heart disease or diabetes, can all get life insurance coverage. There's a good chance you can get the coverage you need as well.
» Back to Top
|
