In its simplest form, life insurance is a promise between an insurance company and you, the policy owner. If you pay a certain amount of money (premium) to the insurance company, the insurance company will pay a certain amount of money (death benefit) to the person (beneficiary) you tell us to when the person whose life is being insured dies.
There are many types of life insurance. Term insurance only provides a death benefit for a limited period of time. By contrast permanent insurance can provide a death benefit and the potential to build policy cash value that you can access during your lifetime using policy loans and withdrawals.1 Permanent insurance can also offer the flexibility to increase or decrease your death benefit as your needs change, as well as the potential to reduce or skip premium payments.2
These policies are designed for individuals who want guarantees and who are focused on providing death benefit protection over cash value accumulation.
May be ideal for the consumer who has a need for life insurance, is somewhat conservative, and wants the guarantees of a fixed, minimum interest rate with the potential for additional interest credits.
Increasing the death benefit may be subject to additional underwriting approval.
May be ideal for those who need death benefit protection but are focused on cash value accumulation for lifetime needs such as supplementing retirement income.
Increasing the death benefit may be subject to additional underwriting approval.
May make sense for those who have budget limitations, large protection needs or temporary need.
If your insurance protection is Term life, you will have a grace period to make your payment. If by the end of the grace period you have not made a payment, your policy will lapse and you will no longer have coverage.
If your insurance protection is permanent life insurance, you will have a grace period to pay your premium plus some additional options. It may be possible that your policy has sufficient cash value to pay the premium from those policy values. Just be aware that using policy values and benefits to pay the premium due will reduce the policy's cash value and death benefit, and may increase the risk of lapsing the policy. If you don't have sufficient cash value to pay the policy premiums, you may have the option to reduce your face amount to a level that doesn’t require a premium payment.
Most importantly, if you are having trouble making your payment, contact the insurance company customer service area. They will be able to give you specific options for your policy.
It is best if you do not name them as the direct beneficiary because most states require that a guardian be appointed to administer the proceeds payable to the minor child and will result in a time delay in creating the guardianship, and therefore, delay in payment of the benefits and potentially additional costs.
The best thing to do is name a guardian, perhaps your spouse, when you establish your beneficiary designation. Another option may be to establish a trust to receive the insurance proceeds for the benefit of the minor child. Your insurance agent and/or attorney can assist you with the proper beneficiary designation if you have minor children.
In many cases, yes, if the ownership of the two policies is the same. You will need to go through new underwriting for the new coverage. To avoid taxation on the cash value in your policy in excess of premiums paid, you will want to consider an exchange under Code Section 1035. 1035 Exchanges allow for a tax-free exchange of one life insurance policy for another. There may be circumstances where replacing one policy for another is suitable for your circumstances, but in most cases we believe that replacing an existing policy for a new one is usually not in your best interests. Work with your agent to get all the facts before making such a decision.
Yes, however, if someone other than the person who is insured owns the life insurance policy, that person should also be the beneficiary. Otherwise, at the death of the insured, the death benefit will be treated as a taxable gift from the owner of the policy to the beneficiary.
Before you can purchase life insurance, you need to qualify for it.
We will ask you to provide us with information that we then use in what is called underwriting. This is the process that an insurance company uses to determine risk.
Second, all of this information is provided to an underwriter. An underwriter is someone who is specially trained to assess your application and determine what risk, if any, may exist. Once all of your information has been reviewed, the company will either approve or deny your request. That process can take days or weeks depending on the information received.
Lastly, your agent will contact you and go over the results of your underwriting and details of your policy.
Have a financial professional contact you
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