Category Archives: Personal Finance

What is Single Premium Whole Life Insurance

The primary feature of life insurance is to influence funds to establish an estate that can provide for surviving loved ones or to leave behind something to an organization like a church or charity. Single Premium Whole Life (SPL) is a kind of life insurance in which a large sum of cash is paid into the insurance policy in exchange for a death benefit that is fully guaranteed to remain paid-up until you die. In this article, we look at a few of the different variations of SPL available, which provide a broad range of funding options and cash out provisions.

With single-premium life insurance policies, the funds invested in the policy build up rapidly because the insurance policy is completely funded by the policyholder. The size of the death benefit will depend on the money invested and the age group and overall health of the insured person. From the insurance company’s viewpoint, a young person is considered to have a longer remaining life span, allowing the cash paid in more time to increase before the death benefit is anticipated to be paid out. And, normally, the greater the amount of cash you originally contribute to your insurance policy, the higher your death benefit will be. For instance, a 60-year-old woman might use a $25,000 single premium to provide a $50,000 tax-free death benefit to her named beneficiaries, whereas a 50-year-old male’s $100,000 single premium might provide a $400,000 death benefit.

Single Premium Whole Life Living Benefits

As the death benefits of life insurance policies present you with an effective means to provide for your surviving dependents, you also want to consider unforeseen expenses that might crop up as you age. You most likely understand the necessity of long-term care insurance, as long-term care can commonly turn out to be a costly predicament. But imagine you have delayed purchasing this essential coverage because you cannot bring yourself to pay the yearly premiums? SPLs can provide a legitimate solution.

Many SPL policies will provide tax-free accessibility to the death benefit to cover long-term care costs. This function can help in protecting your other assets from the possible frustrating cost of long-term care. The death benefit leftover in the policy once you die will pass tax-free to your named beneficiaries. And if you do not utilize any of it, the funds will go to your surviving loved ones just as you had initially planned. Consequently, your SPL plan enables you to cover your long-term care requirements, but still leaves the greatest possible amount of your death benefit unimpaired for your surviving dependents.

A wide variety of SPL policies also consists of a feature that will let you remove part of the death benefit if you are clinically diagnosed with a critical illness and have a life expectation of 12 months or less. This versatility can allow you to make a choice to put away a significant single-premium payment into an SPL insurance policy less challenging for a number of people, and it is crucial to contemplate if you have limited economic assets outside of your SPL.

Single Premium Whole LifeInvestment Options

There are two well-known single-premium policies that offer distinctive investment options.

life insurance with asthma Single-premium whole life pays a fixed interest rate depending on the insurer’s investment experiences and existing economic circumstances.

life insurance with asthma Single-premium variable life enables policyholders to pick from a menu of expertly managed stock, bond and money market subaccounts, as well as a fixed account.

Your preference should really rely on your capacity to handle market variations, the structure of the various other assets in your portfolio, and the way you plan to utilize the insurance policy’s cash value. With a fixed interest rate, you can rely on the safety and reliability of the continuous growth rate in your insurance policy, but you will likely miss out on possible gains if the financial marketplaces have a very good run. The lowest death benefit is developed when you buy the policy, but if the insurance policy’s account value increases beyond a specific amount, then the death benefit can increase as well.

Alternatively, if you prefer the probability of underperformance over the guarantee of a fixed interest rate, a variable life insurance policy with subaccounts invested in equities and bonds may possibly make more common sense for you.

Single Premium Whole Life Withdrawal Options

SPL policies give you complete control over your financial investment, providing access to the cash value for emergency situations, retirement, or other possibilities. One way to withdraw the cash in the policy is by taking a loan.

You can typically consider a loan equivalent to 90% of the policy’s cash surrender value. This will certainly decrease the policy’s cash surrender value and death benefit, but you still have the choice to pay back the policy loan and re-establish the full death benefit.

The insurance companies will also allow you to withdraw money and deduct that withdrawal from the insurance policy’s cash surrender value. The insurers usually have a minimal amount that you can take out. The total you can take out each calendar year without having to pay a surrender fee might be 10% of the premium paid in or 100% of the policy’s gains, which ever is higher.

Nevertheless, an additional cost can develop from withdrawals or loans from your SPL, since SPL insurance policies are typically considered modified endowment contracts (MECs). This means that there is a 10% IRS penalty on all increases withdrawn or borrowed before age 59 1/2. You will additionally have to pay taxes on the profits. Additionally, if you surrender the policy, the insurer will likely hit you with a surrender charge.

Single Premium Whole Life Tax Treatment

Your financial investments will grow tax-deferred within the policy. As mentioned above, you will just pay tax on the earnings if you cash out or borrow money from the insurance policy. Your designated beneficiaries, however, will get the benefits income-tax free with no time delay and cost of probate. This is a critical benefit, as you do not want the efforts made and expense you committed to providing death benefits for your surviving dependents to be muted by unnecessary time delays and probate costs.

Drawbacks

The very least amount you can invest in an SPL insurance policy is typically $5,000, which can make it too expensive for some investors. Additions are not allowed. You should only contemplate using resources that you had intended to pass on to the next generation or to help in funding a long-term objective, such as retirement. Furthermore, you will have to satisfy the insurance company’s medical underwriting requirements to qualify for SPL.

Conclusion

If you have a fairly large amount of cash that you do not need presently, and you are looking for guaranteed life insurance coverage for your family or your preferred charity, a single-premium life insurance policy may possibly be the appropriate product for you. It is also an exceptional way to start a child’s life insurance program.

For example, you could select a child or grandchild as the insured person and maintain the policy in your name. This way you would still maintain control over the cash value. Or, you could designate him or her owner as a means to remove the insurance policy from your estate. However you determine to use a single-premium life insurance policy, keep in mind to take into account your personal financial circumstances and other retirement programs already in use so you can choose and design your policy to best meet your needs.

Article source: http://www.lifeinsure.com/single-premium-whole-life-insurance/

Mortgage Protection with Term Insurance

For most people, obtaining the American dream is achieved by buying a home and getting into debt for the next fifteen or thirty years. You’ll spend a substantial portion of your savings for the necessary down payment, leap through all themortgage protection plan hoops mandated by your lender, spend numerous hours searching the marketplace, all to get to that marvelous day. You have made it, and it feels great! What about mortgage protection?

After moving in and making the house your home, you start to encounter some uneasiness while making an attempt to get some sleep. Your brain starts running the “what if” scenarios and you start to stress about what would occur if you died unexpectedly. How might your lovely wife make that huge mortgage payment without having your portion of the household income?

The first step you take the next morning is to contact your insurance professional and run this predicament by him. He points out that the life insurance you have at your workplace is not enough to take care of repaying your mortgage and suggests you start thinking about Mortgage Protection Insurance.

Mortgage Protection Insurance

Mortgage Protection Insurance is a straightforward and inexpensive concept. It includes buying a term life insurance policy in the amount of your home mortgage balance so that if you might die suddenly, your surviving loved ones will have the money required to pay off the mortgage on their home. Term insurance is the most reasonably priced way to monetarily protect your loved ones and make sure they can stay in the family home.

You can buy a 30-year insurance policy to cover a 30-year home loan or a 20-year policy to cover a 15-year home loan. In every single case, your insurance protection is not decreased even though your mortgage is reduced. This ensures that there will be adequate funds available no matter when you die during the policy period.

When your coverage runs out after 20 or 30 years, your home loan will be settled but you can renew the coverage without being required to prove you are still in good health, or you can convert the insurance policy to a permanent insurance policy and then have insurance coverage for your lifetime.

What about Your Spouse’s Income?

Knowing that most families rely on combined incomes to meet expenditures, you can include your spouse on your policy using the Additional Insured Rider. That way if either of you dies out of the blue, the remaining spouse will be in a position to pay off the outstanding balance and remain in the family home.

Other Riders That You Should Consider

One of the awesome options about term life insurance is that there are a number of riders that you can add to the policy to expand your coverage. Utilizing riders will change your insurance coverage to more than just a death benefit.

Return of Premium Rider – having the return of premium rider will provide for all insurance premiums paid into the policy to be returned to you in one lump-sum payment if you live longer than your policy term. Even though the rider costs about 20 to 40 percent extra premium, it is a reasonable manner for your family to help save for retirement while insuring against your unforeseen death. The added cost of the rider for young adults has a minor effect on the month to month insurance premium.

Child Term Rider – The child term rider permits you to add all of your current children and all children born or adopted at a later date to the insurance policy for a minimal additional cost. The additional insured rider and the child term rider will enable you to turn your term insurance policy into a family plan.

Accelerated Benefit Rider – The accelerated benefit option is a primary coverage for most term policies however if not, it can usually be added to the policy at no additional charge. This rider provides for the life insurance company to pay out a benefit of up to 75 percent beforehand to a covered person that has been diagnosed with a critical illness. The advance payment enables the insured to take care of final obligations before they pass instead of leaving it to survivors. The total amount paid out will be subtracted from the death benefit due to the beneficiary when the insured person eventually passes away.

Accidental Death Benefit – The accidental death benefit, also often referred to as “double indemnity” allows the insurance company to pay a multiple (typically double) of the face amount if the insured person’s death is the direct result of an accident.

Waiver of Premium – The waiver of premium rider is a form of disability insurance that will pay your policy’s premium as long as the insured person is disabled and is unable to work. The rider typically includes a waiting period, a period of coverage, and the insurer’s definition of disability.

Long-Term Care Rider – The long-term care rider is like the accelerated benefit rider where the insurance company will make an advance payment of the death benefit to the insured if he or she is diagnosed with an affliction that forces them to live the balance of their lives in a nursing facility. The amount that is advanced to the insured will be subtracted from the death benefit when the insured eventually passes.

Additional Insured Rider – This is the rider that will permit you to add your husband or wife to your insurance policy with a death benefit up to the limit of the insurance policy.

The Mortgage Protection Plan

For the majority of borrowers, providing financial security for the family is a substantial concern after putting your signature on the dotted line. There is no more budget-friendly way to financially cover your loved ones than by developing a mortgage protection plan to pay off the home loan on the family home.

Since the death benefit stays level during the term of the insurance policy, but the mortgage is reduced by monthly payments, if you died late in the policy term, your remaining loved ones would have the additional funds necessary for a funeral or other final expenses.

Article source: http://www.lifeinsure.com/mortgage-protection-with-term-insurance/

Can Pets Help You Live Longer?

June is National Adopt-a-Cat Month, making it a great time to reflect on how much happiness our cats—and pets in general—bring to our lives. Indeed, our furry (and feathery…and scaly) friends bring us lots of laugher and joy, but there is something else they may be able to do, too—help us live longer.

Can pets really can lengthen our lives? According to several studies, the answer may be yes.

First of all, it should be noted that many of the studies on this subject are observational studies, as opposed to randomized, double-blind controlled trials. These limitations mean that we can’t be certain that having a pet directlycauses improvements in health. However, there are a number of studies which show thatpet ownership is associated with better health.

Heart health

Pets seem to have an especially strong influence on their humans’ hearts. Compared to those who don’t own dogs, dog owners are much more likely to still be alive one year after a heart attack, regardless of how severe it was. In another study, cat owners had a decreased risk for heart attack, stroke, and cardiovascular disease. According to this study, petting a dog or cat has the ability to lower people’s heart rate and blood pressure.

It’s even been shown that simply having your pet in the room canhave a positive effect. One study found that having one’s dog in the room lowered heart rates under stress more than blood pressure medication.

This research seems to be having an effect. In 2013 the American Heart Association issued a statement saying that owning a pet—a dog in particular—could reduce your risk of heart disease.

Other benefits

In addition to heart health, pets have been shown to have a positive impact on depression, self-esteem,stress, and loneliness. This is especially important for elderly people, and there are many successful pet therapy programs in nursing homes and assisted living facilities in the U.S. Studies have shown that animal-assisted therapy, or AAT, can reduce depression, agitation, and aggression in nursing home patients with dementia, andhelp them participate in social activities.

Pets can have a tangible impact on people’s health and well-being, and even help extend their lives. In this way, it can be said that pets protect us. Another way to protect your family—including your animal family members—is with life insurance. Making the smart decision to purchase life insurance can help payfuneral costs, pay off debts and replace income, and more.

Article source: http://www.lifeinsure.com/can-pets-help-live-longer/

Bunk Beds