Category: Life Insurance

Do you have a child protection plan in place for your kids? A child protection plan is aimed at keeping your child healthy, happy and financially secure in the event that something were to happen to you, a sibling or the child themselves.

November’s Child Safety and Protection Month is the perfect time to create a plan or update your current one.

Putting Together a Rock Solid Child Protection Plan

Below is a quick rundown of what should be included in a child protection plan.

Life Insurance for Kids

Losing a child is a terrible event that can create a domino effect of further issues that only make matters worse. The last thing you want to have to worry about is finding the funds to cover funeral costs and taking off time from work. This is especially true if you have other children that will need your undivided attention during this trying time. Taking out a life insurance policy for your kids will mean you have a lot less to worry about and you can fully take care of your other children when they need you most.

Set Up a Trust

This part pertains to your life insurance. If you pass away and your child is still a minor they won’t receive the funds from your life insurance policy even if they’re named as the benefactor.

The best way to ensure that your child is properly taken care of if the worst were to happen is to setup a trust for them. Name the child as the beneficiary of the money in the trust, then name the trust as the beneficiary on your life insurance policy.

Name Guardians in the Event of Your Death

Losing a parent is traumatic for a child. They need love and stability above all else to help them get through the tragedy and to mentally and emotionally cope with what’s happened. Unfortunately, this can be difficult if you haven’t named guardians for your children.

In that scenario a judge will decide who is best equipped to raise your children, starting with grandparents. This could cause riffs among family members, have your child bouncing between family members or leave your child with a guardian that wasn’t your first choice. If the person you would prefer to raise your children isn’t a family member it would be extremely difficult for them to get custody. The judge doesn’t know you, your children or their exact needs, but you do. Play it safe by naming a guardian for your children. (see below for more)

Update or Create Your Will

Like your life insurance policy, your will is key to your child’s security if something were to happen to you. Without a will things could get tied up in courts, your children may not receive assets that were intended for them and they could go to a guardian that you don’t fully approve of.

A will clearly states how assets should be divided, who you prefer to be the guardian of your children and eliminates legal battles. While you can’t “will” your kids to someone, the judge will take that into heavy consideration when appointing the guardians.

Schedule an Annual Visit to Your Pediatrician

When your child was a baby, the doctor visits were laid out pretty clearly. But as they get a little older parents often wait until something is wrong to take their child to the doctor. An annual physical is the best way to keep track of your child’s health and catch any problems as soon as possible.

While there make sure to:

• Ask about vaccinations and/or booster shots and make sure the child is up-to-date
• Get advice on building healthy habits
• Make sure growth and development is on track
• Run tests for vision, hearing and speech
• Check a blood sample for blood count, sugar level and cholesterol level

A Few More Child Protection Plan To-Dos

• Protect their identity from thieves
• Practice fire safety drills
• Keep safety equipment like bicycle helmets and knee pads on hand
• Know your neighbors – check the registered sex offender registry regularly

Now that your child protection plan is in place you’ve taken a huge step towards ensuring your children’s health, well being and financial security are protected. But as your children grow and life changes the plan will need to as well. One of the most important parts of any child protection plan is revisiting it annually to make sure everything is up-to-date and in order.

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Original Source: http://www.mybiginsurance.com/life-insurance-blog/make-life-insurance-part-child-protection-plan

There are a lot of big decisions to make when you set up a life insurance policy, and none is more important than who you name as the beneficiary. It’s not as straightforward a putting a name on a piece of paper. A lot of thought needs to go into this decision.

Community-Property States Require a Spouse Signature

In community-property states like Texas, you will need your spouse’s signature on the life insurance policy if you want to name someone other than the spouse as the beneficiary.

Naming a Single Primary Beneficiary Can Lead to Problems

Many people name their spouse as the beneficiary. While this is understandable it’s not the best idea because your spouse could pass away first or at the same time as yourself. If this were to happen and the beneficiary is no longer living the life insurance proceeds could be put in an estate and it could be quite challenging for heirs to receive the funds. Instead, name a secondary beneficiary who will receive the benefits in the event the primary beneficiary has already passed away.

Life Insurance Contracts Override Wills

Many people make the mistake of thinking that their will is the ultimate document when it comes to splitting up assets after a death. However, the life insurance policy is the deciding factor when it comes to death benefits. If you need to make changes to the beneficiary make it on the policy first and foremost.

Minors Won’t Get the Money

Proceeds from a life insurance policy can’t go directly to a minor. Many problems can arise if your beneficiary is under 18 (21 in some states) and they may end up never seeing any of the money. Instead, set up a trust fund for the minor and name the trust as the beneficiary.

Life Insurance Proceeds Will Make the Beneficiary Ineligible for Government Aid

If your beneficiary is on Medicaid or SSI they will lose it after receiving money from a life insurance policy. According to federal laws, if a recipient gets an inheritance or gift of over $2,000 they will be disqualified from these programs. Instead set up a trust for the person and name the trust as the beneficiary.

Life Insurance Benefits Can Come With Conditions

You have control when it comes to your life insurance benefits far beyond naming the person that will receive the money. Again, creating a trust is a great idea if you want to have a say in how funds are allocated. You can put conditions on the funds such as how the money is paid out and what it’s used for. Some life insurance policies are even giving policyholders the option of deciding whether benefits should be paid in one lump sum or given in installments.

Naming “Children” Isn’t the Same as Listing Names

Many people want their children to be the beneficiaries of a life insurance policy. While this may seem cut and dry to you, to the life insurance company it’s a much more involved affair. Unless you specify names, they will have to go through an investigative process to make sure they get all the beneficiaries correct. This will take a fair amount of time, hold up the process and possibly leave money to people you didn’t intend on naming. Be specific when you name your beneficiaries.

Keep the information above in mind when you decide whom to list as the beneficiaries on your life insurance policy. And of course, keep your policy up to date by making changes as soon as possible if a new beneficiary needs to be named.

Original Source: http://www.mybiginsurance.com/life-insurance-blog/know-naming-life-insurance-beneficiaries

 

If you’re shopping around for a new life insurance policy you are probably comparing the monthly premium amount and coverage options. But life insurance is a little more complex than other types of policies. With cash value, dividends, medical exams and more there are numerous things that should be considered before taking out a new policy.

Have You Had Your Current Life Insurance Policy for More Than Two Years?

Life insurance policies have a two-year contestable period in which the insurance company won’t have to pay out death benefits if they find you provided inaccurate information on the application. Any time you open a new policy the contestable period is reset. If you’re still in your two-year contestable period it’s less of a concern.

How Much Cash Value Have You Built Up?

If you’ve built up a considerable amount of cash value you may be better off with the policy you have. A new policy may take longer to build up cash value and pay out dividends. However, this does depend on how the new policy is set up.

Will a Cash Value Pay Out Significantly Impact Your Taxes?

Whenever you withdraw the cash value of a life insurance policy it is considered income on your taxes. If a new policy requires that you withdraw this could push you into a higher tax bracket. At the very least you would need to plan for paying taxes at your current rate on the money you receive.

How Do the Benefits Compare?

If the benefits and coverage are significantly better switching to a new policy may be a good idea even if you have cash value built up or are past the two-year contestable period. Always weigh the specifics of a new policy against your current one, going beyond the cost of the coverage.

Has Your Health Changed?

A new policy often means a new medical exam. If you are in the same or better shape than when you applied for your current policy then this may work in your favor. If not you need to consider how it could affect the cost and benefits. Check out the medical qualifications of the insurers you’re interested in to make certain you meet them all before applying.

It is against Texas state law for an insurance agent to try to persuade you to switch life insurance policies if they know it could negatively impact your coverage. All agents should provide you with a notice that outlines the considerations listed here along with additional information.

Image Source: efinancial.com/Portals/24412/images/Term%20Life%20Insurance%20Seem%20Like%20the%20Best%20Option.jpg

Original Source: http://www.mybiginsurance.com/life-insurance-blog/key-considerations-replacing-life-insurance

When unexpected expenses happen in life – health problems, investment losses, inadequate retirement funds – some people turn to their life insurance policy for a financial fix. While that may be a way of getting cash when you need it, this option, referred to as a life settlement, is a band aid that may cost you more in the long run.

What is a Life Settlement?

A life settlement is the act of selling a life insurance policy for more than its cash surrender value but less than the death benefit amount. The sale happens between the policy owner and a third party life settlement provider. After the sale the provider will pay future premiums and will be the beneficiary of the death benefits.

The cash surrender value is the amount given to policyholders if they surrender their account.

The death benefit amount is the amount that is paid to the beneficiary after the policyholder has passed away.

Why a Life Settlement May Not Be the Best Option

It’s Only a Portion of Face Value

A life settlement won’t pay the full face value of the policy. Typically it is only a portion anywhere from 25-75%. On Texas life insurance policies there is no minimum so there’s no guarantee that you’ll get a specific amount.

You May Be Too Young

Life settlement providers are looking for a quick payout to recoup the cost of buying your life insurance policy. If you are under 65 you won’t be eligible with most providers. If they do entertain policies for those under 65 the portion that they will pay will be relatively low.

Taxes

If you opt for a life settlement then you will have to pay taxes on the money you receive from the sale. This further reduces the return you receive for liquefying the life insurance.

Loved Ones Won’t Receive the Death Benefit

A life settlement will change who ultimately benefits from the policy upon the policyholders death. The person you have named as beneficiary will no longer receive the benefits – those will now go to the life settlement company.

A Life Settlement Can Affect Medicaid Eligibility

If you opt for a life settlement you may be putting your Medicaid eligibility at risk because of the money you receive. If you rely on Medicaid the one-time payout may not be worth losing this and other government benefits.

It’s Not Exempt From Bankruptcy

Unlike your life insurance policy, a life settlement payout is not exempt from bankruptcy proceedings and creditors can be awarded the money to pay off debts. If financial problems are prompting you to consider a life settlement this factor is something worth seriously considering.

 

Before deciding to use a life settlement, carefully weight all your options. If you have a life insurance policy with a cash value you may be able to cash in a portion or the entire amount. You may also be able to use your policy as collateral to obtain a loan instead.

Talk to a financial planner as well as your insurance agent to determine which option works best for your situation.

Original Source: http://www.mybiginsurance.com/life-insurance-blog/the-drawbacks-of-life-settlements

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Life insurance policies aren’t a one and done product. Policyholders can select from several different types of life insurance. One of the most popular types is called cash value life insurance. But wait – the decision-making doesn’t stop there.

Learn about the different types of cash value life insurance policies, their features and how to decide if this is the right type of life insurance for you and your family.

How Cash Value Life Insurance Differs From Term Life Insurance

Cash value life insurance policies are a little more complex than term life insurance. Unlike term life insurance, cash value isn’t for a set period of time and there are two different types of policies to choose from. While it may be a little harder to wrap your head around, cash value life insurance has benefits over term life.

Lower Premium Over the Life of the Policy

The premiums at the start of the policy will be higher, however because the premiums rise at a slower rate they may be lower than a term life policy in the long run. This is especially true if you buy at a younger age.

Cash Value Savings Component

The biggest difference is that with a cash value policy a portion of each premium is put into an account that you can use to invest with, borrow against or withdraw. The money in this account is the cash value of the policy. It can grow if it’s tied to a fixed interest rate, indexed interest rates or stocks, bonds or securities.

Careful though – if you withdraw the entire amount of the cash value the policy will be canceled.

Benefits

Oftentimes the benefits of cash value life insurance is better than term life, which is part of the reason why it costs more up front. Beneficiaries can potentially receive both the policy’s death benefit and the cash value of the policy.

Whole Life Cash Value Life Insurance

When you choose whole life cash value life insurance it covers you for your entire life without having to renew, given a few exceptions. If you cash out the entire value or fail to pay premiums the policy will be ended. Typically the premium won’t increase but if it does it’s usually nominal.

If the cash value investment account preforms well you may receive dividends if you have a participating policy. The dividends can be put into the cash value of the policy, used to pay future premiums or given as cash.

Flexible Premium Universal Life Cash Value Life Insurance

Flexible premium universal life cash value life insurance is a little more complicated than whole life. As the name suggests this policy has a flexible period of coverage, benefits and premium that can be changed at any time. You can set the length of the policy and as long as the cash value isn’t completely drained and premiums are paid the policy will remain in effect until it reaches maturity. At that point you’ll receive the cash value of the policy.

Flexible premium universal life can have either a guaranteed rate of return or it can be variable, which means the return depends on the performance of the investment connected to the policy.

Who Should Consider Cash Value Life Insurance

Anyone in the market for life insurance in Austin, TX should entertain the idea of a cash value policy and do their part to research offers in detail. Below we’ve highlighted who these types of life insurance policies may work best for.

·      Those who are looking for long term policies that will last at least 15-20 years

·      People who can afford a higher premium at the onset of the policy

·      People who are interested in the savings and investment aspect of a cash value policy

Before establishing a policy discuss all aspects of the policy with the agent, ensure that they have a federal securities license in addition to a state insurance license if they are selling variable universal life insurance and refer to your short and long-term budgets to figure out if this is the best option for your financial situation.

Original Source: http://www.mybiginsurance.com/life-insurance-blog/cash-value-life-insurance-explained