Insurance Information

Key Takeaways

Young couples are often advised to obtain both health insurance and life insurance coverage.
Health insurance covers a portion of medical expenses and doctor’s visits, while life insurance pays out a lump-sum death benefit upon premature death.
While healthy young adults often forgo health insurance, the Affordable Care Act has made it easier to obtain coverage, or to stay on a parent’s plan.
In addition to health coverage, most individuals really do need life insurance once they have a family.
When you only buy the coverage you truly need, paying for health and life insurance simultaneously becomes a lot less daunting.

Life vs. Health Insurance

Life insurance pays out a lump sum to your beneficiaries in the case of your premature death. The idea is that the death benefit should be sufficient to replace future income loss, as well as cover expenses and obligations outstanding such as funeral costs, medical expenses, and other debts—or to fund college savings accounts or retirement years. This gives the family financial continuity so they do not struggle, despite the loss of you and your wage-earning capacity. Health insurance, on the other hand, helps pay for medical expenses such as doctor’s visits, hospital stays, medications, tests, and procedures. This helps ensure that people can afford medical care and stay healthy. The reality is that a lot of people genuinely need both types of protection, especially if they have dependents. If that’s the case, the better idea is to limit coverage to what you truly need so you can afford both types of insurance.

Life Insurance- The Living Benefits that can help if you want to use it to buy a house or car

The two primary types of life insurance coverage are term life insurance and permanent life insurance. Term life insurance is a more cost-efficient way to get a given dollar amount of protection. However, a term life policy (and its payout) only lasts for a limited time – typically 10 to 30 years – and does not build cash value. Once the policy’s term runs out, there’s no protection and no value left.

Permanent life insurance, on the other hand, lasts your entire life as long as premiums are kept up.1 These policies also provide other benefits, including cash value that can be used while you are still alive.2 The two most popular types of permanent policies are whole life insurance and universal life insurance. Both provide lifelong insurance coverage and build cash value. However, the policies differ regarding flexibility, guarantees, and how life insurance companies calculate cash value growth.

A permanent life policy will typically offer most of the optional riders noted above, but it also has an important feature that term life does not provide: cash value. So while permanent insurance is typically more expensive than term, most of the cost difference is because premium dollars can contribute to a policy’s cash account, where it grows tax-deferred, helping your family build wealth.

Cash value usually takes a few years to grow into a usable sum, but once that happens, it can become a financial asset with many advantages. Generally speaking, there are four ways to access life insurance cash value:

Surrender: Cashing out your policy is usually not advisable, but it is possible. While you can cancel your policy and take the cash surrender value payment, you’ll no longer have life insurance protection, and you may face significant surrender fees and/or taxes – but there are other ways to access those funds.
Withdrawal: In many situations, you can withdraw cash from your permanent life policy. That money is often non-taxable as long as it’s not more than the amount you’ve paid into the policy. However, the policy’s death benefit will likely be reduced, and that reduction may be more significant than the amount withdrawn, depending on the terms of your policy.
Loans: You can use your policy cash value to secure a loan that grows at a fixed or variable loan rate set in the contract. Rates can be competitive or lower than a personal loan and there is no application or credit check. You can even choose not to repay, but the outstanding loan balance will usually be deducted from your death benefit.
Pay your life insurance premium: Want to stop paying premiums after you retire? You can often use the money in your cash account to pay part or all of your premiums, making it much easier to keep your cash value insurance coverage in place.
For Business Owners who want to Invest- UIL or Annuities is best

Indexed Universal Life Insurance Policies: The Perfect Option for Professionals and Business Owners

by Timothy R. Fussell
For a professional such as a doctor, attorney or CPA, the Indexed Universal Life policy is perfect for your retirement needs. Often as a professional, you operate as a P.A. being taxed as a sole proprietor, an S Corporation or a C Corporation, and under the tax codes you are limited to retirement account choices. The SEP IRA, Solo-401k or the UNI-401k, all allow you to save on a tax-deferred basis; but the maximum contribution limit is still the same $49,000.00.

Now let’s explore the IUL (indexed universal life) and why it is a better choice. As a professional of these types, your income level is much higher than average, so you max out your contribution very early in the year. With the IUL, there is no limit on how much money you can contribute—the money still grows tax-deferred, but with a several advantages.

Now comes the great part! In the event of a business need, the money in your tax-deferred accumulation account can be used, through interest-free loans, for the purchase of new equipment, to expand the practice, or just to carry you through a tough time. At retirement the money is paid to you in the form of tax-free loans against your account value. The income would be a lifetime income with of loss in a down market, and at the end of the income, your death, the face amount of the life insurance policy would still go to your heirs as a tax-free death benefit. The tax-free death benefit would, at any time, be the security to your family that their lifestyle would continue in the same manner to which they had become accustomed—a **guarantee the retirement account cannot promise. If, through a consultation with your insurance professional, it is determined that your life insurance needs exceed the desired amount of contribution in the IUL, a term life insurance policy can be added to meet your life insurance needs at a lower cost.