What is variable whole life lyrics,100 000 term life insurance rates,life insurance 200 000 miles,long term disability insurance broker - How to DIY

30.04.2015
Cicero’s circumstance is not unique; many working professionals find themselves owning an expensive variable whole life insurance policy (or a similar indexed universal life insurance policy). BUT, what if the client walks through the door already owning a variable whole life insurance policy – as Cicero recently did?
Since he already bought the variable whole life insurance policy, should Cicero keep it in place? If so, does he qualify for a more favorably-priced (read: inexpensive) term-life insurance policy? Therefore, a permanent life insurance policy (such as a whole life, variable life, indexed universal life, etc.) may get the job done. Using a term life policy instead of Cicero’s variable whole policy will save him a tidy sum of money each month.
With a permanent life insurance policy (such as the Cicero’s variable whole life policy, or similar indexed universal life policies), money regularly goes into a savings component.
If Cicero does decide to invest his money, he can do so by using low-cost investment products.
Ongoing life insurance aside, what about the cash surrender value on the existing variable whole life policy? With such a large cash value at stake, does Cicero simply cease payments on his variable whole life insurance policy? Does it make sense to lose the built-up cash value in a variable whole life insurance policy simply to avoid putting more money into the high premiums each month? The growth in cash value of the variable whole life policy relative to the premiums usually makes a strong case for ceasing payment. Looking at the statements of Cicero’s variable whole life insurance policy, we note that for every dollar put into the policy nets less than one dollar in cash value. Because of the myriad fees and expenses embedded into this variable whole life insurance policy, Cicero’s cash value was actually beginning to wane! However, even when including for the cost of a comparable term life policy, each dollar invested still gets taxed by the insurance company. The value of maintaining a variable whole life policy should be considered in the vacuum of the growth in cash value relative to premium payments; a final point of consideration is Cicero’s taxes. We determined just how much of the surrender value is taxable by examining Cicero’s basis – the amount of money already having gone into the cash value component of the variable whole life policy.
Because Cicero was not expecting a shift in his tax bracket in the short-term, it made the most sense to abandon his variable whole life policy immediately.
When would a client like Cicero expect to be in a situation where the tax bracket drops significantly the following year? If you’re unsure if it makes sense to keep paying into your whole life, variable life, or indexed universal life insurance policy, work with a fee-only Certified Financial Planner® (CFP®) to analyze your particular policy’s surrender values, as well as your tax bracket. Jon Luskin, MBA graduated from American Jewish University in 2014, with a degree in non-profit management. When not practicing financial planning, Jon can be found playing basketball, cycling, shooting trap, barbecuing, or practicing jui jitsu. Insurance JobsFinancial needsIs buying term and investing the difference really the right choice? In today’s complex economic environment, financial advisors and their clients are drawn to the “names” in the industry, many of whom have acquired a celebrity status through television appearances and book-signing events. Many well-known and respected financial advisors, such as Jonathan Pond, focus on stocks and bonds, marginalizing the importance of life insurance as a component in a financial design. Robert Kiyosaki, author of Rich Dad, Poor Dad, defines an asset as something that can be used, either now or in the future, to generate income. Life Insurance as an Asset Class: A Value-Added Component of an Asset Allocation was written by Richard M.
As a company that has been in the business of insuring families and businesses for nearly a century and a half, we know of no other financial product that has the ability to build wealth, protect and conserve assets in your lifetime, and transfer those assets to future generations – all with the simplicity, guarantees, and tax advantages inherent to this unique product. Life insurance has traditionally been purchased to replace loss of income needed to meet the survivors’ ongoing expenses, but how do we determine how much is enough? Capital Needs Analysis budgets for current and anticipated expenses, and takes into account other income sources as well as projections on what costs such as Health Care could amount to in the future. Human Life Value (HLV) evaluates the economic life of the decedent – the monetary total of all that he or she would have produced and accumulated in a lifetime, thus the method reflects earnings potential and is not cost-based.
A recent LIMRA International study portrays a sizeable gap between needs and the coverage people have purchased and that 28% of the wives and 15% of the husbands in the study had no life insurance at all.
A common misconception is that whole life insurance is a “good deal” only if the insured dies prematurely, so purchase should be delayed as long as possible. This section of the study offers succinct descriptions on the wide range of life insurance products available in today’s market, and includes a Product Matrix that visually depicts how they compare and contrast.
An important step in purchasing life insurance is to assess as closely as possible how needs may change during a lifetime. Term is known as the simplest or purest form of life insurance, typically purchased for short-term financial protection.
In a discussion about cash value life insurance, the authors point out that one essential difference between Term life and a permanent policy is that the reserve in the Term policy is typically not accessible to the policyholder, as the reserve represented by cash value is to the policyholder with permanent insurance. Whole Life insurance is considered the oldest form of lifetime, level premium insurance, dating back to 1759. First introduced in the 1970’s, UL was the first product to transfer sufficiency risk to the policyholder, as there were fewer guarantees and no fixed premiums or benefits. The Adjustable Life policy, distributed by a limited number of companies, is a whole life policy with more of the premium and death benefit flexibility of UL.
Variable Life and Variable Universal Life policies offer the opportunity (and responsibility) for the policyholder to direct premiums among various investment options – typically equity and a fixed account – to support the underlying policy and death benefit. Another variation on UL, the crediting rate is not subject to the company’s investment results, but based on an elaborate formula derived from the experience of a broad index of stocks. This is the one UL product that falls under the guaranteed premium category of Term and Whole Life. Survivorship Life or second-to-die insurance is frequently used for estate planning, where the proceeds are used to pay estate taxes and other costs associated with settling an estate. For most insurance buyers, the process will include reviewing one or more company-generated policy illustrations. The improper use of an illustration is to specifically portray numbers in order to compare policies.3 Such an illustration for a mutual fund is specifically prohibited by securities regulations.
How does a consumer evaluate the credibility of two illustrations from different companies, or about different products, or products with different guarantees and enhancements?
Universal Life and Variable Universal Life policy development and enhancements would not have been possible without the personal computer. The graph suggests that assuming a higher premium – a more conservative illustration approach – is probably a better, or at least safer, guideline for a buyer. The challenge of illustrating Variable products in a more realistic way has been amplified by the regulation and tradition to project a constant return assumption (12% maximum) as far out as age 120. The definition given for Monte Carlo analysis in the context of portfolio return is a means of statistically evaluating an unknown future outcome based on numerous random samples of prior experience.
In the first, a death benefit of $1 million is funded with an annual premium of $6,035 for a 45-year-old to age 100.
The second graph assumes a slightly higher annual premium ($8,240), and produces a 91% success of sustainability ratio. Another consideration is that regulations restrict UL policy illustrations to use values no greater than the current crediting rate and VUL illustrations may use any rate up to a maximum of 12%.
Above all, financial advisors must be on board to help clients periodically monitor results in order to maximize the effectiveness of their financial strategies.
The good news is that life insurance products have evolved over the years with the times, the economy, and individual needs and desires. For example, in the 1970’s and ’80’s, spiking interest rates with the underlying high rate of inflation had a negative effect on traditional life insurance.
Most insurance companies have a similar mix of investments held in reserve to fulfill obligations to policyholders. Creating a uniform approach to configure pricing and contractual benefits has long been a challenge to the industry, where so many variables in the present must be considered for the future time horizon of life insurance.
A policy standard is derived from resources such as actuarial tables, levels of investment returns, and average costs incurred by insurance companies in managing blocks of life insurance policies. The assessments show 30-year death benefit and total cash values for the three policies, based on the same annual premium.
It is critical to keep in mind that each client’s needs and desires are unique, and that a one-size fits all financial strategy is inadequate. This chapter addresses a common opinion that is generally considered an unquestionable truth among many of the media voices.
For anyone making a buying decision that cannot check off one of the above criteria, Term insurance is definitely a poor choice.
If a client wants to leave a specific legacy and buys Term, he or she must be confident of constant and historically high returns on the investment portion of this strategy. In the discussion, a 45-year-old consumer wants to maintain a $500,000 life insurance policy, but needs to have a supplemental retirement income stream as well. Developed in 1982 by Harry Markowitz, Modern Portfolio Theory has become one of the most well-known economic theories in our lifetime. While everyone invests, no matter what precautions are taken, there is typically some reduction of earnings from all of the above asset classes due to volatility, inflation, taxes, fees. To provide income beyond Social Security during retirement, many people rely on employer-sponsored plans, investments, and life insurance. The second chart compares the results if the $20,000 initial bond income was used to purchase a whole life policy with the results of an all-bond option. The synergies of using life insurance plus other investments can produce more legacy value, potentially more net income, and less market value adjustment risk than a portfolio structured with no permanent life insurance. While Modern Portfolio Theory emphasizes diversity in investment options, a similar process of diversification can apply to the efficient selection of life insurance policies intended for lifetime use, especially when acquiring an amount in excess of $3 – $5 million. Selecting a mix of the right products involves consideration of the client’s risk tolerance, time horizon, desired premium outlay, development and access to cash values, and death benefit requirements.
If a client is interested in lowest outlay, the No-Lapse Guarantee policy may be the right choice. Financial expertise has become more specialized since the 1960’s as the number of products and their complexity have increased.
The best scenario is a relationship with a team of like-minded individuals, each with specific professional expertise in the financial arena. The financial “gurus” are all especially focused on the buying and selling process of the portfolio components they favor. In addition to putting a plan in place, ongoing assessment and careful monitoring are essential for a successful financial strategy that could span a lifetime. Since 1860, Guardian has provided high quality products and services to meet a broad array of personal and business needs to enrich the lives of the people we touch. 2 Variable life insurance products and their underlying investment options are offered by prospectus only. Variable Universal Life insurance is issued by The Guardian Insurance & Annuity Company (GIAC), a Delaware corporation and distributed by Guardian Investor Services LLC (GIS). Values in variable investment options will fluctuate daily and may be worth more or less than the original investment. Variable products and their underlying investment options are not deposits of, or guaranteed or endorsed by any bank or depository institution and are not insured by the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Association, the Federal Reserve Board, or any other Agency and involve risk, including possible loss of the principal amount invested. Securities products and services are offered through Registered Representatives of Park Avenue Securities LLC (PAS), 7 Hanover Square, New York, NY 10004-4025, 1-888-600-4667 begin_of_the_skype_highlighting              1-888-600-4667      end_of_the_skype_highlighting. 3 Final Report of the Task Force for Research on Life Insurance Sales Illustrations under the Auspices of the Committee for Research on Social Concerns, Society of Actuaries, 1992. 5 For policies with level death benefits, the Net Amount at Risk equals the policy’s stipulated death benefit minus the cash value for any point along the con­tinuum from policy purchase until death.
7 Please note that the deduction of all applicable fees and charges could result in lower performance than shown. SEOUL, KOREA23 August 2016 - 9:45amMichael HerhHanwha Life Insurance announced that they launched “Hanwha Life Smart Plus Variable Integrated Whole Life Insurance” which guarantees the surrender value of an insurance contract regardless of an earning rate. This insurance guarantees 95% of the surrender value of an insurance contract by separating it with an expected interest rate (3.0%) ten years after its purchase even if its earning rate is minus. Hanwha Life Smart Plus Variable Integrated Whole Life Insurance can transform into interest rate-linked whole life insurance. Permanent Life InsurancePosted on August 1, 2013 by JasonThere are two basic types of life insurance: term and permanent life insurance. Most permanent life policies require premium payments over the insured person’s entire lifetime and do not permit a change in the death benefits, coverage options, terms, or conditions. Before making your final insurance purchase decision, make sure to check out our recommendations on the best life insurance companies available to you! All permanent policies have a savings or investment feature that increases in value over time. The cash value in a life insurance policy can be fully-redeemed (which cancels the policy), or up to 90% of the value can be used as security for a low interest rate loan.
With all types of life insurance, the death benefit, or face amount, is the amount your beneficiaries will be paid out in the event of your death or the contract’s maturity, which is usually around age 100. The logic behind permanent life insurance is that some individuals want coverage for a lifetime. Personally, I dislike the idea of permanent life insurance and think that term life insurance is a far better alternative in almost every scenario except estate tax risk. First, always beware of agents, brokers, and investment professionals who very strongly recommend permanent life insurance, especially whole or universal life.
Did you know that, on average, the stock market has returned a little over 9% per year for the last 100 years?
There are three types of permanent life insurance: whole life, universal life and variable universal life.


Unlike the fixed premiums required by variable and whole life, universal life insurance has a flexible minimum and maximum premium, a flexible death benefit and an investment component for its cash value. Furthermore, the equity (cash value) is invested in financial instruments like stocks and bonds, which have greater risks of gains or losses than the secure investments of whole life insurance, meaning the cash value is tied to the success of your investments. Policyholders then have the option to obtain a low-interest loan from their cash value reserve. Variable universal life insurance has many of the same features as universal, but the policyholder has more control over his or her equity investments.
In regards to the cash value, you can choose investments from a menu offered by the insurance company.
PROS: The returns from life insurance policies are tax-deferred until the proceeds are withdrawn.
CONS: Term life insurance offers the cheapest rates when you are young and healthy, and the cost of permanent life coverage may be prohibitively expensive for many consumers.
Term life insurance expires at the end of the term and has to be replaced or renewed at a higher premium rate.
While permanent life insurance provides financial protection for families in the event of a premature death, it also allows you to invest in your own future. For families who feel they cannot currently afford a permanent policy but who need to protect their children from financial hardship due to the potential loss of a parent.
To guard against uninsurability in the future: If you buy term insurance now, you can continue this coverage even if you become uninsurable. In addition to providing necessary coverage at an affordable rate, Term life insurance protects your insurability. An ideal product for the young and the old, Whole Life provides the extra security of guaranteed protection at affordable rates, yet it maintains the element of cash value accumulation for pre- and post-retirement needs.
Current forms of Whole Life insurance enable policyowners to benefit from favorable experience and a strong economy by crediting excess interest to the policy. Like all forms of permanent life insurance, Whole Life may be converted into retirement income.
Universal Life provides you with what you want with Whole Life coverage with the flexibility of adjusting your premiums and death benefits..
Universal Life is a flexible premium, adjustable life insurance product that provides you with the flexibility of choosing the policy features that are appropriate for you and adjusting those features as your financial priorities and needs change.
When you are in the formative years of raising a family, for example, you can increase your policy's death benefit for extra needed protection. When a child reaches the age of higher education, you can borrow or withdraw from the cash value of the policy to help you pay college expenses*.
Indexed Universal Life gives you the death benefit and guarantees of life insurance, combined with the opportunity to earn interest linked to the upward movement of a stock market index (without the risk of investing directly in the market), you may wish to consider indexed life insurance.
Like all universal life insurance, Indexed Universal Life allows you to choose the policy features that are most appropriate for you and to adjust those features as your financial priorities and needs change. The flexibility of tax-deferred growth of policy cash values, which may be used to pay for monthly costs of insurance or accessed via policy loans and withdrawals to use as you wish. Unlike other interest-earning life insurance policies, however, Indexed Universal Life offers interest linked to a stock market index – without the risk of investing directly in the market. Variable Life allows you to try the investment market, there's Variable Life Insurance which provides a death benefit and the opportunity for you to invest your premiums in various Separate Account investment portfolios. In addition to offering you this flexibility, however, Variable Universal Life allows you to invest in a number of Separate Account investment portfolios. You can choose the investment options that most closely match your tolerance for risk and your financial goals.
Unless you the client have a complete understanding of the mechanical parts of a Variable Life Insurance policy we encourage you to perhaps consider another solution to you situation. There is no simple answer to the question “How much life insurance should I have?” The amount of life insurance needed varies during a person’s lifetime and between individuals and families. More specifically, family’s should have a death benefit between 5 to 10 your annual income, and policyholders should account for mortgage payments, credit card bills, medical bills, funeral expenses, children’s education and tuition costs, and a retirement package for your spouse to cover daily living expenses. Using different types of policies, such as term, whole, universal, and variable coverage, can give individuals and families greater flexibility when determining the amount you should have.
Many young, healthy single people do not believe they need life insurance, but young people often start out with substantial debt from student loans, car loans and other major purchases, even mortgage loans. How much life insurance a single person needs is based on the total amount of outstanding debt plus $10,000 to cover final expenses, such as medical bills and funeral expenses. Additionally, young singles should think about future financial goals and consider buying permanent whole life insurance when they are young, healthy, and premiums are cheapest. Whole insurance policies are permanent and accrue a cash value over time that can be used to meet financial goals.
Wage earners with financial dependents not only need enough life insurance to cover their debts and final expenses, but they need to provide for their surviving dependents, including spouse, children, and may even their own parents. Financial planners or advisors and insurance experts generally recommend that wage earners have a minimum amount that is equal to 5 to 10 years of income, but the bottom line is to buy coverage that you are comfortable with. Temporary term life insurance is a good choice for wage earners with dependents since the need for additional protection is highest when your children are born and gradually diminished as they become independent, graduate school or college, and begin to live on their own.
For this typical situation, a 20 or 30 year term life policy is best because rates are very cheap, the policy provides coverage when you most need it, and then expires as liabilities begin to decrease. Even though stay-at-home parents may not earn a wage, they contribute valuable services to the household, including child care, laundry services, cleaning, meal planning and preparation, and shopping. Couples with children should consider how much these services would cost if the parent was no longer there to perform them.
Most seniors have paid off their debts in preparation for retirement and do not have dependent children, but they still need life insurance. More affluent seniors may choose to carry enough life coverage to pay estate taxes for their heirs since the proceeds are not taxed, and can be used to pay off any taxes charged by the government when the estate changes hands to the heirs. A home is the biggest purchase most families ever make, so it is important to ensure that the mortgage will be paid if a wage earner dies prematurely. For these types of policies, the premiums and death benefit are not fixed and decrease over the term period as the debt is paid and decreases. There are whole life policies called endowment policies that are perfect gifts for newborn children.
When the child reaches 18, 21, or 25, they can redeem the cash value of the policy to help pay expenses like college tuition, a car loan, or a down payment on a house, or they can convert the endowment policy into traditional whole life policy with low premiums. Permanent policies like whole and universal life insurance can play an important role in financial planning.
Few investments offer the security and stability of whole life and its ability to produce a guaranteed rate of return; meanwhile, universal life insurance offers greater risk for greater returns by investing in the stock and bond markets. Since interest and dividends are tax-deferred until they are removed from the policy, your investment will continue to grow quicker and larger faster, making the tax advantages very attractive. A single payment whole life makes an excellent tax shelter for older, affluent individuals. How much single payment life insurance an individual buys depends on how much money they want to put in a tax-free investment for retirement. Since permanent policies have fixed death benefits, individuals cannot adjust the policies to meet their changing needs. Hopefully throughout this article, we’ve provided you some ideas, suggestions, and factors to consider when determining the details of your life insurance policy.
The next step is to actually get a life insurance quote so potential policy holders can determine the cost of their policy.
In addition to the traditional portfolio of stocks, bonds (and Italian real estate), Cicero has a variable whole life insurance policy. Instead of fee-ridden variable whole life insurance, we most often recommend simple, inexpensive term life insurance to our financial planning clients. Cicero needs life insurance), and the answer to the second question is “No” (Cicero is not eligible for a term life policy at a competitive rate), then it may be appropriate to consider maintaining the existing variable whole life insurance policy. Cicero does not need life insurance), or if the answer to the second question is “Yes” (i.e. Given this, it may be appropriate for Cicero to ditch his variable whole life policy and put the money he saves into an investment account.
However, the above formula is a bit unfair because we must also account for the value of the insurance itself: the death benefit. If surrendering the policy for its cash value, the famous orator may be looking at a tax bill. However, this may not be the case for all individuals currently holding a variable whole life (or similar universal indexed life) insurance policy. Cicero could see a significant drop in his taxable income at the onset of his retirement, or in a year following a large taxable gain – such as the sale of investment property. Without the conflict of interest stemming from the desire to earn a commission from the sales of annuities, insurance policies or other financial products, a fee-only financial planner with a Charted Life Underwriter® (CLU®) designation certifying insurance expertise can work for you as your fiduciary, helping you determine your insurance and investment needs. For his thesis, Jon showed how university endowments can generate more wealth – and take on less risk – by adopting simpler investment strategies. Jon also serves on the programming committee for the San Diego chapter of the Financial Planning Association (FPA), and is an active member of the FPA’s NexGen program – a venue for young financial planning professionals to share best practices. As always, there is an upside as well as a downside to this – on the upside, it helps mobilize people into taking action for their financial future.
The late Louis Rukeyser’s program, Wall Street Week, also focused the public’s attention on the ups and downs of the day’s trading events, as does Bloomberg radio. This statement leads us to the objective of this study – to highlight the uncommon knowledge about life insurance as an asset class and to expand the discussion about it.
Weber, MSA,CLU and Christopher Hause, FSA, MAAA, both independent industry experts with more than 60 years of experience between them. There are many different philosophies and formulas that can be applied, but the two most common approaches are Capital Needs Analysis (CNA) and Human Life Value (HLV).
The analysis will tally expenses, including a factor for inflation, calculate the present value using a conservative rate of return, then offset that by existing assets. It is similar to the formulas used to calculate and claim damages under a wrongful death suit, the theory being that the survivors are entitled to the economic value of what the deceased would have produced during a lifetime. From the probability statistics, a premium amount can be calculated – if the insurance company can estimate how much it expects to pay out in death claims in a given year, it must collect at least that much to cover the cost (this doesn’t take into account other expenses and profits).
The first consideration is that life insurance is much more economical if purchased at earlier ages. This helps determine the type of insurance best tailored to suit the needs and desires of the buyer, and allows for flexibility in planning for the future.
On products purchased for a specified number of years, the initial premium is guaranteed and level, reflecting a mathematical smoothing over the years as life expectancy changes. Additionally, the longer the Term guarantee period (20-30-year Term), the funding becomes more like the permanent policy, but there still is no cash value – living benefits – to Term insurance. Because a contract can be in force over decades, the careful pricing and design of the policy make this a strong and stable financial vehicle no matter what the economic conditions. The policy featured flexibility in amount and timing of premium payments, so that the policyholder simply had to maintain a positive balance in the policy account to cover fees and expenses month-to-month. Premiums and death benefits can be adjusted as guaranteed limited pay policies to Term insurance for limited timeframes. Designed to never lapse as long as the premium is paid, this is typically characterized as a death benefit product – owners should not anticipate accumulating sizeable cash values. The common viewpoint is that it should not be considered if the surviving spouse will need additional financial resources at the death of the first spouse. Even though most insurance companies use current and actual experience as regulations stipulate, illustrations are representations of assumptions made in the policy design. This would include what may happen with premium offset, or if withdrawals are made in later years to supplement income, or if riders are utilized to enhance the policy’s values.
In turn, because of the volatility expected in the sub-accounts of a VUL product, illustrating to show the prospect how the policy works became a real challenge for the insurance industry.
Statistical analysis produces a better way to understand and visualize how variable policies work by providing a more realistic “starting point” which advisors and clients can use as a baseline then revisit periodically. With today’s computers, it is possible to plug in a range of variables to see if the premium is likely to sustain a policy for a lifetime.
The same method may be adapted to a UL product with a crediting rate tied to the experience of a company’s general assets account, which tends to change widely over time. If a policy is purchased with an expectation of paying as little as possible over time, a VUL illustration can solve for a significantly lower premium that is unlikely to be realized. Statistically in force evaluations of these life insurance products should be conducted every 3 – 5 years. There is a broad range of choices to dovetail with needs as well as the client’s situation and preference profile.
The attraction of superior total returns on the short new money portfolios of Universal Life products caused a decrease in sales of whole life with the longer, slower moving old money portfolios. In this section, the authors provide data analysis through policy standards to compare pricing and results for a Universal Life policy, a Variable Universal Life, and a Whole Life policy issued in 1974 and held for 30 years. The Variable product shows three scenarios with various asset mixes ranging from the most conservative to the most aggressive.
Once again, uses of permanent life insurance working in synergy with portfolio investments can provide a higher net after-tax retirement income and provide a higher legacy value as well, while reducing risk. This section expands the discussion, highlighting life insurance as a viable asset class of substantial value.
As the time to retirement gets shorter, it’s wise to scale back on more risky investments and increase the stability of fixed components. The first chart shows that the investment in bonds, growing at an assumed constant 4% rate of return over the years would accumulate an asset value of $2,920,588. Considering life insurance as an asset class achieves the ideal efficient frontier discussed in Modern Portfolio Theory and is, ultimately, also in the best interests of our clients.
The major forms of life insurance present varying combinations of most of these attributes.


However, if best cost is desired, Whole Life or Variable Universal Life could be the better buy. With the advent of the Internet, where individuals can acquire and manage their own investment and insurance choices, there are many resources available for information, advice, and execution of the individual’s wishes. Even in discussions of life insurance, the primary consideration seems to be what product to purchase. Guardian’s Living Balance Sheet is an ideal electronic planning and service platform for use by clients and their Guardian representatives.
Prospectuses contain important information, including charges and expenses, and should be read carefully before completing an application, investing, or sending money.
Any individual soliciting these variable life insurance products must be a licensed insurance agent and a registered representative of the broker-dealer. PAS is an indirect wholly owned subsidiary of The Guardian Life Insurance Company of America, New York, NY. The biggest advantage of this insurance is that this insurance gets rid of worries over a decrease in the surrender value of an insurance contract resulting from a low earning rate by introducing a reserve guarantee type on July 25. Compared to interest rate-linked whole life insurance, the surrender value of an insurance contract ten years after its purchase is at a similar level or a little higher. Permanent life insurance provides lifelong protection for your family and financial dependents, as well as the ability to grow the cash value tax-deferred. Despite the inflexibility and higher premiums, permanent life insurance may be a good option for families who have a long-term need for income replacement and estate planning.
In the case of permanent policies, the cash value is the amount of money available to you if you surrender or cancel your policy before your death or its maturity. Even after your youngest child graduates college and becomes financially independent or your mortgage is paid off, what happens to your spouse’s current lifestyle, living expenses, medical bills, and outstanding personal loans?
Some experts, financial planners and advisers argue that permanent coverage, such as whole or universal life insurance, offers an investment feature to help grow your cash value.
It is very well known that the sales commissions for these policies are high, making it more profitable for agents and brokers to sell. Depending on your current age, health and the type of term insurance you are comparing, permanent policies can cost 10 to 20 times more than term products. Although all three types of policies are permanent, each has different pros and cons that should be considered when an individual decides to buy coverage. Because of the guaranteed interest rate, some view whole life as an insurance policy with a savings account.
Although universal coverage has a fixed premium for the insurance portion of the policy, consumers have the option to pay more into the cash value.
If the loan is not repaid before a claim results in a payout, your beneficiaries may not receive the full face value of the policy.
As with universal life insurance, variable universal policies have flexible premiums and death benefits, allowing you to increase or decrease your coverage with changing financial needs. Your investment options range from different asset classes to varying degrees of risk, and you can have one or multiple investment accounts under a single policy.
Moreover, these kinds of permanent protection allow you to change the death benefit if your long-term investment goals and financial needs change.
The returns of other types of investments are subject to income tax and capital gains tax, giving permanent life insurance obvious tax advantages as an investment.
The death benefit of universal and variable universal life insurance are tied to the success of investments, so the actual death benefit payout may be less than the policyholder planned to leave his or her family if the investments do not yield the anticipated return. If an insured person develops a serious illness or reaches an advanced age during the term, he or she may be unable to qualify for new life insurance. The right way to choose the best life insurance policy is to compare the coverage, options, benefits and rates of different types and find the one that fits both your needs and budget.
There are term policies that can be converted (keep in mind that in most cases your premium will increase) to permanent policies once your financial circumstances change. By buying a convertible Term policy now, you can convert your policy to a permanent life insurance policy without providing evidence of insurability _ even if your health tomorrow is not as good as it is today.
When you reach retirement, you can use loans and withdrawals from the policy's cash value to purchase an annuity that can provide additional funds for your retirement needs*.
The factors to consider when selecting a death benefit amount are current income and investments, outstanding debts, number of dependents and future financial goals, including retirement.
This is because existing family members may have co-signed on a loan with their children and could be liable for any outstanding payments or the loan balance if the individual dies. Buying coverage at a young age can help individuals start saving early and accumulate wealth over time.
One way to deal with changing circumstances is to buy a whole life policy when you are young and supplement that policy with term protection, when necessary, to cover new debts, loans or financial obligations. Once an annual figure is reached, multiply that amount by between 7 and 10, depending on the ages of the children. The amount of money an individual needs to cover the balance of a mortgage decreases over time as payments are made. This is extremely beneficial because, as the death benefit decreases to cover only the remaining portion of your mortgage, your rates also decrease because you do not need as much coverage each month. An endowment policy is a type of limited payment whole insurance that accrues cash value as a child grows. The cash value is fairly liquid and can be withdrawn or used for security for no- interest loans. Since loans are not considered income, no taxes are paid and there are no repayment terms on loans.
For many people, the answer is to supplement permanent protection with temporary term policies. How much you need depends on your current and future financial assets, liabilities, and goals.
This is because of the multitude of high fees involved with policies like variable whole life.
Over time (and via expensive premium payments), the savings component of the variable whole life insurance policy has grown into a sizeable amount: in excess of $40,000. Consider that if you are in a high-enough tax bracket, and you are looking at a large amount of taxable income from the surrender value, and you anticipate being in a significantly lower tax bracket next year, then you may consider maintaining the policy – at least until your tax bracket drops.
Jon is currently studying for his certificate in Personal Financial Planning (PFP) via UCLA Extension.
The downside is that some of the advice is misleading or simply inaccurate, and particularly so with life insurance.
Jane Bryant Quinn and Suze Orman have been negatively outspoken about whole life insurance; both support the concept of buy Term and invest the difference. The study provides a valuable forum for discussion among Guardian associates, accountants, attorneys, other trusted financial advisors, and clients. Ultimately, the net number produced reflects the amount of life insurance believed to be needed to support survivors. For example, a 33-year-old earning $100,000 and working to age 70 might earn a total of $10 million, including 5% annual raises and not discounted for the time value of money.
Important in the calculations is the timeframe from acquisition to life expectancy, and that is why premium amounts increase the older the buyer is at the time of issue.
More to the point of the purpose of life insurance is the security and protection it provides as well as locking in one’s insurability, which can potentially change at later ages due to health factors.
Premiums often follow the model for permanent life insurance, based on life expectancies, which make them basically unaffordable for renewal after the initial period.
In a Participating Whole Life policy from a mutual life insurance company, premiums are returned to policyholders in the form of dividends as their pro-rata share of gains through investment returns, mortality experience, and expense control. It is important that the right policy is matched to the client’s needs – and to be aware that a variable policy can illustrate a better premium at 12% than a UL policy’s crediting rate of 6%.
While peer companies typically utilize a similar process to design products, pricing, values, flexibility, and other features can vary widely. Though whole life was not a bad deal, the focus was on paying as little as possible for the highest return, which drove many clients to the UL marketplace.
Government and high-grade Corporate Bonds, high-grade commercial mortgages, and policy loans, with minimal investment in risk-based capital.
Other assessments are provided using a 60-year old female and a 33-year-old male to illustrate the application of policy standards across various case scenarios and with different products. In the example provided of a 33-year-old male, the premium for a 10-year Term policy with a $1 million death benefit jumped from $355 during the initial period to $3,865 in the 11th year, and increased annually after that. The following charts demonstrate the value of integrating life insurance with a bond portfolio rather than purchasing additional bonds. This coincides with the years when an individual may want additional resources to draw upon for income, as inflation and the cost of living could have outpaced Social Security and a pension.
There are so many factors to consider that it takes professional expertise to help guide the buyer to make efficient choices. Very little attention is paid to monitoring, managing, and measuring the success of the portfolio. It helps provide a comprehensive overview of a portfolio with the opportunity to monitor and update as frequently as necessary, to achieve optimum financial balance among all of an individual’s investments. Please consider the investment objectives, risks, fees and charges, and expenses of the investment company carefully before investing. The policy cannot be cancelled by the insurance company as long as your premiums are paid and remains in effect until the death of the insured person. Whole life insurance guarantees a rate of return on the equity or cash value in the policy, while universal life may offer a minimum guaranteed return. Furthermore, the death benefit is a fixed number with most kinds of policies, while factors such as mortality rates, administrative expenses and investment returns can affect your cash value.
Maybe you have enough in your savings, retirement accounts and pension to cover all these costs, but what if you don’t?
Others explain that, if you have a very high income (think $250,000+) or $1 Million in assets, it might provide some benefits. If you are inclined to buy whole or universal life insurance because of its lifelong protection and investment component, imagine paying $5,000 or more in premiums for the rest of your life and getting a guaranteed 4% rate of return on your cash value.
So, instead of purchasing permanent life insurance, buy a 30-year term life policy, invest the difference in premiums in an index fund, and you’ll come out ahead of the game in the end. All permanent policies feature a fixed death benefit that cannot be altered if the policyholder’s financial needs change, but they differ in their investment potential, premium rates, and options. Some products, called participating policies, also pay out dividends directly to you or into the cash value. Universal life insurance offers the flexibility to invest more when your income is high, or to pay the minimum when your budget is tight.
The amount that will be paid out will be the face value of the policy minus your outstanding balance. Although a portion of your premiums are diverted to the cash value, insurance companies do allow you to make lump-sum payments to increase the amount of investable cash. However, variable universal life insurance does not offer a guaranteed rate of return since you are responsible for the investment decisions in your portfolio. Since the money that is invested is taken from the premiums, permanent insurance may be a good choice for individuals who have difficulty following a savings plan. Permanent policies do not expire and cannot be cancelled by the company because of changes in your health or age.
For seniors with a modest estate, a $10,000 term policy is usually enough to cover final and medical expenses.
For debts like mortgages, there are policies called decreasing or mortgage term life insurance.
Permanent coverage is a long term investment that is great for retirement planning or saving for a child’s education. Young singles and retired seniors need less than couples with dependent children, a mortgage, credit card bills, and tuition costs. Variable whole life is complicated because it is not just life insurance, but a combination of a death benefit, and a cash savings component. Knowing how much in taxes would be due can aid in the decision to maintain or abandon the policy. Said another way, it may make sense to pay the insurance company a little bit of money (for now) to avoid paying Uncle Sam a lot of money (right now). Upon completion of the certificate, Jon will be sitting for the Certified Financial Planner (CFP®) Examination Requirement. It focuses on life insurance as an important asset and foundation to an intelligent financial plan. The illustration suggests to the buyer a view of how the policy’s values might look in the future through economic enhancements that exceed its guaranteed pricing elements.
This practice is consistent in the companies’ ability to allocate excess interest crediting rates on UL policies and dividends on participating Whole Life products.
Because life insurance can provide financial security over generations, it is critical to look to the company for its stability, quality products, customer service, and the knowledgeable expertise of its financial representatives. A prospectus containing this and other important information can be obtained from a sales associate or by calling 1-800-441-6455 begin_of_the_skype_highlighting              1-800-441-6455      end_of_the_skype_highlighting. May of the top burial and funeral insurance policies are issued as this type of life insurance. Finally, the cash value can even be used to cover premium payments when you’re on a tight budget due to decreased earnings.
Similarly, despite providing a fixed death benefit, policyholders are able to decrease or increase (with proof of continued insurability) the death benefit to fit their financial needs. Overall, variable universal life policies are best for people with experience in financial markets and investment strategies. The only difference is – do you really need life insurance coverage at the age of 60, 65, 70, 75 or 80 and do you want to continue paying premiums well into your retirement?



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