FL financial planning

Term life insurance: What you need to know before you start shopping

Estate PlanningYou certainly aren’t alone if you find shopping for Life insurance a perplexing, frustrating process. Even for those with a basic understanding, the intricate details of many Life insurance products can be overwhelming for consumers.

Term Life insurance is one of the simpler policies, and it also happens to be a product that meets the insurance needs of a variety of family types. It offers you protection for a specified time, or term. The policy’s term can be set at anywhere from one to 30 years. Your named beneficiary will receive a specified death benefit should you die within the term of the policy. Since Term Life insurance is designed for protection purposes, it’s usually less expensive than Permanent Life insurance. A large percentage of Term Life consumers are opting for it because they feel their need for Life insurance will shrink as they age. For example, a person might feel the need to protect their children by having a Term Life insurance policy, but feel that this need will decrease or end once their children reach a certain age.

Although Term Life insurance sounds simple and straightforward enough, there are still a few additional points that you should be mindful of as you begin shopping:

  1. Determine your objective. Don’t start shopping before you answer the following question: What am I trying to accomplish with a Life insurance policy? As you assess your goals, you might find that Term Life insurance is ideal for your needs, or maybe not. In most cases, a consumer will outlive the Term Life insurance policy’s term, meaning that benefits are never realized. This element can be problematic if you’re looking to protect your family long-term, or ensure future adult children or grandchildren receive a benefit. However, it can be ideal if you’re looking to protect your family for a limited amount of time and/or would like to ensure debts are covered should you pass away in the near future.
  2. Individual or Group? A Group Term Life insurance policy is usually an employee benefit through an employer. In most cases, a short health history questionnaire is all that’s involved in the application process. Those that qualify will have the monthly premiums automatically deducted from their paychecks. On the other hand, an Individual Term Life insurance policy requires you to apply for the coverage on your own. Unlike group, you will need to have a physical exam nd provide the insurer with your medical history during the application process. Some insurers may also require a background check and permission to examine your medical records.It might seem like the Group Life insurance policy process is easier and less invasive, but he individual policy can offer you some advantages that the group doesn’t. First, you’ll own the individual policy and be able to retain it should you leave or be fired from your urrent employment. Second, rates on group policies typically increase every five years, but individual policies typically offer level premiums that don’t increase during the duration of the policy. Third, group policies are typically less flexible than individual ones.
  3. Know what you’ll do next. There will be a couple of different options available when the Term Life insurance policy nears expiration, including:
    • Allowing the coverage to expire, which may be an option for you if you don’t see the policy as a necessity any longer.
    • Retaining the policy, which might be an option for you if you feel you still need the policy or couldn’t qualify for a different policy for health or other reasons. Just keep in mind that your premiums could increase when you extend the term of your existing policy.
    • Obtain a new policy through an alternative insurer, which might be an option if you’re healthy and would like to still have a Term Life insurance policy, but don’t want to pay the increased premiums associated with extending the term of your existing policy.
    • Upgrade to a permanent policy, which might be an option if you’d like to convert to a more permanent coverage.


  4. Understand how you can upgrade. Upgrading is one of your options when your Term Life insurance policy nears expiration. Should you choose this option, you need to read the fine print in your contract. Upgrades are usually allowed under a conversion privilege, but the fine print may place limitations on the upgrade. For example, a policy might not allow you to convert to a permanent policy after you reach 70-years-old, or might only allow you to convert to a specific type of policy.

Keeping these tips in mind as you shop can make the process much easier and help you obtain the right policy for your family’s unique insurance needs.

Content Provided by Transformer Marketing.

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Practical Differences Between Term and Whole Life Insurance

Spectrum Financial Solutions, FL, NJ, Life Insurance“Term” and “whole” life insurance are phrases thrown about quite frequently in the insurance world. You may well have some idea of the definitions of each without really understanding their effect. So what is the actual impact on daily life of each type of life insurance?

Whole Life Insurance

Put as simply as possible, whole life is an insurance contract that combines life insurance with a savings plan. You may also hear whole life referred to as permanent insurance. Whole life premiums are higher compared to those for term insurance due to their cash value option (savings). You see, after 30 years of paying on this type of policy, you can either cash it out as a lump sum, or you can use the cash value to continue paying the premiums. Thus, you can keep the insurance policy for your entire life.

Term Life Insurance

Term insurance, on the other hand, is life insurance which has a start and stop date –hence the name “term life insurance.” A typical term policy has a term of 15 to 20 years. The premiums are much lower than those for whole life for the same insurance coverage simply due to the fact that there is no savings option; you are paying for insurance coverage alone. Some term policies offer the option of renewing for another term once they expire, but of course the premiums will be much higher at that point because of your age.

Whole vs. Term

The practical differences between term and whole life insurance come down to need. If you need insurance for only a specific time frame, then term insurance is your best bet. However, if you are looking for life insurance with level premiums for 30 years or more that will accumulate cash value during that time, then whole life insurance may be a better option. Your financial adviser can help you decide which is the best choice in your unique situation.

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2015 Goals: Tax-free IRA Withdrawals for Charity

charityHave you been interested in giving to charity?  If so, make sure you understand that there is a way to give to charity while at the same time reaping tax benefits.  In fact, you can make a tax-free IRA deduction to charity from your individual retirement account.  In doing this, it’s much more simpler to meet your annual minimal distribution requirement and support a charitable cause of your choice all the while receiving a tax break.  Best of all, you can donate up to $100,000. 

To determine whether or not taking advantage of a tax-free charitable donation is right for you, keep in mind the following tips:

A charitable deduction will be influenced by your income, however, when using an IRA distribution as a way to give to a charity, this influence can be avoided. 

If your income reported on Form 1040 makes your Medicare Part B income increase, a charitable contribution coming from your IRA may help lessen the price increase. 

In some states, making the donation through your IRA may allow you to claim a state-tax deductible.

If you don’t want to itemize your tax return, making a donation to a charity via your IRA may be able to help you avoid itemizing.

Although you can choose which charity your donation is given to, it must be a qualifying charity that has been deemed qualified by the IRS.  A private foundation, as well as those that operating via donor-advised funds, will not fall under the qualified category.

As with any type of donation that you give, it’s best to first speak with a qualified financial representative to ensure you are taking advantage of all applicable tax benefits.

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Evaluating Where You’re At and Comparing that to Where You Want to Go

Spectrum Financial, NJ, FL, RetirementIf you have any aspirations for your life, then you will need to set goals to meet them. And many of these goals will be money-oriented. Fortunately, you don’t have to be a rocket scientist to make smart money choices. You simply need to assess the money that you have coming in and the money that you have going out. Ideally, the money coming in will be more than what’s going out. If it’s not, then you will need to cut back on your expenses.

You must pinpoint your goals in order to save for them. Take for instance that you want to go on a $5,000 cruise when you turn 40. You’re currently 37-years-old, giving you three years to plan for the cruise. You’ll need to save $138 a month to have enough to money for the cruise.

For other larger goals that you have, this will require more money to be saved. When saving money, you should put it in a savings account that you absolutely do not touch except for during emergencies. It would be even better if you started a multiple savings account; one for emergencies, one or more for recreational/other purposes.

Your income will largely influence the amount of money that you are able to put in a savings account. It’s because of this that you need to be realistic when examining your current financial status and the goals that you want to achieve. For instance, if your annual salary is $35,000 a year, you probably aren’t going to save enough money within 20 years to pay off a $500,000 house. Something more realistic would be paying off a $275,000 house in 20 years.

As with any financial decision, it’s imperative that you think carefully about what you want and what’s feasible. And as always, do your best to foresee what the future might bring, but always be prepared for unexpected circumstances to arise.

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Beneficiary Designations

Spectrum Financial, NJ, FL, GrandkidsThe beneficiary is an important term used in life insurance policies, and one with which you should be familiar if you plan to purchase a policy. A beneficiary is the person to whom the proceeds of the policy will go when it is activated upon the death of the insured. The insured (the person who owns the policy) has the authority to designate their preferred beneficiaries, and the operation of the insurance contract in regard to beneficiaries always supersedes the operation of any other laws, as long as an insurable interest exists for the named beneficiary.

There are two main types of beneficiaries in life insurance policies. These are the primary and contingent beneficiaries. The primary beneficiary is the one to whom the proceeds of the policy are meant and preferred to go. However, if the primary beneficiary dies before the insured, the contingent beneficiary becomes the recipient of the proceeds of the policy.

The insured can also divide up the proceeds of the policy in percentages among more than one primary and/or contingent beneficiary. For example, if the insured has three children and wants them all to be primary beneficiaries, he or she could leave one-third of the value of the policy to each child. The contingent beneficiaries might be grandchildren, who would receive their parent’s portion if that parent were to die before the insured. If a deceased primary beneficiary has more than one child, the insured may divide up the proceeds of their parent’s third of the policy between the surviving children in equal portions or in any other portion the insured prefers.

While naming children as beneficiaries is common, it should be remembered that a legal guardian will have to be appointed to manage any funds a minor child may receive. The insured may name a guardian, or the courts may choose one if none has been named. It should also be remembered that the insured does not have to name children as beneficiaries. Any other relative, friend, or trusted person the insured desires can be named as a primary or contingent beneficiary in a life insurance policy.

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