​​However much we research the options available when buying life insurance, and discuss them with friends and family, there are some things we might just never know.
Following are suggestions from insiders – those who are involved in life-insurance matters on a daily basis.

Include payment with your application.
What would happen if you were to die after applying for a life-insurance policy, but before the application is processed? You wouldn’t have a policy, unless you take one important step: if you include a check for the first payment when you submit an application, your coverage will be retroactively binding to that day.

Don’t name a minor as a beneficiary.
One reason we buy life insurance is to provide for our children. But minors can’t receive life-insurance proceeds, at least not directly. If you name a child as a beneficiary, he or she may have a hard time getting the money before turning eighteen. And, at that point, the child receives the money with no controls over how it’s used. A better option may be to create a life-insurance trust that receives the money and specifies its use. For example, the trust can disburse the funds over time on milestones you define, such as when your child turns twenty-one, thirty, etc.

Don’t use group life insurance to satisfy a divorce agreement.
If a divorce agreement provides you with alimony or child support, it also likely requires your ex-spouse to have a life insurance policy naming you as a beneficiary. However, if your ex-spouse suggests using a work policy to satisfy this requirement, you may need to ask him or her to reconsider: if your ex-spouse changes jobs, the agreed-upon coverage may be lost.

​Life insurance is a straightforward concept: Buy a policy and pay a relatively small premium, and the beneficiary will get a large cash benefit if the insured dies while the policy is in force. 

But there are many variations on this basic theme - and just as many misconceptions about how life insurance works. Here are some of the most common myths. 

I already have enough life insurance through my job. 

Many people believe they have coverage from work. But in many cases, the amount of coverage from a workplace Group Policy is not nearly enough to provide meaningful protection for the employees family. 

The reason: Section 7702 of the tax code, which governs employer-paid group life insurance benefits, only allows employers to deduct premiums for a death benefit of $50,000 or less. That's only a fraction of the true need for most working families.

Many Financial experts recommend owning 10 and 12 times ones salary or more - especially if you are relatively young. The reason: if the unthinkable happens, the family will need that life insurance to replace many years of a breadwinners salary. 

Furthermore, if you get sick and lose your job, you may lose your life insurance just when you need it most. And you may not be able to qualify for life insurance then. 

Owning your own policy ensures that you can select the amount of protection that suits your needs, and that your policy follows you even if you change jobs or leave the workforce. If you have coverage at work, you may want to explore owning additional coverage for yourself and your family. 

I'm young and healthy and don't need it.

The best time to buy life insurance is when you are young and in good health. Accident and injury, not illness, are the leading cause of death for Americans under age 44, and the fourth leading cause of death for Americans of all ages, according to the Centers for Disease Control. 

These deaths include:

• Car accident
• Accidental drug overdoses, including prescription drug overdoses
• Medical error
• Falls
• Drowning
• Accidental shooting
• Electric shock
• Fires
• Traumatic brain injury
• Crime

Any of these events can strike the young and healthy at any time. More than 235,000 Americans died of injuries and accidents in 2016, according to the CDC - 105,296 of them, or 43% were age 45 or younger.

I don't qualify for life insurance.

Medicine has improved a great deal in recent years - and life insurance underwriting has changed with it. You may still be able to qualify even if you have controllable diabetes, cancer (in remission, usually for 5 years or more), or if you smoke or are overweight, have high blood pressure or cholesterol. 

Yes, you'll likely have to pay a higher premium, or settle for a lower amount of life insurance. 

I can't afford it.

it's more affordable than you think. Some 80% of Americans vastly overestimate the cost of life insurance. According to LIMRA.  Millennials overestimate the cost by 213%, and
Gen Xers by 119%.

​Client Scenario
Michael, 35, his wife Jennifer, 34, and their two sons live in Bakersfield, California. The couple lives comfortably on their $150,000 household income, which covers the mortgage and allows for a few extras.  

​​Concerns
A friend’s recent health scare inspired the couple to take action on their need for life insurance. Michael and Jennifer rely on their dual incomes. They want to make sure their sons, and the life they’ve built, are financially protected if something happens to them.

Solution
We put together a Term Life Insurance  Policy with Accelerated Underwriting proved to be the answer for their family situation.

Michael bought a $500,000 / 20-year Term Life  policy and got Jennifer $500,000 in coverage using an
Other Insured Level Term Rider.

The couple also purchased the Children’s Term Rider to give their sons $15,000 in coverage and the option to convert to permanent life insurance down the road.

The couple liked the added protection of living benefits with Critical Illness Benefit Riders. These add-ons pay a $50,000 lump-sum benefit if either suffer a critical illness like cancer, heart attack or stroke.

The final piece of their plan was a return of premium benefit (ROP), in case they never use their Term Life policy.

Is Suze Orman's advice right for you?

She suggests you "buy term and invest the difference." But are you willing to risk your savings on one-size-fits-all financial advice?

​Yes, term life insurance is less expensive than cash-value life insurance. But only if you have time to calculate the exact price difference, set aside that money, add it to your existing investments, and shuffle your balance between stocks, bonds, and mutual funds to minimize risk. Who has time for all that?
​
Cash-value life insurance offers a stable alternative.
Here are the benefits:

• Tax-deferred growth for your policy's cash value
• Guaranteed gains for your cash value
• Protection against stock market downturns
• No IRS penalties when you withdraw money before age 59.5

#investing #stockmarket #retirement #SocialSecurity #money #smallbusinessowner #video

Did you know that there are safer alternatives to the stock market? Indexed Universal Life Insurance is a powerful wealth accumulation tool, you probably never heard of.

Indexed Universal Life Insurance has three important features:

1). When you're younger, you can put the money in to create a "forced savings plan".

2). When you're older, you can enjoy its supplemental retirement income.

3). If you get sick, the death benefit can be used for critical care and chronic care.

​One of the biggest mistakes people make in planning their health and life coverage is assuming they'll never need long-term care services, or that if they do need the services, they will pay for them with their savings.

And many people shy away from long-term care insurance because they worry about premium hikes or the fact that if they don't use the coverage, they never benefit from their premium payments. But now there is a policy that melds long-term care insurance with life insurance.

Here's how these hybrid policies work:

You pay a lump sum premium for a universal life insurance policy, which builds up a tax-deferred cash value, in addition to providing life insurance that will pay a death benefit to your beneficiaries.

If you need long-term care services, you can use this death benefit to help pay for the cost.

Depending on the terms of the coverage, a $500,000 life insurance policy might pay from $200,000 to 500,000 toward the cost of nursing home care, in home care, and/or assisted living expenses.

The amount used to pay for long-term care expenses is deducted from the death benefit, and any part of the death benefit that is not used to pay for such costs is paid to your beneficiaries as life insurance proceeds.

One type of coverage bundles a long-term care insurance policy with a whole life insurance policy. This strategy may be done with a single upfront premium, a set of premiums for a fixed term, or ongoing premiums.

The cash value is invested and liquid after surrender charges, and the policies generally will provide a fixed interest rate for cash value growth.

These hybrid policies try to eliminate some of the friction points of long-term care insurance, such as:

- Premium hikes,
- Limited-benefit periods,
- Worries that you may be rejected during the underwriting process, and
- The fact that if you never use your long-term care coverage, you see no return on your premium.

You can avoid premium increases by paying a one-time premium or a guaranteed schedule of premiums for a specific period.

Some policies lock costs in at the start, and you can sometimes get an optional continuation of benefit rider that would continue paying for long-term care benefits even if the death benefit is depleted.

Is it good for your situation?

A blended life insurance/long-term care policy costs more, but there are potential advantages that may make this additional cost worth it for your situation.

You have some earmarked, guaranteed funds to help pay for any needed long-term care services. If you don't need long-term care services, your beneficiaries receive the unreduced death benefit.

In addition, universal policies typically charge a premium that is guaranteed to at least maintain the basic benefit, although it may not be enough to build cash value. That eliminates the problem of rising rates on long-term care insurance that prompt many people to shy away from buying this type of coverage.

If you decide to buy a blended life insurance/long-term care insurance policy, be sure you understand the long-term care benefits it would provide. Questions you may want to ask include:

- Exactly what type of long-term care services would the policy pay for; in-home care? Assisted Living? Adult Day Care? Nursing Home Care?

- How does the policy determine the amount of long-term care benefits it would pay? For example: does the policy pay a percent of the total death benefit, or does it pay a percentage of the death benefit monthly?

- Can you add inflation protection coverage?

- Are there any conditions under which premiums could increase?

- Is the policy tax-qualified, so that long-term care benefits won't be taxed as income?

Every person's needs vary, but if this type of dual long-term care and life insurance coverage suits your needs your able to buy two types of insurance protection in a single policy and with a single premium.
If you would like help from a professional who can guide you, WFGInsuranceQuotes.com can assist you. Connect directly with a financial professional. You can request a personal strategy session to discuss your needs and goals.

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​When shopping around for a life insurance policy, you have many choices. From monthly low-cost term insurance, to more expensive but long-term coverage benefits of whole life and universal life insurance, there’s a wide landscape of options.

As you consider different selections, it’s important to understand how these types of insurance differ from another. Among permanent life insurance, two widely-purchased options are whole life insurance and indexed universal life insurance.

While term life insurance is the most straightforward, it covers you only for a short-term period. Conversely, whole life and indexed universal life policies give lifelong coverage, so long as a policy remains active.

But they are more complex, tend to cost more than term coverage, and can be better-suited for long-term objectives. With that said, the cash value component of permanent insurance may be attractive for a number of reasons, including for efficient legacy planning, tax-advantaged wealth building, and tax-deferred retirement saving.

If you’re exploring term life insurance versus whole life insurance and indexed universal life insurance, it’s prudent to be diligent. You will want to research and consider your options carefully, and to help you get started, here's a quick guide on the differences between these life insurance types.

What to Consider When Buying Life Insurance
When it comes to life insurance, people often focus on two things: length of coverage and price. Chances are you have heard of trendy sayings like “term over perm” or “buy term and invest the difference.” But the question of what life insurance someone needs isn’t an “either-or” situation. Nor is term insurance the “best” option by default.

Sure, term coverage may be purchased at the lowest initial cost. But when you need to renew your policy, term rates often increase substantially. You may also find that you actually need more than one type of life insurance policy.

So, any life insurance purchasing decision should include a vigorous fact-finding and analysis of your personal and household financial needs. In fact, some other variables to consider are:

• Your risk tolerance
• Your age
• How your number of dependents might change
• Your health status
• Your time horizon before retirement
• Whether your needs extend beyond just protection
  
  

Depending on your circumstances, you may want to consider permanent as well as term life insurance for your portfolio. Now, let’s go back to the overview of term and permanent life insurance options.

Term Life Insurance
Compared to whole life and indexed universal life, term insurance provides the simplest coverage. The policy owner holds the guarantee of a death benefit for a certain period. That can last anywhere from 10-30 years, with most term policies lasting for 20 years.
When a term policy expires, that’s it. Your loved ones won’t receive any payouts since the policy has ended. You may be able to renew your term policy, but your new rates will be based on your current age and the actuarial risks that come with it (for example, heightened health risks, shorter life expectancy, so on).

The benefits of term life insurance are:

• Premiums stay fixed
• Simplest form of life insurance coverage you can purchase
• Available at lower cost than whole life and IUL, at least initially
• Provides a straightforward, guaranteed death benefit for a preset duration
• May come with ability to convert to a permanent policy
• Some policies include riders for healthcare and long-term care costs
• Flexible, short-term protection when people need it
  
  

Some downsides tied to term life insurance are:

• Policy may lapse if premium payments are late or missed
• No death benefit provided upon expiration
• Renewal rates can be far more costly than your initial rates
• No cash value included in the policy
• For some people, no “return benefit” for potentially decades of premium payments can be hard to stomach
  
  

Because its coverage is temporary, term life insurance can be a better option for those with temporary financial needs. People who find themselves in the following situations may want to consider this type of coverage:

• Creating protection for households in high-need years, such as when they first have children
• Providing immediate financial resources if a primary income earner dies unexpectedly
• Covering the economic value of a homemaker should they pass away
• Giving coverage for debts or expenses, like a mortgage, if an income earner deceases
  
  

In short, term insurance is a short-term, economical way to insure a large amount of money, or the income stream that a wage earner brings home. Those looking for lifelong coverage or needing efficient legacy planning vehicles may be better-served by permanent insurance options.

Whole Life Insurance
Whole life insurance has been around for decades. It is the most basic form of cash value life insurance.  A whole life insurance policy comes with predictable premiums that don’t rise with age. It also confers guaranteed benefits.

Whole life insurance comes with a cash value, which can be accessed in later years. When comparing whole life – and other cash value insurance for that matter – to term life, it’s similar to buying versus renting a home. Sure, renting will be less expensive in the short run. But over the long term, it may prove to be the most costly. In contrast, buying a home enables someone to build up home equity over time – not to mention it may be potentially lower cost over time.

Whole life is like owning a home that has a corresponding equity component. Over time, this equity component, or the cash value grows tax-deferred, and your premiums don’t increase. With that said, whole life insurance does come with more costs to cover, including management fees.

The benefits of whole life insurance are:

• Premiums stay fixed, don’t rise with age
• Comes with guaranteed benefits
• Simplest form of cash value life insurance
• Ability to pay up policy face value in 10-20 years, or at age 65
• Can access cash value via loans or withdrawals later on
• No age 59.5 withdrawal rules, so long as the policy doesn’t become a Modified Endowment Contract
• Cash value grows on tax-deferred basis and money can be taken out on a potentially tax-free basis
• Insurance company may pay dividends to policy owner
  
  

Some downsides of whole life insurance are:

• Often the interest rate is not guaranteed
• Comes with more costs to pay than term insurance
• Premium payments aren’t flexible
• Premiums must be paid consistently or policy will lapse
• Likely to earn lower interest
• Policy lapse may trigger taxable event
• Most whole life policies don’t build cash value early on
  
  

Whole life insurance may be a good option for those wanting lifelong coverage and more straightforward cost of insurance than with other cash value insurance products. It can also be a better fit for retirement savers looking for alternatives to the meager interest rates of CDs or bank saving accounts.

Indexed Universal Life Insurance
Index universal life insurance, or “IUL,” can enjoy stronger opportunities for cash value growth than whole life insurance. Its interest-earning potential is tied to an index, like the S&P 500 price index. Unlike whole life insurance, IUL does offer flexibility in premium payments, with certain conditions. The cash inside an IUL policy grows tax-deferred, just like with whole life, and the cash value can be tapped for premium payments.

While the growth potential may be more substantial, indexed universal life insurance is a newer innovation in the insurance marketplace. Your premiums may increase over time, as the cost of insurance may rise. Insurance carriers may hold derivatives as underlying investments in IUL policies, which can make these policies even more complex.

While IUL does let you enjoy growth potential tied to an index, it comes with limits. IUL insurance carriers “cap” the growth potential at certain predetermined rates, and likewise they may protect against negative index changes with a “floor.” While many IUL policies have a floor of 0%, or your cash value doesn’t drop in value when the index goes down, this applies to when the insurance carrier credits interest to your policy. In fact, your policy may lose value due to policy costs you have to pay, should you earn no or low interest at a given point.

If a policy owner relied on high interest-earning years to fund the cash value, it could lead to a policy lapse in later years, should the policy get low interest in later times. Likewise, taking policy loans and paying loan interest can be risky if earned interest doesn’t surpass the costs of the loan.

Some of the benefits of indexed universal life insurance are:

• Guaranteed benefits, though fewer than whole life insurance
• Ability to obtain a bigger death benefit than with whole life
• Flexible payments for premiums possible
• Potential to receive more interest than whole life insurance
• Cash value can be accessed via loans or withdrawals
• No age 59.5 withdrawal rules
• Tax-deferred retirement money growth potential
• Ideal vehicle for supplementing income or maximizing an estate for beneficiaries
  
  

Some drawbacks of IUL can include:

• Premiums may increase over time
• Opportunity to earn interest depends on index performance
• Interest-earning potential “capped” by insurers
• Policy may lose value when costs outpace low interest
  
  

Overall, people looking for safer alternatives to stock market volatility may want to consider indexed universal life. Likewise, individuals looking to maximize legacy assets for heirs or provide a tax-efficient estate transfer to their loved ones may look into this insurance type. IUL can also offer another vehicle for supplemental retirement income when retirement savers have maximized contributions to IRAs, 401(k)s, and other savings plans.

While indexed universal life insurance may be a solid retirement planning vehicle, it is more complex than other cash value life insurance. Working with a qualified financial professional to properly structure a policy, according to your needs and goals, is a prudent strategy.

Final Thoughts
While this overview showcases some of the critical differences of IUL, whole life, and term life insurance, it’s by no means exhaustive. If you are considering life insurance as part of your financial strategy, especially permanent insurance, be prudent.

Conduct a careful due diligence and consider guidance from a financial professional who acts in your best interest. And when planned and implemented properly, a life insurance policy can go a long ways to bringing you more financial security and peace of mind.

Ready for personal attention as you consider different insurance options? A financial professional at WFGInsuranceQuotes.com can assist you. Click here to connect with someone directly. 

In the last decade, we had two major market crashes. Understandably, many working professionals worry about the long-term safety of their money. They may have retirement saving plans such as 401(k) plans at their disposal. But with its contribution limits, costly tax implications, and investment options’ exposure to market risk, the 401(k) can be unseemly for conservative-minded savers.

One trend we have seen is presentation of “IUL,” or indexed universal life insurance, as an alternative to the 401(k). To be clear, IUL isn’t an investment strategy, it is a type of permanent life insurance. So be wary of discussions in which IUL is treated as an investment vehicle, especially relative to a 401(k) plan.

With that said, IUL may be attractive to retirement savers, including younger professionals, on account of its more tax-efficient advantages over the 401(k), among other benefits. Some advantages include protection against market downfalls, more flexibility with contributions and money access, and better tax treatment for future income. Keep in mind, though – just like with any financial product, suitability will always depend on individual client needs, circumstances, and objectives.

Here’s a quick overview of indexed universal life insurance, and how it can differ from a 401(k) as a wealth-accumulating option.

IUL Basics
Just like with other permanent life insurance products, indexed universal life insurance comes with a savings component (also called an investment component). It also has a cash benefit that can be tapped should any needs come up.

Where it differs from other permanent life insurance options is its interest-earning potential. It offers some potential for savings growth while keeping your money intact when the market falls:

• A policyholder’s account isn’t linked to bond funds, but rather to stock indices such as the S&P 500.
• Interest is credited to the account based on how this index performs. If the index goes up, your cash balance increases by a proportion of that gain.
• Why a proportion, you may ask? Insurers rely on a formula to determine how much interest your cash balance earns.
• If the index gained 12%, your cash balance may increase just 6-9%. That’s because this formula is used to calculate a percentage of index gains.
• There also tends to be a cap on interest crediting. In the past, an average upper-range cap would be around 12% or so. So if the S&P 500 had a stellar year and gained, say, 15%, your cash balance would get a percentage of that increase.
• However, this trade-off for limited growth comes with reliable market protection. If the index takes a nosedive, or records any negative change, your cash balance is credited 0% -- so there are no losses from negative index changes.
• Some IUL policies offer a “protection floor” of higher minimum interest crediting in down-market periods, such as 1%.

You can see how this growth potential with market protection is one of the primary differences between IUL and the 401(k). Contrastingly, 401(k) savings are completely at the mercy of the market when it tumbles.

401(k) vs. IUL Differences
With that overview, what distinguishes IUL from the 401(k)? Of course, it depends on the type of 401(k) plan you have. But let’s lay out some of the differences between IUL and the ubiquitous, traditional 401(k) plan.

One of the chief differences is how IUL and 401(k) plans are classified within the tax code. Life insurance is covered under Section 7702 of the IRS tax code, whereas 401(k) plans are treated under – surprise! – Section 401(k). Check them out for context.

Unlike with traditional 401(k)s, IUL is funded with non-qualified money, or after-tax dollars. So what you pay into IUL has been taxed already. That’s good news for future income – potentially tax-free retirement income! IUL also offers the advantage of a tax-efficient death benefit for loved ones. And what are some other differences?

• 401(k)s may come with an employer match, while IUL policies do not have this incentive
• Money within a 401(k) plan is exposed to losses from market downfalls
• 401(k) plans don’t let you borrow against them with the same flexibility as you might with IUL, generally speaking
• 401(k) withdrawals before age 59.5 are subject to a 10% penalty and income taxation
• Unlike with the 401(k), distributions from an IUL policy, when taken as loans, are non-taxable
• Withdrawals from a 401(k) are subject to more substantial tax liability
• There are less restrictions on contributions to an IUL policy than they are to a 401(k) plan (these do come with some requirements)
• In the 2018 tax year, the contribution limit for a 401(k) is set at $18,500
• With its contractual guarantees, IUL offers the benefit of preserving your earning power in your professional working years
• Indexed universal life insurance can also be customized for different situations: there are riders for chronic illness, work disability, and other specialized circumstances

Of course, IUL comes with its own downsides. Benefits from indexed universal life insurance may be realized after a period of 20-25 years. For this reason, this may not be an appropriate option for mature professionals or Americans getting close to retirement age.
IUL can also come with different fee and cost structures. Some policy options are better than others. It’s important to work with a knowledgeable, impartial, independent advisor when discussing suitability and looking for possible insurance solutions.

Need Help with Your Planning?
If you need help finding the right IUL policy or another guaranteed insurance strategy for your financial needs, WFGInsuranceQuotes.com can assist you. You can connect directly with a financial professional who understands these vehicles and how they can fit into an overall retirement planning strategy.

A key reason that index universal life has become so popular is that it is an excellent product in which to save money now to produce steady cash flow later in retirement. Here are six advantages of using index universal life to save for retirement.

1. The safety of no negative returns.
Investors burned by declining values in the equity, bond and real estate markets now understand the value of a guarantee that their annual returns will never be negative. That guarantee is precisely what index universal life provides.

2. The possibility of high positive returns.
Safe alternatives without investment risk right now are suffering from very low yields. Many are at historical lows, and that makes them unattractive to many savers. With index universal life, if the index performs well over the period measured, the contract can result in an interest credit that is attractive.

3. The ability to create a tax-free cash flow in retirement.
Many other vehicles that can be used to save for retirement create taxation. IRAs and 401(k)s, for example, delay but do not eliminate taxation. In fact, many advisors point out that they encourage clients to save a smaller amount of taxes now in order to pay a much larger amount in taxes later.

Index universal life, on the other hand, can create a totally tax-free cash flow in retirement. Through the use of contract loans, the cash flow can be free of federal, state, and local income taxes. And, it can create a tax-free death benefit. This tax-free feature allows the index universal life product to be more attractive than other alternatives, even if those alternatives create a higher pre-tax return.