Life insurance provides an immediate, liquid estate. This cash allows your surviving spouse, children and others to replace the income that was lost when you died. It will maintain the lifestyle they have become used to, help fund higher education, new purchases, and all the other things in life you would like your survivors to have. Of course, some life insurance policies are for special purposes, such as immediately paying off a loan, buying out a business partner, protecting a business against the loss of a key employee, funding for a favored charity, or paying estate taxes.

This is the most common starting question for most discussions of life insurance. Premiums vary enormously, based on the type of coverage, your age, your health, and many underwriting issues. The Annual premium for a $1,000,000 life insurance policy can be $400 for a younger person in exceptional health seeking short-term term coverage. It can be in excess of $50,000+ a year for an older person with health problems seeking whole life coverage. It is probably somewhere in between. Any answer more precise and sophisticated than “it depends on your circumstances” will shed more heat than light on the subject.

The right answer is based on the answers to the many questions that I will ask you. Only after we discuss these things can I make an intelligent guess, and only after underwriting will you have a commitment from a carrier. “Services” that try to shortcut the process are full of disclaimers and wiggle words. They will ask you the same questions later, after you have generated a quote, which may well be completely off base. Does that make sense?

One thing I can promise you. It will never cost more than you can comfortably afford. I can’t spend your money, and I don’t try. If it appears that you have an insurance need, I’ll ask you for a comfortable budget.

Underwriting is the actual process of obtaining insurance. The insurance company considers the purpose and need for your proposed coverage, performs medical tests (using a paramedical examiner, given at your convenience, and at no cost to you), and reviews your health history, your family history, driving record, and your finances. Also, if you travel or partake in dangerous hobbies (like scuba diving, or piloting an airplane), you will be asked additional questions during your application to determine the extra risk. One or more of your personal physicians may be contacted to provide a copy of your medical history. You may be interviewed over the phone, as well. For large policies, you may also be asked to provide references to attest to your character. It is my job to guide you smoothly through the process.

For policies for business use, we’ll also need to describe the business (industry, history, revenues, and profitability), document the nature of the ownership, the valuation of the business and address succession planning, such as a buy/sell agreement.

A declination is for a specific reason, and the carrier will send you a confidential letter explaining the reason(s). Declination by one carrier does not necessarily mean that you cannot get insurance. I can explain the options you will have and the steps we can take to try to get you coverage.

Because smoking is probably the most important factor in your underwriting which you have control over. Underwriters spend their lives studying public health and mortality, so they have reasons to inquire so pointedly. Healthy smokers may pay as much as 5 times (5x) as high a premium as that for healthy non-smokers!

When you apply for coverage, I’ll ask you several questions related to tobacco:
Do you smoke cigarettes? 
Do you use tobacco in any form, including chewing tobacco, pipes, cigars, or “the patch”? 
If so, when was your last use?

If you apply for insurance, you should know that you take a test, which – among other things – will detect any recent use of tobacco. Do not try to conceal use of smoking from an insurance company. Even if you “succeed”, it is a crime to do so (fraud), and there is an excellent chance that your death claim will be denied. Your survivors would be devastated.

Certain companies will let you reapply for a better rate on your premium if you stop smoking. You need to be a non-smoker for a year (not even “the patch”). Usually, they will require you to take a test to confirm that you are a non-smoker. What an incentive to kick the habit!

Once you’re confirmed free of tobacco for at least a year, you can get for standard non-smoker rates. If your health is otherwise good, you may want to consider also applying for coverage with a new carrier, who may offer you preferred rates rather than standard. As this is a potential replacement, I will prepare replacement papers to guide you in your alternatives.

Certain diseases seem to run in families. If your parents died of heart disease, cancer or diabetes, then that might reflect in your health eventually. Even if you are in excellent health, the insurance company may be hesitant to issue you a policy with a “preferred best ” discount if your parents died before age 60 because of these risks. (Of course, it’s also possible that your father was an alcoholic and a 2½-pack-a-day smoker who died at 59, and you’ve never drank or smoked.)

When we prepare your application, I’ll help you document your family history to present the fairest case to the underwriter.

Doctors have long shown that your build can affect several health issues including heart disease,
high blood pressure and diabetes. Some carriers have tougher height/weight requirements than others.
 
I’ll help select the best company for your needs!

First things first. You ought to contact your previous agent and make him/her aware of your concern, and contact
the carrier. The carrier usually will write you letter explaining the reason(s) you were declined for coverage. 
Also know that the Medical Information Bureau, Inc. (MIB), a non-profit industry group in Boston will be sent a very abbrieviated record of your medical issue(s). The MIB retains this file for seven years. As part of your insurance application, the new carrier routinely checks your application against the MIB database to see any noteworthy
results from previous applications for coverage, and will be made aware if there have been any. In short, they’ll know. 
And, they’ll see whether you disclosed them in your new application. Moral of the story: Never “hide” anything!  

When we work on your application, your complete candor is a necessity! Concealing information on an insurance application is a crime - a crime you’re not going to get away with - and one that no reputable agent would abet.
If you disagree with a rating, we’ll put this information right up front, on the application and in a cover letter that I
send with the application, providing the facts about why you disagree with the rating. 
The underwriter from the new carrier will thus evaluate your case in the best possible light.

Too bad it’s not that easy! Your policy was based on a reasonably complete “photograph” of your health and finances on the day you applied. The way the insurer looks at it, they had a chance to look you over, and agreed to underwrite you for, say $500,000. Now that you want to increase it to, say, $750,000, the insurance company understandably would like to have another look at your health before they commit to any more coverage. If the roles were reversed, wouldn’t you? Forgive them for thinking that perhaps you just got terrible news about your health and decided this
would be an opportune time to buy more insurance.  

As for using your doctor’s exam, it has a different focus than the insurance company exam. First of all, the insurance company tests you for use of cocaine and nicotine, and your doctor probably doesn’t. The insurance company tests
to see if you use any of several medicines, to aid “forgetful” applicants who don’t mention this to the paramedical examiner. Finally, the insurance company likes to have some outside corroboration to your doctors’ records.

It is possible, but challenging. I’ll help you document your case, and your doctor’s notes/medical records are crucial.   Your prospects depend on the severity of the incident, residual effects, and your recovery. Ideally, the insurance company typically wants you to wait 2-4 years after a stroke before you apply. You may be offered a policy at
standard rates, or with a rating. They may be willing to write a policy sooner under certain circumstances.
 
Let’s discuss your best options.

It depends on several factors, including:
What type of cancer?
Severity?
Treatments?
Any metatheses (has it spread to other areas?)

Obviously, records from your doctor(s) are crucial. The length of time you have been in remission is crucial: less than two years can be very challenging, 5 to 10 years in remission should be favorable. It is so unpredictable that it really warrants a thorough discussion before we apply.

Every case is different, and I will ask you the questions to help you document your medical condition in a logical
orderly manner. As is my habit, we will explain everything relevant about your circumstance to the underwriter in
a cover letter. I always write a cover letter; it’s part of the work I do for you!
 
However, many agents don’t write a cover letter for their clients.

Underwriters commonly use ratios to your current income to limit the amount of coverage they will write. 
For instance, a 40-year old earning $100,000 a year might be limited to 15x income, or $1,500,000 of coverage.
(This is to discourage people from “playing hero” by doing the most foolish thing to collect on their life insurance.
There are even state laws that specially address life insurance for death by suicide.)  

In this particular case, the 40-year-old may buy less than $1,500,000, but probably won’t be able to purchase
much more without unusual justification, which I can explain how to do.

The owner of a life insurance policy will vary according to the purpose of the insurance coverage. According to
many attorneys, improper ownership is one the biggest mistakes people make in setting up their insurance.
Who should own the life insurance policy depends on the purpose – be it for income replacement, business
continuation or estate planning. I will ensure that your intentions are reflected in the policy!  

The owner could be you, your spouse (sometimes used in divorce cases), your partner, your employer or a Trust.   Owners have both rights and responsibilities. The policy owner pays the premiums, requests changes to the policy and/or the mode of payment, and can even cancel the policy entirely!  
And, the death benefit (or cash value, if surrendered) is included in the owner’s estate for certain tax purposes.

That’s where trusts can be helpful.

After your insurance is put in force, the owner may request changes to the policy. I can help you make whatever changes you need. Some changes, like a new address or how many premiums you pay per year, are fairly simple.   Certain changes (policy ownership, use of life insurance trusts, dividend options, to name just a few) can be more sophisticated. And, there are special procedures for others, like a collateral assignment (to prioritize a particular
lender over the other beneficiaries).

I can help you explore all of these.

A beneficiary can and should be anyone with whom you have an economic relationship at the time you take out the policy, who would suffer an economic loss in the event of your death. It can be a spouse, ex-spouse, a fiancé, your parents, your children, aunt, uncle, niece or nephew, charities, your Alma Mater, etc. 
It could be a creditor, a business partner, or your employer.  

If minor children are listed, it’s necessary to name a custodian, so that in the event of your death, a responsible adult that you trust can take custody (but not ownership!) of the insurance proceeds until the children are no longer minors.   Before naming a custodian, ask for their permission: they’re undertaking a big responsibility!  

For cases involving a life insurance trust, we can discuss why it is vital to name the trust as beneficiary of the policy.   I’ve seen this done wrong, and it would create a tax nightmare if not corrected. Your trusts and estates attorney will
ask you to name beneficiaries of the trust, who will receive the proceeds paid to trust, under the guidance of the
trustee.

Beneficiary changes must be made by the owner, not just the insured (nor beneficiary!), and must be in writing,
after the policy is in force. You will usually need the complete name, relationship, social security number, and
date of birth of the new beneficiary. It takes a few weeks for the insurance company to record the change.
 
I’ll be glad to help you navigate your way through the process.

Estate planning is the translation of your goals, wishes and dreams about the future into finite actions to accomplish the plans. Estate planning encompasses your intentions about securing your spouse and childrens’ future, about how and when your will use your assets, how and when they will be distributed to your heirs, about what happens to your interest in your business ventures, and for some, donations to charitable ventures. More broadly, it enables you retain control over certain decisions and issues. Finally, for many people, it protects the quality of the remaining years of
their life, by suggesting the purchase of long term care insurance, writing/rewriting wills and trusts, and selecting a retirement lifestyle.  

I recommend that you use an attorney who specializes in estate planning. I can refer you to several well-qualified professionals who can help you. I recommend that you do not use an attorney who merely dabbles in estate planning, and does a dozen things as well.  

A qualified estate planning attorney and I will listen to you and translate your goals, dreams and wishes into documents which execute those plans. A personalized combination of the life insurance, disability income insurance and long term care policies I provide is integrated with the will(s), irrevocable life insurance trusts, charitable trusts, Durable Power of Attorney, Medical Directives, living wills, etc. that your attorney provides. 

You worked hard for your assets; these plans protect them for the future.
You and your beneficiaries will be glad you did!

You really cannot begin too early. I make sure that you begin to address the estate planning from the first time we meet. We discuss how ownership of assets, including insurance policies, can affect your estate. Where needed, we discuss certain techniques to shield you against the impact of estate taxes on the next generation (in some instances, many years before retirement). Life insurance helps “equalize” distribution of property from an estate that includes illiquid assets like real estate and business equity.

I’ll work closely with your lawyer to accomplish these goals, and I’ll help walk you through this process.

A Trust can keep the policy proceeds outside your taxable estate, pay any Federal or state estate taxes, and enable
a trustee to control how the trust assets are distributed to the beneficiaries of the trust. I will ensure that the wording
in the application meets your needs, explain things you’ll want to know about your Trust tax ID number, how the trust
is documented to the carrier and how the policy is applied for.

As your life changes, your need for protection changes, and your goals may change. One of the things insurance carriers commonly suggest is that your coverage be reviewed periodically. It is an excellent idea, and I help you do
this. You will be far better served than if your affairs are not addressed for many years, and then you perceive a need
for different coverage, which you might not be able to get! Your health will most likely eventually change as the years
go on (we just don’t know when it will change), and you may become uninsurable or insurable only at a much higher cost. Should the insurance company perceive a greater risk to insure you, they will charge higher premiums, or not accept you. Not a month goes by in my practice that I won’t see a person stunned, even shocked, that the carrier intends to charge a much higher premium and/or will not insure them. They can tell you this: The time to buy the coverage you need is now, while your health is good.

I make the arrangements for an examiner to come to your home or office (at no cost or obligation to you).
The insurance company pays for the paramedic exam. The exam usually consists of a series of questions regarding your health and family history, some measurements (height, weight, blood pressure, pulse) and blood and/or urine tests. Your age and the amount of insurance will determine exactly what tests and questions are necessary. 

Poorly documented medical history is probably the number one reason for delays in getting policies issued,
so we’ll want to get the clearest possible picture of your health history.

First off, I send you a “how to prepare for your paramedic exam” guide a few days in advance.
In general, the day before the exam, please refrain from any alcohol or caffeine. 
It’s also probably not the wisest idea to eat greasy food, sugary beverages and fattening desserts the day before
the exam.

If your exam is in the morning, don’t eat or drink anything after midnight. Do NOT have any breakfast (food or drink);
However, it is helpful to drink a large glass of water (no other beverage!) an hour before the exam (helps with the urine test). If you take the exam in the afternoon or evening, have very light meals before it, fast as long as possible (at least 4-6 hours is recommended), and drink plenty of water during the day.

Of course, if you have special medical requirements (i.e., diabetes), we will discuss the special procedures for your paramedical exam.

When you see the doctor, he/she will ask for your driver’s license number and photo ID.
Be prepared with the names and phone numbers of your Doctor(s), when and why you last saw him or her,
plus the names and dosage of any medicine you take.

Another popular request, but the answer is usually “no”. The lab work that the insurance company requests is
broader in scope than then your doctor’s tests. In addition to the usual blood profile, this expensive test can detect
use of certain medications that, unfortunately, sometimes clients forget to mention to the examiner.

The use of an independent examiner to corroborate your health gives some extra degree of comfort to the insurance company. Rarely, applicants ask their doctor to register to administer insurance company exams. 

In most instances, however, your doctor (understandably) does not want to take on this additional task.

An Attending Physician’s Statement is your medical report from your doctor, including results from your office visits, and any blood, urine, lab and EKG reports. Most insurance applications require an APS from your doctor(s), either if you have recent tests made, or if you are under treatment for a condition or ailment.  

The insurance company pays your doctor’s office staff to copy the records in your file.
This process usually takes one to three weeks, but sometimes doctors get deluged with APS requests.
If I detect a delay, I may ask you to call your Doctor to ask if they can speed up this process. 

Remember – these are your records!

Not always.

A problem crops up if the underwriter reads in your medical file that the doctor suggested that you take a particular test, but the results of the test are not included in the file. The underwriter wants to get comfortable about any risk
your health poses, and may ask if the test was ever taken and if so, what were the results.

Sometimes, a patient doesn’t take a test a doctor suggests.
Sometimes, a doctor doesn’t communicate the need for a test to the patient clearly (or at all!),
and the patient only learns of it when the underwriter raises the question.

Unfortunately, the applicant needs to help the underwriter by demonstrating that the test was performed,
or that his/her health is fine and the test isn’t necessary, or that the test still needs to be performed.

It requires close attention from a conscientious agent.

Binding is a bit of a misnomer in the life insurance business, but it refers to the creation of temporary insurance.   Temporary insurance is designed to offer protection during the underwriting process, usually to a maximum of
$500,000 or $1,000,000. 
It goes into effect only if the applicant pays a modal premium at the time of the application, only if all the tests (ie. the paramedical exam) have been completed, only if the agent deems the insured to likely be in standard health or better, and for a maximum of 60 or 90 days. Underwriting is usually complete by then, unless the insured has a difficult situation regarding obtaining an APS.  

If an underwriting decision cannot be made 60 (or 90) days, or if the insured is deemed to be less than a standard risk, or if all the tests are not taken, the insurance company will return the binder check to the insured, and there will be no temporary protection. Then the policy - if one is issued - can only be paid for (“COD”) after underwriting and issuance is complete.  

At the time the company issues, declines or postpones a decision, the temporary insurance coverage ends, because (understandably) the insurance company will not pay a benefit on both the temporary coverage and the policy itself.

For the most basic of all reasons: People die. And people who die while their life insurance is being underwritten
do not provide their beneficiaries with the protection they intend, unless they have “bound” their coverage. 
Another agent I know just went through this, and it is a heartbreaking affair for the survivors.  

And, the insured’s health may change during underwriting!
If the policy is bound, that change, subsequent to when the insured was examined is not counted against the insured.
If the policy is not bound, then any change is fair game for the underwriter to consider in evaluating your health. 
If the underwriting process takes more than a few weeks (typically because the insured’s doctor is delayed in
providing an APS), the carrier can ask the insured to affirm that his/her health has not changed since the
paramedical exam date and that they have not seen a doctor for any reason. 

Of course, if the insured’s health has changed or if they saw a doctor, the carrier has the right to review the circumstances and either decide to issue the policy regardless, or rescind the policy. 

It is simply making things fair for the carrier and the insured.

Term insurance is a type of life insurance usually designed to offer a fixed benefit for a fixed premium for a number
of years, commonly 5, 10, 15, 20, 25 or 30 years. This is also called “level term”.

A second type of term insurance, typically called Annual Renewable Term, offers a fixed benefit for a steadily
increasing premium. 

Yet another type of plan offers 10 level years of coverage, with additional 10-year periods at ever-increasing premiums. 

There are many variations.

We will need to discuss a crucial question: “How long do you want coverage?”
Once we address that, we can discuss your options.

No, the coverage typically doesn’t end at the end of the level period, but it’s usually priced to encourage you
to drop the coverage. 

For example, say a $1,000,000 20-year level plan costs $1,500 each year for the first 20 years. 
In year 21, the premium could be $15,000! 
By year 25, it could be $25,000 and by year 30, over $100,000! 

Who would keep such a policy?
Only a person who had a terminal illness, who thought he/she would die soon.
For that person, it might be worthwhile to keep paying such high premiums. 

The insurance companies know that this happens occasionally, and price the policies accordingly.
This is a major reason why some people only want to buy permanent insurance, which is priced so that
you can keep it in force all your life.

We should discuss the adequacy of the length of time you want coverage;
it is an integral part of the pricing of the premium, and a central question in your insurance decisions.

With decreasing term life insurance, the death benefit decreases as the insured becomes older.
This is sometimes called mortgage insurance, and is no longer commonly sold, nor particularly cost effective.

Annual Renewable Term, or ART, is provides the same benefit each year, but the premium steadily increases.

Level term is generally guaranteed for a period of 5, 10, 15, 20 or even 30 years, but premiums after the guarantee
period are exorbitant. Even though they can be guaranteed many years into the future, they are generally very cost-competitive with ART. ART rates are not guaranteed beyond the current year. 

If term is your best choice, we’ll assess your time horizon and decide which type is best for you.

Two contradictory concepts, which have been conflicting the profession for decades:

(1) Term insurance provides life insurance protection, period!
     If the policy is in force on the day you die, your beneficiaries receive the death benefit.
     I don’t imagine many beneficiaries ask whether the check was from a term insurance policy,
     or a whole life policy, or some other type. It’s life insurance. They were protected. Period.

(2) At the same time, term insurance is priced that - assuming you reach normal life expectancy - you’ll allow
     it to lapse or otherwise quit the policy, so it won’t be in force on the day you die. Some consider that it’s
     downfall – that it likely won’t “pay off”.

Permanent insurance is designed to be in force for all of your life.
For more on permanent insurance, please see the Whole Life and Universal Life sections.

Term insurance essentially insures your beneficiaries should you die prior to life expectancy;
However, the importance of having at least term insurance cannot be overstated.

My greatest value to you is thinking through this question in terms of your budget and your future plans.
Every person and business has different goals, different needs, different timelines and different finances.
The answer to the question can only really be fairly arrived at when we discuss your specific circumstances.

There are many clients who would like to own permanent insurance but cannot afford their entire coverage to be in permanent policies. I show them how to own a combination of protection, some term insurance, some permanent insurance that offers satisfactory coverage today and some coverage that will always be there. 

In addition, many term plans allow conversion, so that today’s term insurance can be converted to permanent
insurance for several years after the policy has been issued (even if your health has changed!).

Carriers usually allow you the option of converting some or all of your term insurance to a permanent life insurance policy for some period of time without having to take another medical exam, or for that matter, undergo any underwriting!

Even if your health has changed in the interim, you have the right (as specified in your policy) to convert some (or all)
of your term coverage to permanent life insurance. 

When we review your coverage, we will see whether you have this right, and if so, how to convert your coverage.

Term insurance is designed and priced to lapse, or go away, after the level period.

By converting your term insurance to permanent insurance, you’ll be able to maintain coverage for the rest of your life
if you want. The conversion is done at attained age, meaning if you are 37, it will cost you less to convert your term coverage than it would at, say, age 40.

People defer conversions because the extra money for permanent insurance competes with business and personal needs. You can wait and convert later, but it costs more, because the insurance company will have fewer years to
build up money to pay your death benefit.

We’ll work together to develop a plan that addresses your budget and goals.

It’s called whole life simply because it is insurance coverage for your whole life.

It has the same price for the rest of your life, with a lifelong guaranteed level premium. 
Naturally, the premium is higher than term insurance during the next several years of coverage. 
Remember, however, that the whole life premium won’t increase. Ever. Guaranteed.

Even though the underwriting is identical to term insurance, the insurance company has to price whole life insurance differently than term insurance (which is deemed to only have a chance of occurring during the period of time you’ll
have the term insurance policy). After all, there is a chance you will have a fire, or a car accident, or will die during
the next 20 years, but your ultimate death is a certainty. You won’t shock the insurance company;
they fully expect to pay the death benefit on whole life insurance policies.

We can discuss several additional significant benefits that only Whole Life insurance provides.

The underwriting gives them assurance that you won’t die for many years (of course, no one has any way of
knowing this, but that’s why you bought the insurance in the first place!)

The many years of premiums, plus the income return they generate, is designed to more than offset the cost of insurance (some of which they are required to reserve, or put aside) plus the cost to run the company and make
a profit.

Dividends are payments made by certain insurance companies, called mutual companies.

Mutual companies are owned by the policyholders, not stockholders. These carriers have the option to return
money in the form of dividends (from their excess profits) to their policyholders. Dividends are never guaranteed.

I usually recommend that any dividends the company pays be used as “paid-up additions”, which can dramatically increase the policy cash values and death benefit. Since dividends are a portion of the profits of the carrier, they may
or may not be paid each year at the carrier’s discretion. While top-rated carriers pride themselves on paying dividends every year for decades, they are never guaranteed . Even if dividends are not paid, however, the death benefit and guaranteed cash value are still guaranteed for life.

You’ll get the benefit of whole life coverage for the rest of your life, assuming that you pay premiums.
I usually recommend that you pay your premium for as long as you live. 
The premiums will become evermore affordable over time.

Some agents tell people they can stop paying their premiums after 10 or 12 or 15 years. They projected (non-guaranteed) policy dividends to more than equal the premium payments after that. In the past, some agents
didn’t tell the public that these so-called “vanishing premiums” were a risky way to own whole life insurance.
Non-guaranteed dividends might not be paid by the insurance company each year. 
The policyholder would then have to resume paying premiums out-of-pocket. 
This also meant that your policy values didn’t “grow” by reinvesting whatever dividends were paid.

For these reasons, I don’t recommend using dividends to pay future premiums, and never tell policyholders that
their premiums will “vanish”. 

Of course, we will discuss your dividend options when we meet, and at our policy reviews.

Yes. The turn of the millenium was a roller-coaster for stock market investors.
If you use the paid-up additions dividends option and pay your required premiums,
even the growth in the non-guaranteed cash values and death benefits from dividends cannot decrease.

It is a safer way to deploy at least some portion of your money.

Universal Life (UL) is another type of permanent life insurance.
In UL, part of the premium pays the insured’s mortality cost and certain fees.
The rest is put into a “side fund”, invested by the insurance company and credited to the policy.
Of course, as the insured gets older, the mortality charge increases, but this is hopefully more than offset  by policy premiums and the interest the side fund is earning.

UL can have several distinct advantages over Whole Life, particularly the potential for lower cost, as well as death
benefit flexibility. Before you buy UL, I’ll make you well aware of what this type of policy is (and isn’t!), to avoid future surprises.

It’s my personal opinion that the hazards of UL were never properly understood in many cases, and I choose to blame agents. My clients also review the life insurance illustration, and I point out surrender periods and surrender charges associated with UL.

UL policies “rules” are very flexible. Non-level premiums may be paid, and premiums may even be “skipped”.

Premiums are not guaranteed.
Even if you pay the same premium you paid since the day you bought the policy, it may not be enough to keep it in force all of your life (because other factors, like changing interest rates, need to be taken into account when computing UL premiums.)

UL lacks many guarantees of whole life insurance.
The mortality charges and fees the company assesses against the policy are not guaranteed, and can be increased by the company. It’s because the insurance company isn’t held to as many guarantees that coverage can be obtained at
a potentially lower initial cost than whole life.

So, because…

• how much is paid into the policy is up to you,
• the "crediting" (interest) rate on the policy fluctuates, and
• future mortality charges are not guaranteed 

UL needs to be monitored regularly. Specifically, we compare actual policy performance to projections to ensure that the cash value grows as you intended.  We take into account changes in interest rates and costs charged by the company and may change your premiums to “stay on budget”.

We will review how UL works, so you are comfortable today and in the future.

Because your policy is building cash value all the while it is protecting you.
With some restrictions, you may surrender the policy for its’ cash value while you are still living.
There are ways to withdraw portions of the cash value without affecting the basic protection the policy provides.
Let’s discuss the pros and cons of this.

Some people say, “If my $1,000,000 life insurance policy already has $100,000 of cash value. 
When I die, the insurance company is only apying $900,000 of their money and $100,000 of mine!” 
There’s even a way for the coverage to include the face amount plus the cash value, so that the cash value isn’t sacrificed when you die. Let’s discuss the pros and cons.

Universal Life policies have a premium referred to as a target premium. It’s the projected premium the insurance company thinks will keep the policy in force until a reasonable age of death (say 95 or 100).

I usually recommend that you pay at least a target premium, or more, designed (but not guaranteed) to endow
the policy. It’s to your advantage to fund the policy adequately (or it could lapse without value in your later years).

Even paying target rates, we should still monitor the policy every year because interest rates, which fluctuate,
are a factor in its performance and the mortality charges can change.

Regrettably, some agents told their clients they could stop paying their UL premiums after 10 years, by paying
some specified premium during those 10 years. (Sort of like a “vanishing premium” for UL.) The agents assumed
that the portion of the premium invested in the side fund by the insurance company and credited to the policy would performed as projected.  

Perhaps it hasn’t. Perhaps the policy written in, say, 1983, assumed that the premiums in the side fund would earn 14% interest. If their calculation of future premiums assumed that the policy would earn 14% rates, and interest rates subsequently averaged 6% instead, the interest earnings would have been far less than was in the projection.

The annually increasing mortality costs are still charged against the side fund, but the balance would be lower, and eventually the principal of the side fund would be used, until it was all used up...If premiums aren’t increased to make up for the lower interest rates, the policy will eventually not have enough cash to pay the annually increasing mortality costs. If this is not monitored as it happens, the client later on gets notes from the insurance company asking to large amounts of money to essentially “make up” for many years of underfunding.  

Since the crediting rate fluctuates, and is tied to interest rates, assumptions from years ago may no longer hold true.   To keep the policy in force, the policyholder would then have to resume paying premiums, and make up the underfunding. Not a good situation.

Would you hazard a guess as to interest rates in the year 2015? 
For these reasons, I never tell policyholders that their UL premiums may or will “vanish”.

Of course, we will discuss your premium strategy when we meet, and at our policy reviews.

Well, no.

The IRS grants certain tax advantages to life insurance policies, including tax deferral of the buildup, or growth,
in cash values of permanent policies. However, IRS doesn’t think it’s fair to extend the advantages of life insurance policies to people sheltering large amounts of money in instruments that don’t have the risk of genuine life insurance policies. (For instance, putting $75,000 premium into a $100,000 UL policy.) 

I’ll help you plan premiums which keep your policy in force, but will not create difficulties with the IRS.

It is a permanent life insurance policy that covers two people. The beneficiary receives the death benefit subsequent
to the death of the second person. Because two people must die before a benefit is paid, these policies are generally less costly than the premiums for both lives dividually. These policies can be designed for a married couple to fund estate taxes, or for business partners’ succession planning.

We can discuss the reasons to use a trust, vis-à-vis having children own the policies to fund the estate taxes.

No, they typically get one or the other. While the insured is alive the cash value is available to the policyowner
and after the insured’s death, the death benefit is paid to the beneficiary. 
There is a certain variation in UL policies  that adds the cash value to the death benefit.

I can show you the advantages and disadvantages this variation, sometimes called “Option B”.

Generally not. Part of my job as an agent is to provide service to my clients with the whole cycle of insurance.
When death occurs in the family, I will be there to help the beneficiaries file the death claim expediently.

Social Security pays a one-time benefit of $255. Ask yourself how far this will go in paying for funeral and burial expenses that can run upwards of $5,000 to $10,000.

If you self-insure, this means that you have many assets. These assets generally pass tax-free to a spouse, but are subject to estate taxes before they move to the next generation. Estate taxes are due nine months after death in cash.

Sometimes, assets are not easily convertible to cash (such as real estate or a share of a business), or the assets are currently depressed (the stock market), or are in trust.

Perhaps your children work in your business. 
Imagine the financial peril they face if – upon your death – they have to sell their largest asset (the business!) just to
pay the estate taxes.

Does it make sense to have your beneficiaries compelled to come up with immediate dollars to settle your estate?   Selling may be inopportune. I can show you how life insurance can pay the estate taxes more efficiently.

You may not need life insurance. We can discuss this. Perhaps, however, your spouse and/or children/dependents
may need the replacement of your income if death occurred. 

Life insurance proceeds replace the necessary income for years to come.

We’ll need to discuss whether you do. 
You might need life insurance, if you are married or engaged to be married to someone who will rely on your income,
or if you have significant debt.

When you are young and in presumably very good health, it’s easier to be approved for insurance, and if you have intentions to start a family, it’s a good idea.

Perhaps even more important to a younger working person is disability income insurance.
Please see the section on disability income insurance.

Non-working? Most spouses work very hard!
They perform invaluable home-management and childcare functions that have a monetary value if they need to be replaced. A house-parent could need as much insurance than the breadwinner or maybe more!
How much would you have to spend to replace these services, and for how long?

Insurance for mentally handicapped children depends on different factors.
 
The question has to be asked:
What, exactly, is being protected, and how will life insurance help?
Is he/she working?
Who/how will care be provided in old age?

It’s best to check with an attorney who specializes with Guardianship/Conservator cases for advice.
Someone will have to pay for burial and final expenses down the line, and insurance proceeds can help.  

Far more significantly, you may want to keep a significant amount of life insurance on your life. 
Life insurance will provide a significant estate for the child when you can no longer provide the financial support that
this child may require for many years to come. Permanent, cash-value life insurance creates an immediate estate
that will provide the funds this child will need whenever that day comes.

A waiver of premium is a rider added at extra cost to a life insurance policy.
It pays the scheduled premium on your policy if you become totally disabled.

We can discuss the pros and cons of putting a waiver on your policy.

You will usually have a choice to pay your premium annually, or spread the payments out semi-annually (2x),
quarterly (4x) or monthly (12x). You will pay more if you pay other than annually, since the insurance company has
to wait for some of the premium dollars. Each carrier uses different factors to compute the extra amount you will pay.

I will provide you with your choices, and help you make an intelligent analysis.

Most carriers allow monthly premiums to be paid only as pre-approved electronic funds transfers.
When you initiate your policy, I ask for two months’ premiums to adequately fund premiums, while the bank transfer
is being established, confirmed, etc. You usually also sign a special authorization form and provide a voided check,
so the bank can electronically verify your account number and transfer the funds.

Before we worry too much about life insurance on the baby, let’s make sure that the breadwinners have adequate life insurance and disability coverage!  That’s an even better gift!
  

Assuming they do, a unique gift (forget about the silver spoon) is initiating a whole life insurance policy and paying
for it for a few years until the parents can take over the payments. This will provide life-long insurance coverage,
and can increase in coverage over the years if dividends grow. The cost is usually very reasonable.
The new parents (and eventually the new insured) will appreciate this.

Life insurance premiums reflect lower “per thousand” rates on larger-sized policies. (Bands are simply the vertical columns of “rate cards” used years ago.) For instance, the “per thousand” cost on a $1,000,000 policy can be
much less than a $100,000 policy! 

Since carriers need to recover the same fixed costs (lab fees, motor vehicle check, cost of processing and printing
the policy) against generally lower revenue, they don’t offer the same savings on a smaller policy.

We’ll make sure your plan makes the most sense for your circumstances.

This is a rider to some permanent policies that allows the insured to purchase more insurance in the future without
a medical exam (even if your health changes and you become less insurable). It protects you by making sure you
can get insurance in the future.

A better question to ask yourself is, “What’s gonna happen in the future that I wouldn’t just as soon have the
insurance (at least convertible term insurance) today?”

An ADB rider is an addition to a policy that gives extra coverage if death occurs by accident.

I’ve never understood why that would matter to anyone. 
I’ve never been a big proponent of this type of rider, and we can discuss why.

Old actuary tables assumed that people died earlier than current tables assume. Since premiums are based on
number of years until death, mortality costs in some older policies may be higher than in today’s contracts.
Premiums were higher because people died younger, and had fewer years expected to pay the premiums.
Thanks to modern medicine and better treatment, people are living longer and thus have longer to pay the remiums.
The risk is spread out for a longer period of time. 

If you have an old policy, we should examine it to ascertain if it is still in your best interest!

The grace period is usually 30 days after the “paid up to date” of the policy.
 
Premiums are usually based on the policy date and you pay in advance. 
[If you have cash value in a whole life or universal life policy, you may be able to use the automatic premium
loan feature so your policy doesn’t lapse. I can show you how to set this up in your policies.]

Generally, life insurance companies will let you borrow most of the cash value.
 
You’ll typically pay interest on the loan. Also be aware the company will subtract the unpaid loan from the death
benefit should you die before you repay the loan. Outstanding policy loans may also affect what the company
pays in dividends.

I can explain the pluses and minuses for taking/repaying a policy loan.

It depends, not only on the carrier, but on the date the policy was issued, and ultimately on language in the
policy contract.

When we review your policies, we can discuss this.

First of all, I’m sorry to hear of your circumstances. It must be tough to deal with the physical and mental woes.

Some life insurance policies allow the early payment of some portion of the policy death benefit upon proof that
you have a terminal disease, catastrophic illness or injury. 

We can look into it, but I hope we never have to.