Sunday, August 28, 2011

Retirees May Need More Life Insurance

If you died today, your spouse would still be faced with daily living expenses - for 10, 20, or even 30 years. Without life insurance, would he or she be able to pay off your obligations, maintain the lifestyle you have both worked so hard to achieve, and pass on something to your children and grandchildren?

For example, depending on the size of your estate, your heirs could be hit with a large estate tax bill after you die - up to 45% of your non-exempt estate, or more, depending on your State's inheritance taxes. Enter life insurance. Life insurance proceeds are generally free of income tax, and can be set up so they avoid probate. As a result, your life insurance policy can potentially pay out immediately upon your death, allowing your heirs to pay those estate taxes, as well as funeral costs and other debts, without having to liquidate other assets. And if your life insurance policy is properly structured, the proceeds from it will not add to your estate tax liability.

Moreover, if your circumstances change and you no longer have anyone who would need the proceeds of a life insurance policy, your may be able to surrender the policy and supplement your retirment income with the funds that have accumulated in the policy's "cash value account."

So, how much life insurance do you need as a retiree? That depends on how much your family will need to meet general obligations upon your death (such as medical costs, funeral expenses, and estate settlement bills) as well as how much future income your family will need to sustain them. The latter is tricky to calculate, because it invovles calculating the present day value of future needed cash flow streams.

For more information, contact us at Funeral Dignity Life.

Sunday, August 21, 2011

Whole versus Term Life Insurance: A Comparison

Whether or not they own it, most people agree that you should have life insurance. However, it isn't always easy to know what company to buy from or what type of insurance to buy. Companies that only sell term life tend to imply that purchasing whole life is at best unnecessary and at worst a scam. Companies that prefer to sell whole life are more likely to caution you about having insurance that can expire and be too expensive in later years to replace. The truth is, while life insurance should be regarded as a necessity, it is true that purchasing a policy that does not meet your expectations can ultimately seem like a major mistake. Hopefully this comparison of Term vs Whole life will help you determine what you need in a life insurance policy.

Term Life

Term life insurance is a policy that will provide a benefit if you should die in the period of time provided by the "term." At the end of the period, the premium— should you decide to renew, goes up sharply and increases annually for another 10 or 15 years after which it expires.

Whole Life

Whole life, as it sounds, is for your entire life. Variations abound, which may have increasing premiums or waiting periods, but the standard "guaranteed whole life" will have level premiums, a level death benefit, and will build cash value. Premiums are reasonable if purchased while you are young.


Term life is cheap even in high face values. If you are young it is possible to get a policy that will last 30 years. Riders such as spouse riders and disability riders are available. While the policy itself is not really designed to be renewed—the renewal premiums are very high—it can be converted to any other policy offered by that company without medical underwriting. Thus, if you decide in later life that you don't need the large term policy, you can simply convert it to a much smaller whole life without worrying about answering a lot of health questions.

Whole Life will never need replacing. High cash values are available if you meet the underwriting requirements. You can purchase additional riders, and because it builds cash value, you can borrow against it. You can also cash surrender it if you decide later in life that you don't need it. The benefit can be turned into a cash stream by your beneficiary rather than being paid in a lump sum. Also, the policy, if you live long enough, will eventually endow— meaning the face value and cash value will be equal, at which point the company will give you a check upon request.


While the initial cost is low, the rates for a whole life in your later years will be much higher. Thus, it is important to know what type you need.

A term life has no cash value, thus no loan option. An unrecognized consequence is that, since there is no cash to keep the policy going, it will lapse within 30 days if you miss a payment. A whole life, in contrast, can be set up for an "automatic premium loan" if you should miss your payment.

The primary disadvantage of a whole life is the cost. Premiums are very reasonable for younger buyers but are much higher than Term Life. Due to the higher cost, people often make the mistake of only purchasing enough for burial.

Loans are available, but the interest must be paid yearly. If you borrow against a whole life and do not pay the interest, the policy will eventually lapse for loan insufficiency. You should not purchase the policy solely for a source of loans.

For more information, contact us at Funeral Dignity Life.

Sunday, August 14, 2011

More on Burial Insurance

About 40% of today's working people do not have life insurance beyond what they have with their employers. Employers of any size usually provide group life insurance as a benefit because it is ridiculously cheap for them, and they can deduct the cost from their taxes.

Most also forget to tell people that if it is group term, it disappears when they leave the job or retire. However, by the time you reach retirement age, the cost of having your own insurance will be much more expensive; you may think there is no way you can afford it on social security or out of your retirement, and that your heirs will simply have to bear that burden.

You have probably been to funerals and have heard people talking about Mrs. "Smith" who didn't have a penny of life insurance, and thus the family had to decide how to pay the bill. An easy and inexpensive way to avoid leaving your family with a bad memory is to purchase "pre-needs" insurance. This is a type of whole life insurance policy that you purchase from a funeral director. He is the beneficiary on the policy, but you pay the premium. You receive a contract stating that your funeral will be taken care of for the face value of the policy. You do want to make sure the policy is transferable in case you move to another city or state.

A second option that people sometimes use when receiving a retirement distribution of a 401K or IRA plan is to take a lump sum and simply "prepay" a funeral. In this case, you make all the arrangements with a specific funeral home, choosing your casket, the number of cars you want, the type of service, and so forth. The funeral director gives you a contract, but actually invests your money himself. His hope is that you will live long enough for him to make a profit on your money.

Probably the most preferred burial insurance (aka: Senior Life) option is simply to purchase a small whole life policy of your own that will be enough to pay final expenses. Then you choose the beneficiary yourself. Many companies have "easy issue" policies that generally have no medical exam requirement and are quite affordable.

Some people have severe health issues that prevent them from getting even an easy issue policy. In such cases, you can usually still get a pre-needs policy from the funeral director, although it will probably be cheaper to get a "Graded Benefit" policy. A graded benefit policy is simply a whole life policy that pays a limited benefit—usually your premium plus interest—during the first two years. It has no underwriting at all as the company has very little risk. It is more expensive than a regular life insurance policy, but is still an option for meeting the need.

For more information, contact us at Funeral Dignity Life.

Sunday, August 7, 2011

We Offer Several Packages to Fit Your Needs

Products consist of different categories at Funeral Dignity Life. We have: preferred, standard, graded and guaranteed issue. All of our final expense plans are whole life policies.

Preferred Package: Your health is pefect and you will get the BEST pricing from us. Immediate coverage is available.

Standard Package: Immediate Benefit Whole Life Policy which rewards five years of current good health whether your are a smoker or non-smoker.

Graded Package: Do you have current health issues, but you are taking care of yourself? The graded package allows for you to have life insurance coverage with a two year waiting period before the full face amount is paid. If you should die before the two years, the coverage would pay a percentage of the face amount policy.

Guaranteed Package: Guaranteed life insurance coverage regardless of health issues or preexisitng conditions.