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Insurance Products For Families and Individuals
Confused about what type of insurance to buy? Which is the most cost effective? Which cost less in the short-term and which save the most over the longer-term? If you are struggling with these questions too, let us help!
Term Life Insurance: is Houston life insurance that has guaranteed premiums for a specified numbers of years – typically 5, 10, 15, 20 or 30 years. After the guaranteed period expires, the premiums could rise annually. Most term policies terminate coverage at age 95 or 98.
Because the premiums are lower than other Houston, TX life insurance types, it is the most cost effective over the short term. As long as the premiums are paid, a death benefit will be paid to the beneficiaries upon the death of the insured. See what it would cost to cover you.
Mortgage Protection Insurance: is life insurance to cover the mortgagees, where the amount of death benefit is sized to cover the mortgage amount. Mortgage Protection Insurance can be Term or Permanent Insurance. Most policies are portable (I.e., can be transferred to another mortgage due to a refinance, equity loan or new mortgage) and has optional riders such as disability income, spouse and child coverage, return of premium and waiver of premium. This is a good choice for families wanting to mitigate all potential catastrophes threatening their mortgage and the lost of their home. See what it would cost to cover you.
Return of Premium: is a rider that returns all of the paid premiums after a specified period, typically 30 years. The reimbursed premiums are tax free. With most products the return of premium is prorated if the policy is terminated early. For many, getting all your premiums back is like getting free insurance.
Universal life Insurance: is life insurance belonging to the permanent life insurance family. It’s considered permanent because most Universal Life (UL) policies terminate at age 100 or 120, an age that most are not likely to see. Like all permanent life policies, it has a cash account in addition to a death benefit. Periodic premiums are broken down to pay the Cost of Insurance (COI) and fees, with the remainder going into the cash account, which grows at a fixed interest rate. The growth rate of the cash account is defined by the company and is typically in the range of 4.5% to 6%. The cash is assessable to the owner to withdraw or borrow. Withdrawals of cash or borrowing could affect the death benefit and borrowed funds will accrue at a specified interest rate. The flexible premiums (minimum, target, or maximum non-MEC), makes the UL an ideal choice for those wanting a permanent policy with adjustable premiums to manage budget constraints. Because the interested rate growth is always positive, it is consider a fixed product.
Long Term Care: is insurance that pays for care not typically covered by health insurance or Medicare. Benefits are available to the insured if they can’t perform the Activities of Daily Living (ADLs), of if cognitively impaired. ADLs include bathing, toileting, dressing, eating, continence, and transfer. Cognitive impairment includes such things as: short-term or long-term memory lost, lost of orientation to people, places or time, or loss of deductive or abstract reasoning. About 60% of people over age 65 will need some form of long term care during their lifetime. Benefits typically cover the cost of home care as well as nursing care facilities.
Insurance Products for Small Businesses
Key Man life Insurance: is life insurance covering the life of any employee critical to the survival of the business. In small companies it can be the CEO or a key employee. How it works is the company will pay the premiums and is the beneficiary if the key person dies. The Death Benefit is used to offset the cost of hiring a short term or permanent replacement, cost to protect profits, or to protect shareholders.
Buy Sell Agreement: Buy sell agreements are supported by insurance policies where death of a co-owner or partner is a triggering event. However, death is not the only trigger. Other events such as owner or partner leaving the business or retiring can trigger a Buy-sell. A Permanent policy with cash buildup is an excellent product to support a buy-sell agreement. These agreements are always accompanied by legal documents outlining the triggers and action to follow. The proceeds from a buy-sell can be used to buy-out the portion of the business owned by the deceased to avoid family interference in running the business. Or, a one-sided buy-sell can be used to retire the father, where the cash account funds from the son’s policy is the source of the father’s retirement benefits. In this example, the son steps up to lead the firm, and the father gets to gracefully retire.
Annuities: An Annuity is a financial product where funds are accepted and grow during the accumulate phase, and a stream of money is paid out when annuitized. The payout can be a single payment, a stream of payments until the annuitant dies, or payments made over a specified time frame. There are a ton of annuity types, with upfront bonuses, varying growth rates and a choice of payout options.
Because of the large variety of annuity types and growth and payout flexibility, it is quite easy to structure an arrangement to fit a number of needs.
Traditional IRA: is a qualified Individual Retirement Account (IRA). Like most qualified plans it has an annual contribution limit, and the funds cannot be accessed until after age 59 ½. Although there are exceptions, a 10% penalty is assess to fund withdrawn prior to reaching age 59 ½. The invested funds are pre-taxed (i.e., can be deducted from taxes) and withdrawals are taxed as ordinary income.
Roth IRA: for the most part a Roth IRA follows the same rules as the Traditional IRA with some exceptions:
1. Contributions are taxable
2. Withdrawals are Tax Free, provided the account is 5 years old
3. The Required Minimum Distribution (RMD) rule does not apply
If you are looking for a Tax Free Retirement investment plan, this is one of them. However, because of the limit on contribution amount and limits on qualifying income level, those wanting a Tax Free Retirement plan with more capacity will have to consider additional alternatives.
Tax Free Retirement: is a plan for supplementing your retirement or having access to funds for emergencies and purchases with tax free money. Unlike tax deferral plans - Traditional IRAs, 401(k), or 403b, a Tax Free Retirement Plan has output funds that are completely free of taxes and can be accessed without penalty prior to age 59 ½. And, there are no RMD issues. These plans work equally well for high income earners as well as middle class income earners or those moving into middle class income status. Your financial professional has a combination of tools to meet your need.
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Houston, TX Life Insurance Services
Equity Index Universal Life: is a UL policy where the growth rate of the cash account is influenced by the performance of a stock market index, such as the S&P 500. Like the UL, the Equity Indexed UL (EIUL) is considered a fixed product because the growth rate of the cash account is never negative. Most policies have a floor for the growth rate of 2% to 3% and cap the upper end growth limit at 10% to 14% depending on market conditions. The cap and the floor are determined by the company. Policy holders are given a wide variety of cash account growth choices: high cap, high participation rate, fixed rate, and various index choices. This is the product of choice for those looking for a permanent policy with potential cash account performance exceeding the fixed UL or Whole Life, but without the risk of loss as in a Variable Life insurance policy. Would you like a printed illustration?
Living Benefits: In addition to the death benefit of insurance policies, Living Benefits are available while you are alive – i.e., “You Don’t Have To Die To Use It." Although the permanent life insurance potentially offers the highest number of Living Benefits, some Living Benefits are offered through term policies as well. Living benefits come in the following forms:
- Tax Free Retirement Income
- Emergency Funds
- Disability Income
- Waiver of Premium
- Business Planning
- Terminal, Chronic and Critical Illness
- College Tuition – How much should we be saving for College?
- Charitable Planning
Whole Life Insurance: is the euphemism for permanent policies. When people think of permanent policies – whole life comes to mind. The whole life policy is designed to guarantee a death benefit. So as long as premiums are paid, the beneficiary is paid the death benefit when the insured dies. Like all permanent policies it has a cash account typically designed to match the death benefit at maturity. The growth of the cash account is funded from part of the paid premiums and dividends that are awarded to the policy. Whole Life policies have grown in sophistication, so check with your financial professional for more detail.
Final Expense: These policies are called Final Expense because it is likely to be the last policy you purchase. It is marketed as a policy designed to pay final expenses, such as funerals, medical bills, or debt. They are typically whole life with no exam required. Older people and those with health impairments are the target market for this product. The death benefit typically has an upper limit and a lower limit of $1000. If you have an uncle, medically challenged child, or any loved one having difficulty finding insurance – this is where to look. Curious to know what it cost?
Disability Insurance: pays a monthly income to policy holders who are injured or sick and can no longer perform their regular job. The benefit period can be 6 months, 1 year, 2 years, 5 years, 10 years or lifetime. Eliminations periods are 14 days to 1 year. The monthly premiums are influenced by the chosen benefit and elimination period. Why disability income is so important:
- The chance of missing at least 90 days of work is 1 in 3
- The risk of disability is greater than the risk of death
- Half of the foreclosures are due to disability, 2% is due to death
Video describing Term and Permanent Life Insurance.
Section 79: provides for a tax deduction to corporations sponsoring life insurance plans for their employees. A good financial professional can help tailor a plan unique to your firm where he or she has access to company experts specializing in this area.
Executive Bonus Plans: Permanent Houston, Texas life insurance is an excellent vehicle to offer extra benefits to key personnel, where the death benefit proceeds go to their families if a loss occurs, and the cash accumulation value is used to supplement their retirement income.
Investment Product for Individuals, families and Small Businesses
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