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According to the It is important to note that for those seniors t that are under 65 years old and are working, Social Security penalizes benefits by one dollar for every two earned above $8,640. If you are working and are between the ages of 65 and 69, Social Security penalizes benefits by one dollar for every three dollars earned above $13,500. Speak with your estate planning team if you are contemplating working past your 65th birthday. Also, call the Social Security Administration to find out more details about the impact of working on your benefits. The telephone number for the Social Security Administration is: (800) 772-1213 |
Life insurance is an essential ingredient in keeping your legacy alive. It provides you with the comfort and the knowledge that you have taken care of the following:
- family protection
- estate and settlement costs
- emergency funding
- next generation gifting
Life insurance is sometimes called an instant estate planning tool. The proceeds from a life insurance policy can:
- help ensure that your family is not burdened by significant debt by covering the payment of taxes and other transfer taxes
- help satisfy other debt including funeral costs and outstanding medical expenses
- provide immediate income to loved ones.
2. Question: What types of insurance are best suited for keeping my legacy alive?
In most circumstances, the types of insurance policies that are best suited for keeping one's legacy alive are policies that have the following characteristics:
- they are permanent
- the premiums for the most part remain fixed
- they provide a death benefit and a cash value accumulation opportunity which grows over the years (tax deferred)
- they stay in force throughout one's life time
- they provide flexibility such as the opportunity for the owner to borrow against it. (Loans and withdrawals will decrease the policy's cash value and death benefit. Loans and withdrawals frompolicies classified as "modified endowment contracts" are subject to current income tax and, if the policy holder is under age 59 1/2, and additional 10% penalty tax.)
- at the time of death, the beneficiary collect the proceeds generally free of income tax
- they provide the opportunity to transfer ownership of the policy to another person or benificiary. In this instance, the proceeds can go directly to the beneficiary without being subject to probate.
The type of insurance policy that meets all of the above criteria and are usually best suited for keeping one's legacy alive are called Whole Life Insurance Policies.
3. Question: Tell me more about a whole life insurance policy and why it may be one of the best choices in meeting the "legacy alive" standards.
In order to fully understand whole life insurance you need to have an understanding of its opposite: term insurance. You will hear people debate these two main types of life insurance frequently. In a nutshell:
Term Insurance
Term insurance offers a low premium (in comparison to a whole life policy) during the early years of the insured individual. This type of policy has a specific time frame or term as the name implies.
These policies will typically include renewal opportunities with premiums that can increase substantially as one ages. Often times these types of policies will include a clause requiring evidence of insurability. So, if you were ill, it might be impossible to get insurance in a time when you might need it most.
In addition, this type of policy does not build cash value and is only used for death protection.
Whole Life Insurance
Whole life insurance policies are more expensive initially, although part of your premium is invested. You benefit from a "cash-build up" value. Sometimes this cash value is used to offset the premium. Any earnings that are gained are not taxed while the policy is in effect.
Think of a whole life insurance policy as providing permanent protection, like home ownership. Home ownership provides security and the opportunity for accumulation of wealth, whereas renting (comparable to term life insurance) may be cheaper initially, but there is no equity or opportunity for "growing" your estate.
Generally, the annual premiums (payments) for a whole life policy remain the same throughout the life of the insured individual. During the early years of the policy, the premiums are higher than those of a straight term life policy. As time passes, the level premium, combined with a build-up of cash values, tends to keep whole life policies in force.
Probate expenses and delays can be avoided in settling an insurance estate when the policy is payable to a named beneficiary. It is also important to note that life insurance proceeds are generally income tax free and depending upon the state you live, favorably treated in terms of inheritance tax. Your estate planning team will help you set up everything properly.
A term insurance policy provides protection and pays a death benefit during the term of the policy. Usually the policy owner pays one year of premium and receives one year of death benefits.
Like rent, as long as you are paying the premium you have protection. Although some term policies can be renewed, typically the premium rate increases as one becomes older and there is no guarantee that the policy will be renewed.
So, as you can see, long term security and peace of mind comes from whole life insurance in much the same way home ownership provides us with long term protection.
Continue on to Life Insurance Part II to learn about these different types of Whole Life or Permanent Life Insurance. This overview will give you a basic understanding and reference point for questions to pose to your life insurance underwriter.
(U.S. General Accounting Office.) Click on the topic below and you will jump to that page. Life Insurance Part II Keeping Your legacy Alive and Whole Life Insurance Major Benefits of Whole Life Insurance. I have heard about numerous other types of insurance such as:
Securitites offered through Ameritas Investment Corp. (AIC), member of NASD/SIPC.
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Bill Judge & Associates
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Disclaimer: William Judge, Jr., of Bill Judge & Associates is registered with AIC, which is otherwise unaffiliated with Bill Judge & Associates.
5900 O Street, Lincoln, NE 68510
1-800-335-985
This is not an offer of securities in any jurisdiction, nor is it specifically directed to a resident of any jurisdiction. As with any security, request a prospectus from your registered representative. Read it carefully before you invest or send money. Securities products are limited to residents of Arizona, California, District of Columbia, Florida, Maryland and Virginia. A representative from Bill Judge and Associates will contact you to provide requested information. California license number 0D30711
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