Life Insurance FAQs

What is Estate Planning?
What is Premium Financed Life Insurance?
How Do Know If I Need Life Insurance?
How Do I Know How Much Coverage I Need?
What’s The Difference Between Term And Permanent Life Insurance Coverage?
Can I Use Life Insurance While I’m Living?
Can I Borrow Money Against My Life Insurance Policy?
Can The Same Person Have More Than One Life Insurance Policy?
What Should I Consider In Naming My Beneficiaries?
Is A Physical Exam Always Required To Obtain Life Insurance?
What is Key Employee Insurance?
What is a Buy and Sell Agreement? Why it is important?
Why Estate Planning is important?

Do I need Life Insurance?

Life insurance guarantees that when the time comes, everything will be taken care of. If you were to die tomorrow, would your family be able to cover your burial as well as continue to pay their own expenses?

The person that you choose to be your beneficiary will get a tax free payment that ensures that everything will be taken care of. Lack of planning can make a horrible situation even worse.

Contact your Affordable Insurance and Financial Services agent to discuss your life insurance options today.

Life Insurance FAQs

How Do I Know How Much Coverage I Need?

Insurance policies are not cookie cutter, not every person needs the same thing. It depends on whether you have family that relies on you or if you are alone and just wanting to cover your own burial.

There isn’t a set amount for replacing income, so the only wrong coverage is having none at all.

Contact your Affordable Insurance and Financial Services agent today, and they can assist you with balancing future needs with your current financial capabilities.

Life Insurance FAQs

What’s The Difference Between Term And Permanent Life Insurance Coverage?

The most cost effective type of coverage is Term Life Insurance, because it only covers you for a determined amount of time. The length of the policy varies, but as long as the policyholder dies within the time period covered, benefits will be paid. The downfall to this coverage is that the policyholder may outlive their coverage. While you are able to renew, you will be subject to higher premiums because you will be older.

Permanent Life Insurance offers lifetime protection if you continually pay your premiums.  This coverage is great for all age groups. If you buy young, you can lock in a low premium. If you are older,  you can ensure your loved ones are provided for .

In some situations, both term life and permanent coverage is desirable. Contact your Affordable Insurance and Financial Services agent today to determine which solution is best for you.

Life Insurance FAQs

Can I Use Life Insurance While I’m Living?

The key reason for purchasing life insurance is to cover your expenses after your death, but there are a lot of policies that allow the policyholder to use benefits while they are living.

Waiver of Premiums:  This is a benefit that allows you to keep your policy if you become too ill to pay your premiums, or if you become disabled.

Accelerated Death Benefits: Policyholders can exchange their death benefit for the amount of the policy’s face value If they are terminally ill.

Cash Accumulation: Some policies let you increase the value of your insurance by overpaying your regular premium. The accumulation of cash can also increase the amount of the loan if the policyholder is still living.

Portability:  When you retire or switch employment, you can take your policy with you with convenient direct billing.

Can I Borrow Money Against My Life Insurance Policy?

You cannot borrow against a Term Life Insurance Policy. However, you can borrow against a Permanent Insurance Policy. You will be required to pay back what it borrowed, plus interest. Any unpaid loan balances will be deducted from the death benefit if the policyholder dies before the loan is paid.

Life Insurance FAQs

Can The Same Person Have More Than One Life Insurance Policy?

There is no restriction on the number of policies that a person can hold. More often than not, a person will buy their own coverage as a supplement to insurance offered by their job. At the time of death, all policies will be paid out.

What Should I Consider In Naming My Beneficiaries?

This is one of the most important parts of your policy, and one of the most important choices you will make. This is the person that you will be giving the power to make decisions after your death, so it has to be someone you trust. You can choose one or multiple beneficiaries, and they can be changed at any time. You will also have to pick back up beneficiaries in the event that you outlive your primary choice.

If you have additional questions regarding the process of choosing your beneficiaries, please contact your agent, and they will be happy to assist you.

Is A Physical Exam Always Required To Obtain Life Insurance?

While most companies do require a physical exam in order to get coverage, there are some that do not have the requirement. If you want a high death benefit, examinations are almost always required.

You should be prepared to provide information on your medical history as well.

What is Key Employee Insurance?
Both large and small businesses often have one or two individuals that are responsible for a huge portion of the company’s revenue, like the CEO, owner or a key employee. Unexpectedly losing someone central to company viability could irrevocably harm the business or even force it into bankruptcy. Key man (or key person) insurance mitigates against this possibility and protects the business if they experience key person loss.
What is key man insurance? In brief, key man insurance is a life or disability insurance policy taken out by a company on an indispensable person to protect it from the losses incurred as a result of the key person’s inability to work.

How Does Key Employee Insurance Work?
The typical aim of key man insurance policy is to prevent a business from going under in the event of an integral team member’s extended absence due to death or disability. The company itself pays for the insurance policy and acts as beneficiary. So if a key person dies or is incapacitated for a long period of time, the company receives compensation based on their policy. Businesses can use those funds for a variety of functions such as:
paying off debts,
covering overhead costs,
redistributing money,
recruiting, hiring, and training replacements,
paying severance,
or closing the business.

What Is a Buy and Sell Agreement? Why it is important?
A buy and sell agreement is a legally binding contract that stipulates how a partner’s share of a business may be reassigned if that partner dies or otherwise leaves the business. Most often, the buy and sell agreement stipulates that the available share be sold to the remaining partners or to the partnership.
The buy and sell agreement is also known as a buy-sell agreement, a buyout agreement, a business will, or a business prenup.
*How a Buy and Sell Agreement Works?
Buy and sell agreements are commonly used by sole proprietorships, partnerships, and closed corporations in an attempt to smooth transitions in ownership when each partner dies, retires, or decides to exit the business.
The buy and sell agreement requires that the business share be sold to the company or the remaining members of the business according to a predetermined formula.
In the case of the death of a partner, the estate must agree to sell.
*Understanding Buy and Sell Agreements
There are two common forms of agreements:
1.In a cross-purchase agreement, the remaining owners purchase the share of the business that is for sale.
2.In a redemption agreement, the business entity buys the share of the business.
Some partners opt for a mix of the two, with some portions available for purchase by individual partners and the remainder bought by the partnership.
In order to ensure that funds are available, partners in a business commonly purchase life insurance policies on the other partners. In the event of a death, the proceeds from the policy will be used towards the purchase of the deceased’s business interest.

Why Estate Planning is important?

Protect Your Loved Ones With an Estate Plan
Estate planning is one of the most important things you can do to provide for your family into the future—no matter your age, health status or net worth. An estate plan allows you to choose who will care for your minor children in the event of your death, as well as who will inherit your assets. It also helps you pass on your assets in a way that can minimize the tax burden on your loved ones. Here are some suggestions on how to get started.

Draft a will
In a will, you state who gets your assets, when they will get them and in what form. Wills generally include the designation of an executor, the person in charge of carrying out the instructions you’ve laid forth. A will forces your estate into probate. Without a will, the court will distribute your assets according to the laws of the state you reside in, and they may end up in the hands of a relative you did not foresee receiving them.
If you have minor children, a will allows you to appoint a guardian to take care of them in the event of your death. If you leave assets to your children, their guardian may also be in charge of managing those assets and making sure they are spent and invested appropriately. Be sure that potential guardians understand the full extent of their responsibilities.

What is probate?
Your estate executor or the attorney representing your estate typically initiates probate. During this process, a probate court validates your will and then authorizes your executor to distribute your estate to your beneficiaries as you instructed, as well as pay any taxes your estate may owe.
If you have no will, a further administrative proceeding must be held to determine how your estate will be divided. In this case, the court will name an administrator for your estate, who then follows the probate judge’s instructions on how to distribute your property.

Why should you avoid probate?
Although probate is often straightforward, many people want to avoid it. The reasons can vary, but there are some common complaints about the process:
It can be slow. In some cases, it can take years for a probate court to finalize an estate, especially if it’s complicated or involves a contested will.
It can be costly. Costs vary from state to state, but probate generally entails executor fees, attorney costs and other administrative expenses, such as appraiser’s fees. In some cases, these charges can accumulate quickly. The expenses are exacerbated if the process drags on for a while.
It is public. Since it is a state legal proceeding, what goes on in probate court does not stay there. All the material in the probate process goes into the public record.

How can you avoid probate?
Regardless of why you want to avoid probate, there are steps you can take to do just that.
Have a small estate. Most states set an exemption level for probate, offering at least an expedited process for what is deemed a small estate. In some cases, “small” actually can be quite large. Check your state’s probate estate limits.
Give away your assets while you’re alive. You might be able to get your estate to a simplified or exempt probate position by reducing its value while you are still here. Instead of leaving your assets to family and friends after you die, give them the items before then. Not only can this reduce the amount of your estate that goes through probate, it also might help trim or even eliminate future federal and state estate taxes.
Establish a living trust. Trusts are appealing when it comes to avoiding probate because property held in trust is not part of your estate upon your death. The reason? A trustee, not you, controls the trust property, and is obligated to distribute it under the terms of the trust agreement.
Make accounts payable on death. Bank and other accounts that are payable on death go directly to your designated beneficiary without going through probate. Some states also allow such transfers of real estate.
Own property jointly. Making your spouse or someone else a joint owner facilitates the transfer of the asset without the need for probate. Some ways to hold such assets include joint tenancy with right of survivorship, tenancy by the entirety and community property with right of survivorship.

What is power of attorney?
A power of attorney or letter of attorney is a written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor.

What does medical power of attorney?
A medical power of attorney is a document that allows you, the principal, to designate a trusted family member or friend to make medical decisions for you in the event you become unconscious or mentally incapable of making those decisions for yourself. … Medical powers of attorney are not just for the elderly.

What are the Different Types of Power of Attorney?
Non-Durable Power of Attorney. …
Durable Power of Attorney. …
Special or Limited Power of Attorney. …
Medical Power of Attorney. …
Springing Power of Attorney.

How powerful is a power of attorney?
10 Things to Know about Powers of Attorney. They are powerful. A lot of people do not understand that a power of attorney is one of the most powerful legal documents that we have. It can give another person (or persons) the ability to act on your behalf with regard to all financial and medical matters.


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June 22nd, 2020 by Affordable Insurance and Financial Services