Life Insurance and Annuities

What is Life Insurance

Life insurance is a contract between an insurance carrier and a policyholder, where the insurance carrier promises to pay a designated beneficiary an agreed sum of money upon the death of the policy holder, in exchange for an agreed premium (monetary consideration). There are many different types of policies or contracts and depending on the contractual structure, other events such as terminal illness or critical illness can also trigger payment.

Life policies are legal contracts and are written with specific terms, obligations and rights of both the insured and the insurer. Most all policies come with exclusions to limit the liability of the insurer. Common examples are claims relating to suicide, fraud, war, riot, and civil commotion. Most types of life insurance policies premiums are based on age, life style, health and geographic regions. There are forms of policies that don’t take these things into consideration but there are limits to the amount of coverage with consideration to age and other factors.

Life-based contracts tend to fall into two major categories:

Protection policies – designed to provide a benefit, typically a lump sum payment, in the event of a specified occurrence. A common form—more common in years past—of a protection policy design is term insurance.

Investment policies – the main objective of these policies is to facilitate the growth of capital by regular or single premiums. Common forms which we discuss later are whole life, universal life, and variable life policies.

Life Insurance Stages – Options to consider

There are many things to consider when piecing together the fabric of your life and financial wellbeing. We go through various stages in our life with specific events marking each stage. Some are age specific and some are not. Here are a few life stages that people experience and reasons why you may want to consider contacting one of our advisors to learn how life insurance may help in a given life stage.

Single

When structured correctly a life insurance policy may help in these scenarios:

Life insurance is cheapest when the insured is young and healthy
Whole life insurance when purchased early can help fund your retirement
If your parents are cosigned on educational loans and something happened to you, they would still have to pay your tuition loan after you are gone
Elderly parents or a child may be depending on you financially
Funeral expenses
A life insurance policy can provide living benefits such as medical costs should you become terminally ill

Young Families

When structured correctly a life insurance policy may help:

Start a savings plan with cash value life insurance
Provide partial funding for a child’s education
Protect your mortgage investment
Cover funeral expenses
Payoff debt

Established Families

When structured correctly a life insurance policy may help:

Provide equity protection and mortgage protection
Preserve and protect your retirement resources
Provide Long-Term Care Insurance funding
Create a fund for college education continuance for your children
Maintain a current lifestyle for your spouse and loved ones
Pay funeral expenses and medical bills
Prevent payment of creditor debt from your estate
Fund critical or chronic disease care and health care funding

Empty Nesters

When structured correctly a life insurance policy may help:

Protect and pay mortgages or can be used for medical or education expenses
Create a living fund for your remaining spouse
Fund assisted living expenses
Pay for nursing care or health related expenses
Generate cash for final expenses and medical bills
Retirement preservation for your remaining spouse
Give legacy funding to grandchildren

TYPES OF LIFE INSURANCE

Term Life Insurance

Term Life Insurance is an inexpensive way to provide the most coverage for your family and loved ones. The policy structure of term life insurance is offered in various amounts and terms in years of protection. The insurance expires without value if the insured lives beyond the policy period, usually 5 to 20 years (some companies offer longer terms). You have the option to add various riders to the policy and some policies can be structured to pay living payments such as critical or chronic illness situations.

Term insurance premiums do not change or increase during the guaranteed term. However, they rise drastically after the term expires. Usually to the point that the insured will not want to continue the policy. For that reason, Term Life Insurance is usually structured to cover a specific need such as mortgage protection or college and short-term debt. Term life Insurance pays a death benefit only if you die during that term. Term Life Insurance generally provides the largest insurance protection for your premium dollar.

Our Term Life Insurance specialists can help you:

Choose your coverage plan with the perfect timeframe for you
Get customized coverage that can cover you and the unique needs of your family

Discuss your needs with a Chestnut Ridge Financial Services advisor and learn how you can protect your family.

Contact a CRFS specialist to learn more about Term Life Insurance.

Whole Life

Whole Life Insurance is the perfect way to safeguard your family’s future with both a guarantee and a way to acquire more money over time as a form of investment. Our Chestnut Ridge Financial Services representatives can help you determine which benefits will help you and your family the most with Whole Life Insurance. Some of the features you can receive with Whole Life Insurance include the following benefits.

Cash Value – Whole Life Insurance can come with a savings benefit that allows you to accumulate more cash value over the time of your investment. It depends on the carrier and the insurance contract. This money will increase over time, regardless of where the investment markets are. Furthermore, you can access the cash value that builds in your policy if you need it. There are no restrictions on when you can access the value nor on how you use the value.

Lifetime Coverage – Your death benefit remains in place and in fact, in some policies, will grow over time. Unlike Term Life Insurance Whole Life Insurance does not have a term limit. If the premiums are paid, and the policy stays in force you will be protected.

Death Benefit – This is the amount that is guaranteed to be paid to your beneficiaries if your monthly premium payments are made. Remember that the death benefit and cash value of the policy are not the same thing. The death benefit is the face amount of the insurance policy paid when the insured dies. The cash value is based on the premiums paid and accumulates over time. Cash value is what you access in loans and surrenders if you desire. Always consult your insurances advisor when making these decisions.

Options – There are various riders, policy types and different insurance carrier models that will allow you to structure a plan that fits your specific needs. Whole Life Insurance is one of the most flexible financial tools with favorable tax advantages in existence. Always discuss your needs with a professional insurance advisor.

Cash Value Whole Life Insurance offers guaranteed insurance protection your entire life with the flexibility of living benefits and structured withdrawals and payments.

Talk to a Chestnut Ridge Financial Services insurance advisor to help you design a plan that best suits your goal.

Contact a CRFS specialist to learn more about Whole Life Insurance.

Universal Life Insurance

Universal Life Insurance is a variation of a Whole Life Insurance policy; however, the premiums are designed to be flexible. Policy owners have the flexibility to choose a payment structure and change their payments based on policy criteria. A minimum payment is established but the policyholder may choose to pay additional amounts (i.e. the more you pay, the less time you will need to pay). Your premiums pay for an insurance amount, a savings or investment element and the expenses of the policy. The policy savings has a stated interest on the investment portion which changes with market interest rates.

Contact a CRFS specialist to learn more.

Final Expense Life Insurance

Final Expense Life Insurance is designed to do exactly what the title implies. Final Expense Life Insurance is intended for adults usually age 40 and above to pay for expenses created from their death. It can cover things like estate fees, funeral expenses, medical expenses, debt and more. There are various types of final expense policies depending on your current health condition. A guaranteed Issue Final Expense policy can be purchased without any medical questions and regardless of the insureds health. Another type of Final Expense Insurance policy called a GRADED BENEFIT policy which has a time frame of exclusion to cover preexisting conditions. This is usually less expensive than the guaranteed issue policy.

Final Expense life insurance is meant to handle:
Funeral and burial expenses
Credit card debt
Medical bills
Other bills that come with end-of-life circumstances

Contact a CRFS specialist to see if Final Expense Life Insurance is right for your situation.

Accidental Death and Disbursement Insurance

Accidental Death and Disbursement Insurance is an insurance policy that will pay a benefit to the insured in the event of a covered accident. It will not pay a benefit if the insured’s death is due to a health-related cause. AD&D, or Accidental Death and Disbursement, is ideal to cover someone who may not qualify for life insurance due to strict life insurance underwriting guidelines.

AD&D also has some added coverages that a typical life insurance policy will not pay a benefit for. One of them is the loss of a finger, toe, or limb. You may also receive a benefit if you become paralyzed or comatose. Accidental Death & Dismemberment Insurance also covers a loss of your senses, including eyesight, hearing, loss of speech if the loss occurs do to a covered accident.

Contact a CRFS specialist today to learn more.

Annuities

Annuities are tools provided by insurance carriers that generate various forms of payment to the annuitant. Annuities can provide long-term income during retirement through a stream of future payments, a lump sum payment upon the annuitant’s death or immediate payments. The two basic types of annuities are deferred and immediate, referring to the timing of the benefits paid to the annuitant. If you chose a deferred annuity your money is invested by the insurance company for a longer time frame. You are given several options by contract on when, how long and how much your benefit payments will be. Should you choose an immediate annuity you will begin to receive payments shortly after you purchase your annuity. An immediate annuity is usually selected when the annuitant is closer to retirement. Furthermore, there are two sub-categories under the main types of annuities. They are a fixed annuities and variable annuities. A fixed annuity gives you a specific return for the money you invested, and a variable annuity will give you a variable return based on investments and market index. In any case an annuity is a safe vehicle, based on the insurance carrier solvency, to have a guaranteed tax deferred income in your retirement portfolio.

Annuities are flexible and can be complex. However, if structured properly they can be an important part of one’s retirement plan. You should always consult a licensed professional advisor to determine if an annuity is right for you. An advisor will help you analyze factors such as age, financial liquidity, your tax brackets and your overall retirement plan to determine if an annuity is right for you.

Chestnut Ridge Financial Services offers a variety of solutions from top producing financial service providers, giving you multiple options when determining what type of annuity is right for you.

Contact a CRFS specialist to learn more.