Life Insurance. Single Premium Life Insurance

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1 Life Insurance Life insurance provides cash for many important expenses to help survivors deal with a number of pressing financial issues after the loss of a loved one. Proceeds from a life insurance policy can be used to pay the deceased's final expenses and outstanding debts, such as credit cards, mortgages, auto loans, and medical bills; or, it can provide income and security to a surviving spouse, children, or family members. There are many types of life insurance available to address these concerns, such as single premium life, universal life, term life, whole life, and final expense insurance, each designed to help meet the wide variety of differing needs and means of individuals and families. Will your family be provided for when you die? Have you thought about what they will do if the primary income provider is gone? There never seems to be a good time to think about death or the loss of a loved one, and choosing a life insurance product or plan that will meet your particular circumstances can be overwhelming. Here at Blue Atlantic Insurance Group, we put the client first, offering you the best companies with the best products at the best prices in the industry. We are an independent agency and we search the market to find the most competitive insurance solutions available in order to meet our clients' needs, and our agents are more than just insurance experts, they are your neighbors and friends. Single Premium Life Insurance 1 / 10

2 Single premium insurance is a life policy where you pay just one premium in a lump sum at the beginning. If you have the means, this can be a great way to get the coverage you need without the expense or worry of paying ongoing premiums for the rest of your life. Sources of this single premium could be from unused savings or investments. The premium could be transferred from the existing cash value in another policy or annuity that is not performing, one that you were planning to surrender, or one where you are unable to continue paying premiums and risk losing entirely. By paying a lump sum premium up front, this policy provides a fixed death benefit you can count on for life, and begins to accumulate cash value right away. Like all life insurance, the cash value in this policy grows tax deferred, access to the cash value is available tax free by using policy loans, and the entire death benefit is paid to beneficiaries income tax free. The unique structure of this type of policy has been very popular in tax and estate planning because it allows you to put large premiums immediately into this policy to convert an asset into a tax advantaged benefit for your heirs. A fixed cash asset used to purchase a single premium life insurance policy can provide a tax free death benefit much larger than the value of the asset itself, and provides a great way to increase the value of your estate to beneficiaries. There are even single premium policies available now that allow you to systematically transfer qualified money from your excess IRA into the policy, thereby reducing the tax burden of the IRA by spreading withdrawals out over many years, and eventually converting a taxable asset into a tax free benefit for your family. Wondering if a single premium life insurance policy is right for you? We at Blue Atlantic Insurance Group can help you determine how to best accomplish your goals and needs. Our strategy is to help you prepare for the future, but plan for the unexpected. Our personable agents are ready to help you with professional expertise, so you can choose the insurance plan that best suits your needs and budget. Whole Life Insurance 2 / 10

3 This truly permanent insurance product has been around since the inception of life insurance first began in this country. It is so named because both the coverage and the premiums are intended to last for your "whole" life. Whole life accomplishes its enduring quality by collecting higher premiums than needed to cover the death benefit in the early years of the policy, while the insured is younger, and uses the buildup of this "cash value" to offset the higher cost and risk to provide the same death benefit as the person ages. The premiums are the same throughout the contract and most of the face amounts in a whole life policy are level, sometimes increasing in later years if the cash value grows significantly. While the cost is higher than term or even Universal Life, whole life insurance is predictably consistent and easy to use in plans requiring guarantees without change. As long as the policy owner pays the premiums, the insurance will remain in force, and the premiums will never increase. Most people buy whole life insurance for the certainty of the death protection, but the growth of cash value in a whole life policy can provide the owner some "living benefits" as well. Once there is a buildup of cash value in a whole life policy, which usually takes several years, it is made accessible to the policy owner in the form of a policy loan, which carries some limitations and restrictions, and does incur interest on the outstanding loan amount until repaid, if ever. Unpaid loans plus accrued interest are simply deducted from the death benefit upon the death of the insured. The unique tax structure of life insurance allows for a policy owner to use the cash value from their whole life policy during their lifetime to access tax free income, and still leave an income tax free death benefit to their beneficiaries, thus avoiding ever paying taxes on the gains within the policy. Using cash value from a whole life policy can be a valuable benefit, but should not be approached without clear guidance on the implications such a loan will have on the policy and its intended purposes. All Blue Atlantic Insurance Group agents are trained in the proper use of whole life in a comprehensive insurance plan, and our expert advice will help you determine if such a policy is right for you, and help you understand how to best use the cash value growing in your whole life policies. 3 / 10

4 Universal Life Insurance Universal life insurance is considered a permanent cash value building policy that, much like whole life, is intended to cover you for your entire life, no matter how long you live. Universal life differs from whole life in a number of other ways, however, in that the premiums are typically flexible and can be adjusted by the policy holder, within a range of limits, without changing or losing the death benefit, as long as there is sufficient cash value or premium paid to cover the basic policy expenses each year. This gives the insured a lot of control over their policy and allows for them to increase premiums in order to accumulate more tax advantaged cash value when they are able, or temporarily reduce or suspend making premium payments if they need to, and still keep their coverage. Some UL policies even allow you to decrease the face amount in the future if you desire, such as when children are grown, or in order to permanently reduce the minimum premium required, once you reach retirement. Another feature of UL is the access to any cash value that has accumulated in the policy. While paying premiums into a UL policy that protects the most important part of your life, your family, you are also accumulating cash within the policy that you can use for emergencies, or as a retirement income planning tool. Policy withdrawals and policy loans are allowed from the cash value and provide a unique way of planning for a tax free stream of income if the policy has been properly funded in previous years, and there is a sufficient amount of cash value from which to draw. While policy loans are typical in most types of cash value life insurance, withdrawals are unique in a UL policy and unlike a loan, are considered a return of previously paid premiums, and therefore are not taxable and do not typically incur interest charges, but will proportionately reduce the death benefit. Even if you make continued withdrawals, as long as the policy is in force when you die, the beneficiaries will still get a reduced income tax free death benefit. 4 / 10

5 What makes universal life popular, other than its flexibility and user friendly features, is that the premiums needed to provide a lifetime of insurance coverage are considerably less than whole life, and while initially higher than term, over time will allow much more reasonable premium costs for aging policy holders who need to continue coverage for their entire lives. It is very easy to customize a lifetime insurance plan that will adjust to changing needs and financial circumstances using a universal life insurance policy. With a personally tailored universal life insurance plan, you can protect your assets, your retirement, your income, your family, and your future. It is challenging to make sure you pick the right plan, pay a sufficient amount of premium to accomplish your long term goals, and get the correct amount of coverage. It takes careful consideration of your needs and your budget with a strong understanding about how these types of policies work, as well as knowledge about the difference between UL policies from different companies. Don't make a mistake and try to guess at this on your own. Get a professional to help. In the early years when UL policies first became popular, overoptimistic projections of interest returns within the policy, as well as misuse of the flexible premium options by owners, led a number of UL policy holders to find the continuation of their death benefit in trouble unless they dumped large sums of cash into the policy or significantly increased their premiums. If you have a UL policy that is potentially in trouble, or you have been opting to minimally fund it for a number of years, call us and we can help you determine what your best course of action should be in order to preserve your valuable insurance coverage. At Blue Atlantic Insurance Group, our knowledgeable agents can help you find out how this lifelong protection might fit into your planning. Maybe you need a universal life policy, or maybe you need a combination of different types of policies. We will listen to what you are trying to accomplish, determine exactly how much insurance you need and for how long, find out how much your budget can afford, and create a solution that will give you the peace of mind you want, knowing that your family is well taken care of, for life. Our personal approach to life insurance planning will leave you wondering why you waited so long to get started, so don't wait any longer. Call us today! Our agents are ready to meet you in your home or in our office. Term Life Insurance Term insurance is a life insurance policy that is defined by the term, or length of time for which 5 / 10

6 coverage is in force, during which the premiums typically remain level. The longer the guaranteed term period is, the higher the cost of the insurance. While most term policies have level premiums, some term policies have graded premiums where the early premiums are level at a lower amount and increase to a higher level somewhere during the policy period. Some term policies provide for automatic extensions of the original term period at a higher but guaranteed premium with no further underwriting required. Most term policies simply end when the term expires or when you cease making premium payments. Term policies do not build up cash value, but a few may offer a partial return of premium if you keep it for the full term. What are the benefits of a term life policy? Term life insurance is competitively priced and allows many people to acquire an appropriate amount of coverage, even within modest budgets, by choosing a term period that meets their particular needs. Common Term Periods Available include: - Five Year Level - this infrequently used term policy is mostly purchased for very short term business purposes and because of its specialty use, it is not as economically priced as the shortened time period may suggest - Ten Year Level - an economical medium duration term coverage period, this policy is usually inadequate for complete protection of families with younger children, but may provide a suitable layer of temporary additional coverage to boost a existing broader based insurance plan, or for use with families with older children - Fifteen Year Level - with only five more years of protection than a ten year term, for the increase in premium cost, this product may not be the most economical choice, unless this product closely matches the specific term needed - Twenty Year Level - a popular time frame for people with young children, this term will cover most families looking for protection until the children leave home or go off to college. If the insured's health deteriorates during the twenty year period, re-insurance options may be limited and difficult to find - Thirty Year Level - the cost and availability of this extended term product varies with the market, so when considering this length of term insurance, make sure to do some comparison shopping of other types of more permanent life insurance, keeping long term goals in mind. While this term period mirrors many mortgages, consider that few mortgages are kept to full term. Conversion options with this product are usually available for a period less than the full thirty years. Typical Rider Options available as additional costs: 6 / 10

7 - Children's Rider - provides a death benefit for children if the child should die while the policy is still in force. While this is an inexpensive way to provide pure death protection for a child, other more durable insurance products designed specifically for children may be better choices that will survive you and give your children a lifetime of insurability options. - Other Insured Rider - You can add anyone you name, (subject to underwriting) as the additionally insured with this feature, such as a spouse, an adult child, or a business partner. Some policies may limit this addition to spouses only. - Waiver of Premium - rarely used with term insurance, when available, it will allow for the payment of premiums on your behalf, if you become disabled as defined within the rider, which allows you to keep your coverage in force if you are unable to pay premiums, due to a qualified disability. - Accidental Death - this rider will increase the death benefit by some factor, usually double, in the event that the death is accidental, rather than due to natural causes. - Accelerated Death Benefit - this is usually a no cost rider, and sometimes a policy provision, which provides for you to take a defined portion of the face amount as a benefit while you are still living, if you are diagnosed with a terminal illness Who should use term insurance? Term insurance is usually inexpensive for younger, healthy individuals because it only covers them for a limited period of time in the prime of their life when the risk of death is low. After a policy reaches the end of its guaranteed term period, the coverage either ends, or must be converted to a more costly permanent type of insurance if the policy holder wants to continue this coverage without further underwriting. If further coverage is needed when a term policy ends, if the insured person is healthy, it is usually more economical to just start a new policy. Though most term insurance has some type of conversion option available, conversion of term is mostly limited to people who have developed uninsurable or ratable conditions since the term policy was originally taken out. Most people buy term insurance when the anticipated risk or need is considered temporary, such as during the time children are dependents at home, or during the life of a mortgage or other debt. Since term insurance is usually the least costly type of life insurance, many people buy term simply because it is the only way they can get the full amount of death benefit they need within a budget they can afford. Term insurance is designed to cover the unexpected or untimely death of someone and not meant to be counted on for normal and full life or estate planning. Term insurance is a great way to cover temporary needs of younger and middle aged adults, but if there is also an anticipated need for some amount of insurance to continue longer than the projected term period or until a time closer to a normal life expectancy, other types of insurance may ultimately prove to be less expensive when considered over the entire coverage period needed. The older 7 / 10

8 a person is and the more medical conditions they have developed, the more expensive term insurance becomes, and relying on term insurance at this point is a gamble as to whether the term period will expire prior to the death of an elder policy holder, possibly leaving them with no coverage at all when they eventually die. In many cases, using a combination of different types of insurance, including some term and some permanent, will account for changing circumstances, and will best allow for the appropriate amount of coverage to be available at all stages of life, and at a premium that is still affordable. While you can buy term life insurance online, on the phone, or even over the TV, let one of the agents at Blue Atlantic Insurance Group help you determine the best type and amount of insurance to meet all of your life insurance needs, in the most economically efficient manner for the entire period you need coverage. At Blue Atlantic Insurance Group, our agents are more than just insurance experts; they are your neighbors and friends. Final Expense Insurance The rising cost of funeral expenses makes final expense insurance more of a necessity than ever. With modest funeral costs easily exceeding $8,000, this inevitable expense will eventually have to be paid for every one of us. Social Security will only pay $255 for your burial, so the balance must either come from selling off assets in your estate, or your family will have to come up with the difference. To avoid leaving your grieving loved ones with a huge financial burden, it is vital to consider the value that burial insurance provides to relieve the stress placed upon your family of how this cost will be covered. In addition to funeral costs, final expense insurance can also provide your family a way to settle your debts, create some short term cash flow for survivors, and pay any remaining medical bills you leave behind. Using Life Insurance as a Planning Tool Life insurance is used by people of all income levels to provide planning and protection for everything that is important to them. Life insurance allows anyone who is able to buy a policy a way to increase the value of their estate beyond their hard earned savings, in order to provide for income and security of loved ones, to pay final expenses and settle debts, or to protect a family business for future generations. Life insurance is also used to plan for the payment of estate taxes, and provides the liquidity sometimes needed to preserve assets you wish to leave for your heirs. Your use of life insurance is a very personal decision, based upon your chosen financial goals and objectives, but it also depends upon your financial ability to pay premiums, and in your health qualification in underwriting to obtain coverage. 8 / 10

9 If you have ANY of the circumstances listed below, you may need life insurance as part of your planning: - I have a family that is dependent upon my income for support, (whether they live with you or not) - I have children that are still living at home - I have a spouse - I own a home - I provide a home which others count on as their place of residence - I own a business, or own a business with a partner - I own a business with a key employee, or key employees, whose expertise and/or position is critical to the income and viability of my business - I want to leave my business to my heirs - I own property or real estate other than my primary residence - I have large amounts of investments/savings/annuities - I own an IRA, a 401K, or other asset based retirement account - I have debts: (credit cards, personal loans, business loans, mortgages, car payments, bills in my name, etc) - I own assets of value that one day I want my loved ones to have and enjoy - I don't want someone else to have to pay for my bills or expenses when I die - I haven't arranged or pre-paid for my funeral expenses - I don't know how I am going to pay for nursing home care if I need it one day - My spouse does not have sufficient retirement savings or income of her own to live on if I am not around - I want to help my grandchildren with college expenses - I want to help out my children and grandchildren with some cash when I die - I want to leave a legacy for my family and/or community - I don't know whether my estate will owe taxes to the state or federal government - I want to leave something to a charity/church/civic group/foundation Uncovering your goals, developing a plan to meet your needs, and determining your ability to put your plan into place is one of the primary objectives of the agents at Blue Atlantic Insurance Group when they meet with you. We'll help you make sure you are protecting what is important to you and that you use the most efficient and economical means to do so. Our expertise has helped to protect our clients for years, and we welcome the opportunity to work with you in the same professional and personable manner all our clients already enjoy. At Blue Atlantic Insurance Group, our agents are more than just insurance experts; they are your neighbors and friends. 9 / 10

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