Term Life Insurance
Term Insurance is like:
1. Renting
2. Owning
Renting your coverage
What is disability insurance?
paycheck/income insurance
Is Whole Life Insurance an Investment?
No.
Permanent Life Insurance is like:
1. Renting
2. Owning
Owning your coverage. Much like buying a home, it is an asset that can build equity over time.
What is the best type of life insurance?
the type to own when you die.
What are the two main types of term life insurance?
Level Term and Annually Renewable Term
Are long-term disability insurance benefits received taxable or tax-free?
It depends.
If you pay the premium with after-tax dollars, they are received income tax-free.
If your employer pays the premium, they are taxable as income.
What are some benefits of Whole Life?
1. Lifetime coverage
2. Tax-advantaged growth of accumulated cash values
3. Tax-free access to accumulated cash values (usually)
4. Utilize cash values during "down markets"
5. Legacy Assurance and Estate Equalization
What is IUL?
Indexed Universal Life.
What is a Mutual Company?
Where a company is owned by its policyholders.
What is a Conversion Feature?
The ability to convert a term policy to a permanent policy.
What is a partial-disability claim?
When someone can prove a 20% loss of time or income from injury/illness/disability they can receive partial benefits.
How can you access your accumulated cash values?
1. distributions/surrenders: FIFO tax treatment
2. Policy Loans: borrowing from carrier
3. Line-of-Credit: borrowing from institutions (TriState Capital or BNY Mellon) or life insurance specific lender (Inclined)
What type of life insurance is an investment vehicle/product?
Variable Life and Variable Universal Life
The Accumulated Cash Values are invested into professionally managed portfolios.
What is an ILIT?
Irrevocable Life Insurance Trust. Commonly used in estate planning.
Guess: How much would a $1M Term Policy for a healthy 35 year old male cost? (monthly)
Annually Renewable Term: $38.92/mo
Level Term 20: $56.18/mo.
Are all disability policies eligible to receive dividends?
No. Many carriers do not pay dividends to disability policies. Northwestern Mutual pays more than 15x the next carrier in disability dividends, which helps the policyholder pay their premium.
What are the three ways to use your dividend in a Whole Life Policy?
1. Purchase additional coverage
2. Pay the premium
3. Take a cash payout
What is Survivorship Life Insurance?
a policy insuring two individuals that pays upon the second death.
What are Dividends?
When a company has lower than expected claims payouts and business expenses & higher return on investments (more profitable). The company can pay a dividend back to shareholders and/or policyowners.
(Northwestern Mutual has paid a dividend every year since 1872)
Do all carriers view you as a tobacco user if you chew, smoke, vape?
Not all.
Chewing: Cincinnati Life, Prudential, Lincoln at Non-Tobacco
Smoking: always tobacco. Some offer Non-Tobacco after 12 months.
Vaping: always tobacco
What is the difference between Non-Cancellable Guaranteed Renewable and Guaranteed Renewable contracts?
The premiums on NCGR cannot be changed off the original schedule. The company has the ability to change premiums on GR contracts.
What has been Northwestern Mutual's average Dividend Interest Rate over the last 20 years?
(the crediting rate applied to their whole life policies)
6.13%
1986 - 11.25%
2019 - 5.00%
Are you required to pay premiums every month/year?
No. Universal Life has premium flexibility.
Premium expense and policy charges are deducted monthly. If there is enough cash value to cover those costs, nothing will happen. If there is not enough cash value to cover those costs, the policy can lapse.
What is a 1035 Exchange?
a tax-free exchange of certain insurance products.*
1. Life Insurance -> Life Insurance, Annuity, or Long-Term Care
2. Annuity -> Annuity or Long-Term Care Premiums (unique tax-planning feature)