Life Insurance

TABLE OF CONTENTS

1. Why have Life Insurance?
2. Suggested Planning Process to Determine Life Insurance Needs
3. Purpose of this Life Insurance Information Section
4. Kinds of Life Insurance Offered by James E. Casey

1. Why have Life Insurance?

Most of us would prefer not to think of an untimely death. However, should this happen, most of us would want to leave family members with a means to settle our final expenses and other debts, plus, provide money for our survivors to live on while they go through a period of adjustment. We need to think in terms of covering longer-term expenses such as educating children and home mortgages. Having adequate life insurance to provide the money to cover these needs can be critically important to surviving family members.

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2. Suggested Planning Process to Determine Life Insurance Needs:

One way to begin the planning process is by asking yourself "How much money would your survivor(s) need if you died"? Consider the following:

• Your final expenses? These can include not only the cost of the funeral, but final medical expenses, plus money to settle your estate.
• Emergencies including home and auto repairs and unexpected medical expenses for your survivor(s)?
• Mortgage balance?
• Savings for children's education?
• Other debts, including vehicle loans and credit card balances?
• On-going living and other routine expenses including food, clothing and normal repairs to home and/or other property?

Next, consider the total value of your existing liquid assets and any life insurance policies you already own.

Finally, subtract the total value of your existing liquid assets and any current life insurance polices from the total cash needs from the questions listed above. The answer equates to the amount of additional life insurance needed.

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3. Purpose of this Life Insurance Information Section

The purpose of this life insurance information is to provide a brief overview of three kinds of life insurance plans sold by James E. Casey. They are known as Term Life, Universal Life and Whole Life Insurance.

Please use the pre-qualification form found elsewhere on this website to facilitate quote estimates for life insurance. If you prefer to ask for a quote estimate by telephone, please call (919) 932-7351 or e-mail request to Jcasey@CaseyInsuranceServices.com.

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4. Kinds of Life Insurance Offered by James E. Casey

a. Term Life Insurance:

Term life insurance provides coverage over a certain term, usually between five and 30 years. Today, most term policies will guarantee a level premium for only a specific number of years. For example, a 30-year Term life plan may guarantee a level premium for the first 15 years; then, the Insurance Company reserves the right to raise the premium within specified limits for the remaining 15 years. This is in direct contrast to Whole life insurance where premiums are locked in at one rate throughout the life of the policy. With Universal life insurance, the policyholder generally has an adjustable premium, within a specified range, that can directly affect the term of the policy and the cash value.

Some Term life insurance policies can be renewed to age 95. Usually, the premium goes up a varying amount every time the policy is renewed, with the reasoning that the policyholder gets older, and is therefore at more risk.

Some Term life policies offer the option to convert the policy to a permanent or whole life policy at the time of renewal.

Initial premiums are usually lower for Term life than for similar amounts of insurance purchased through Universal or Whole life insurance plans. However, Term life insurance builds no cash value. As with Universal and Whole life plans, premiums for Term life insurance are considerably higher for those purchasing coverage in later years.

b. Universal Life Insurance

Universal life insurance has become popular among people who want a policy offering some of features of Term life insurance, as well as certain other features found in Whole life insurance policies.

Universal life policies usually have flexible or adjustable premiums as defined within the actual policies. This means the policyholder can change the amount of premium payment, within an acceptable range set by the insurance companies. By paying the lowest premium allowed for the policy, the death benefit may last only a few years, similar to Term life insurance. On the other hand, by paying higher premiums, the death benefit generally extends the coverage over more years. In addition, higher premium rates can help build cash value in the policies.

The policyholder must be careful to not pay premium amounts above the maximum amount specified for the policy over a period of time, or it may become disqualified as life insurance for federal income tax purposes. The result would be some unexpected income taxes due upon the death of the insured.

Universal life insurance plans are also useful in estate planning. This is especially true for married couples who have a lot of non-liquid assets like real estate, and want to provide enough liquidity to pay estate taxes that will become due after the death of the surviving spouse. In this case the couple might consider purchasing a joint and last survivor universal life insurance policy with flexible premiums. The death benefit is paid at the death of the second joint insured.

c. Whole Life Insurance

Whole life insurance provides coverage of the policyholder's entire life. Therefore, the policy does not need renewing, and the premiums generally remain the same.

Whole life policies are called other names as well, including Permanent insurance and Ordinary life insurance.

Whole life insurance offers both a death benefit and a cash value. The cash value builds throughout the duration of the policy. Some people borrow from the cash value. It is not necessary to pay the loan back, but there is an interest charge. In addition, if death of the policyholder occurs before the loan is paid back, the amount outstanding will be deducted from the face value before payment is made to the beneficiary.

If a policy owner or policy holder is still living at age 100 and the premium requirements are current, plus, no outstanding loan exist against the policy, most companies will pay the full death benefit.

Whole life insurance is popular for those who like the forced savings feature (cash value building, partly from premium payments) as well as the tax-deferment option. In addition, Whole life insurance is especially attractive to those who do not want to worry about the renewability of the policy due to possible declining health in advanced years, as well as higher premiums.

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