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Donna Said:

what is the Life insurance cover?

We Answered:

lifeinsurance.awardspace.info - try this one. I have their insurance and, as remember, they can provide such a service.

Guy Said:

Tax treatment of Single Premium Whole life policy before tax changes in 1988?

We Answered:

The tax law changes created something called a Modified Endowment Contract (MEC - defined in section 7702A of the Internal Revenue Code). Because your policy was issued before then, you are not subject to MEC rules, which provides greater tax advantages for you.

To access the cash value, you have a few main options: (1) take a policy loan, (2) surrender the policy, (3) take a cash withdrawal.

(1) Policy Loan - The company essentially gives you a loan with your policy as collateral. If you die, the death benefit will help to pay back the loan. You will have to pay interest to the insurance company on the policy loan, and this interest is NOT tax deductible.

(2) Surrender the Policy - You will recognise a gain upon surrendering or lapsing your policy. The taxable gain is calculated as the cash value you receive less the sum of all premiums you paid (or in your case the single premium - the sum of all premiums paid is defined as your tax basis).

(3) Withdraw cash value - You can withdraw some of the policy value from the contract. Note that your death benefit will decrease as well, and will probably drop about 1.5 times the amount of the withdrawal you take (I won't get into details, but this is due to what is outlined in IRC section 7702). To determine what part, if any, is taxable compare the amount withdrawn to the premiums paid. Any amounts that are above the premium paid will be taxable. (Your tax basis will decrease by the amount withdrawn).

As a sidenote, MEC rules (not yours, but for newer policies), would impact situation 3. Here, a policy which is heavily funded and declared a MEC (like a single premium whole life policy), will be taxed gain first, meaning that all cash value withdrawn will be taxed, until the cash value is equal to the premiums paid. If this last paragraph confused you, ignore it since it does not pertain to your policy.

Clifford Said:

If I am 27 and single, do I need to be paying for life insurance?

We Answered:

No,

I personally don't believe in whole life policies. So, that leaves term life. Somebody else gets the money after you die. If you are not supporting anybody, why waste your money?

The premium for a healthy 27 year old is not significantly different than the premium of a healthy 35 year old, so "locking in a good rate" doesn't make sense. Most term policies are usually only 15 years anyway so you would be renewing again at 42 anyway. As somebody else said, bump your 401k contribution and you will be better off.
If you feel the need to cover your funeral costs, go buy a cheap 15k policy.

Yvonne Said:

single premium, life annuity?

We Answered:

I wish someone (above) would stop answering questions about annuities because she doesn't understand them. There are NO FEES for fixed immediate annuities. And, you absolutely cannot get a CD or any other bank product to guarantee a fixed payment over your life expectancy. You also cannot get a bank product to return a combination of principal and interest making about 2/3rds of the income completely tax free. From the hip I'd estimate that you'd get somewhere between $150 & $225/month and that roughly 2/3rds would be a return of your principal and would be tax free (unless it was IRA money of course).

Also, if you have some health issues you can have some insurance companies underwrite the annuity and take in account your declined health. In some cases they can deem your life expectancy to be shorted thereby increasing your payment. I'm not saying they definitely make sense, but I don't make blanket statements about that which I do not understand. Explore your options with your financial advisor.

Clifford Said:

Are there additional premiums with single premium policies?

We Answered:

First of all your should but term insurance and do your investing elsewhere.

Bryan Said:

Where can I find a reputable Life Insurance Company/Policy?

We Answered:

Your best bet is to consult with an insurance professional. All the major life insurance companies are reputable. I would avoid anything on line. An insurance professional will work out something for you within your budget and explain how to list your children as beneficiaries. They do not have to be adults to be listed on your policy.