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Dwayne Said:

For a special 15 year decreasing term life insurance?

We Answered:

It's normally preferable to get a level term policy. The death benefit will remain the same for the term of the policy even though the premium will be comparable to the decreasing term. The decreasing term would only be preferable in a couple of situations. Decreasing term policies are often offered on a guaranteed or simplified issue basis, so if there is an insurability issue, it may be the better (or only) option. Also, many decreasing term policies are offered on a joint first-to-die basis which may make them more cost effective than separate policies for two individuals.

You didn't ask a question, so hopefully this is the information you were looking for.

Isaac Said:

Term Life 95 Insurance offerred by American Fidelity Assurance. Good product? Or stick with 30 year term?

We Answered:

I would compare that product to a level death benefit secondary guarantee universal life that runs out at age 95. In my experience, decreasing term products to 95 should be less expensive in theory, but the lack of a competitive market place tends to keep the price high. Guaranteed UL, on the other hand, is a very competitive market, and they are not designed for significant cash accumulation, keeping costs lower.

The real question in my mind is how long you actually need coverage. Another benefit of the guaranteed UL is that the agent can dial in an exact age the policy should lapse, so if you needed coverage until age 93 or 96, you could get it.

Once you define your need, consider a few different scenarios to find the one that fits best for you.

Angela Said:

What type of life insurance would be best to purchase?

We Answered:

Level term with conversion

1. With level term, she can lock in a 20 or 30 year level term policy at cheap rates, and get the amount of coverage she needs in order to take care of a 3 year old until daughter is old enough to be on her own.

2. LEvel term provides the amount of life insurance you need at lowest possible price, and since she only makes $25k per year, price is a consideration.

just a note - level term insurance is usually convertible term insurance. look for a policy that offers conversion privilege for the duration of the level term.

Curtis Said:

Term LIfe Insurance, amount and duration?

We Answered:

What you should be thinking is "What can I do to build wealth so that I don't need to purchase life insurance anymore?"

If I was in your situation, I would buy a 30 year term. I don't know your financial situation, but financial experts you should get coverage of 8-10 times your current annual income. If you make $40k/year, you need $400,000 coverage. For a 24 year old, it may cost you around $35-$40/month, which isn't much if you compare it to whole life or universal life insurance.

Next, you should highly consider investing into mutual funds that are inside a Roth IRA. The average rate of return on them has been around 12% in the past 25 years. If you put away $200/month, you can potentially have about $706k in 30 years. Remember, you are not going to get 12% every year because the stock market constantly fluctuates, but on the long term, you can potentially get an average rate of 12%. In 30 years, you will be 54. I don't know what age you plan to retire, but lets say you retire at age 60. When you are 60, you can potentially have $1.4 million.

Jessica Said:

Term Life Insurance Ownership?

We Answered:

There is no estate tax between spouses. All value can be passed from husband to wife or vice versa without any probate or estate tax. Those apply when value is passed to the next generation. So, whether your insurance goes into the b trust or the a trust is not a tax concern.

Normally, The surviving spouse can use either part of the trust for their welfare and benefit. Access to the funds is not an issue.

The Living trust that you set up does 4 things.
1. "avoids probate". That is worth doing, and as long as the insurance is handled IN THE TRUST, it is not an issue.
2. "Provides for specific distribution". If you both name the same beneficiaries, or the insurance is used up by the time of distribution, it is not an issue.
3. "Provides incase you become incompetent to handle your affairs". that means you have already chosen someone to handle your finances, if you have chosen eachother as trustees, it is not an issue.
4. "Maximizes your Prepaid tax credit". This is the Estate tax part. Each of us can pass to the next generation XX amount of money with no estate taxes due. That number is going up, so we'll leave it at XX. Traditionally, without a trust, the First To Die(FTD) passes ALL to the spouse and nothing to the NextGen. When the Last to Die (LTD) dies all is passed through the one conduit to the NextGen. If the amount is enough it could create a taxable event. The trust, stops the automatic transfer from the FTD to the spouse. and earmarks it for the next gen. The spouse gets to manage it. When the LTD passes away the trust transfers the two separate parts to the NextGen, in TWO conduits and smaller amount from each person, this could eliminate or reduce the estate tax.

This is the only place that your choice of where to put the money could have an effect. But where it is, is not as important as HOW it is managed. If the LTD, retains all of their earnings and spends the Insurance, the LTD part (or B part) of the trust is going to get much larger, and the FTD part (or A Part) of the trust will be much smaller. Resulting a potential of having too much in one side and not enough in the other.

Your friend is technically accurate, you and your spouse are not really separate in this and which ever pocket it falls into, it's still in your pocket.

You did not say whether you are in business or not. If you are there are some ways that you can drastically reduce the taxes.

Call me monday.

Richard Fritzler
800 590-6612
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Hope that helps, post back if need be- regards- Richard Man U

April Said:

What is decreasing Term life insurance policy?

We Answered:

A Decreasing Term policy decreases over the life of the term, which could be 10, 15, 20, 25, 30 years. Or it could be decreasing to age 65.

A Decreasing Term policy is designed to cover a financial need or debt, such as a mortgage. The principle loan decreases as you make payments. The Decreasing Term will also decrease along with the principle, and will expire at the end of the term. This insurance would be called Mortgage Decreasing Term, designed to decrease with the principle, based on the interest rate of the loan.

This type of policy could also be used by a business owner to cover a business loan which is financed over a period of time.

Decreasing Term is sometimes also used to provide an income to a surviving spouse, based on life expectancy. As time goes by, the less amount of coverage one would need for an income; taking into account that the surviving spouse also has less time to live.

Although the amount of insurance decreases, the premium remains the same. As the insured gets older, insurance costs more, so each year, the amount of coverage will decrease.

Decreasing Term will have a guaranteed convertible benefit, giving the insured/owner the right to convert the policy to a Whole Life policy at whatever amount is in effect at the time of conversion.

In a Life Insurance Need situation, a Decreasing Term Rider could be added to a participating (pays dividends) Whole Life policy to provide level coverage, at a reduced premium rate than with Whole Life alone.

Example: A client needs $500,000 of life Insurance. He purchases a $250,000 Whole Life, with a $250,000 30-year Decreasing Term Rider. Using the dividends to purchase Paid Up Additions. As the Term decreases, the dividends will purchase the Paid Up Additions, which will keep the total amount of life insurance basically level. At the end of the Term period, there should be right at $500,000 in total Whole Life insurance. (250K WL and $250K PUA)

The above example will also keep the insured/owner from having to pay higher premiums for the renewal of Level Term insurance.