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Life Insurance

4 Reasons Women Must Have Life Insurance

4 Reasons Women Must Have Life Insurance

Women have been changing their roles in the home and at work for decades now. They have found that more opportunity and options are available to them now than before. These days, we see women with full-time careers and women who take care of the home full-time – and pretty much everything in between.

Women have found a new work-life balance that was never available before. Due to these factors, many females also have found solvency and greater financial independence. However, there seems to be one huge gap in some women's financial plans.


Do Women Need Life Insurance?

 

Many financially independent women do not have life insurance. While certain insurance policies like health, homeowners, and auto insurance are necessities, many females forget about life insurance; like most men do. LIMRA found that nearly 48% of women do not have any life insurance. This could be problematic.


Here are four reasons why women must have life insurance:

1. Income Replacement

While it may be unpleasant to think and plan for one's death, life insurance is an easy way to ensure your family won't have financial worries when you pass, as they'll already be mourning your loss.

Life insurance covers funeral costs and more. For full-time homemakers, the cost of paying someone to handle the household duties is often covered under a life insurance policy. As hiring a maid or caretaker can be costly, this could be a substantial help to a family.

For women with full-time careers who have an income that supports a family, a policy can cover funeral expenses along with other day-to-day living costs. These type policies could ensure your family doesn't miss a beat if you were to pass.


2. Financial Gains

Life insurance policies tend to gain financial value over time. For women, your employment or marital status rarely matters when talking about life insurance plans. Agents should understand that this is even more important for women making more than their spouses.


3. Protect Her Interests

There can be situations where a woman does not need life insurance. If she is single without children, then life insurance could be put off. However, certain circumstances permit taking out a policy.

For example, a single woman may consider a life insurance policy if she has a lot of debt and someone co-signed for her loan. By doing so, she could protect the co-signer from taking her debt if she passes.

As well, a woman who is taking care of an aging or ill family member may benefit from taking a life insurance policy. Many policies cover those she cares for if she were to pass.


4. Less Expensive For Women

Life insurance policies and premiums are typically priced based on life expectancy for age groups and genders. As such, women typically pay less than men. This is due to the fact that men have shorter life expectancies on average. Women tend to outlive males by nearly five years.

One of the main contributing factors to gender lifespan is cardiovascular problems. Women tend to avoid heart attacks and strokes earlier in life. Men typically find these problems at a younger age than women.


What is the right life insurance plan for me?

There's no exact math when looking at life insurance. Each woman will have different wants and needs. On average, a woman will want to purchase a life insurance policy 5-15X her income at the moment.

For example, if a woman is making $100,000 per year, then she could purchase a life insurance policy from $500,000 to $1,500,000. Her needs, family, and age will contribute to what type of coverage she chooses. A young, single woman may only want 5X her income in coverage, but a married woman could want up to 15X her income. 

For more information on life insurance contact Skyline Risk Management Inc. (718) 267-6600 to voice your concerns. 

Common Life Insurance Beneficiary Blunders

Common Life Insurance Beneficiary Blunders

It is no fun to think about the day when a life insurance policy will need to go into effect, but it is even less fun to think about a day when a life insurance policy or a day when a life insurance policy goes into effect but does not benefit the beneficiaries that the insured had intended to designate. In listing the beneficiaries on a life insurance policy, the manner in which one lists the intended recipients of the policy can make a big difference in who, if anyone, actually receives the money. In taking a look at some of the most common discrepancies that can arise during a life insurance policy payout, one can avoid making some of the common mistakes.

The first thing to know is that not only does a life insurance policy have the ability to have more than one beneficiary; it really should have more than one beneficiary. In fact, a life insurance policy can have up to three "classes" of beneficiaries whereby if the person, people, or entities named in one class are all deceased, the benefits would then be paid out to the next class of beneficiaries. By listing multiple classes of beneficiaries the insured ensures that they still have some say in who the policy funds go to if those for whom the policy was intended have passed.


Listing a loved one by relationship

The way in which you list a loved one on the insurance policy can be one of the biggest roadblocks to the benefits payout. The wording is crucial when naming a benefits recipient because, depending on the words you choose, the beneficiary may change. You can opt to list a beneficiary by their relationship to the insured or by their name. Each has its benefits and drawbacks. If you choose to list by relationship, then whoever currently holds the role when the insured dies will be the one to receive the policy benefits. If you list “wife” as the beneficiary, for instance, it would consider the spouse at the time of death as the beneficiary but exclude any former spouses. It can be convenient if that is the insured’s intention, but you also run the risk of unintentionally excluding a loved one from coverage due to a relationship change.


Listing a loved one as a group

The clearest and most common example of listing beneficiaries as a group is naming the insured's children as a class. While typical parent-child relationships do not legally change over time, the definition of "child" can create problems. In situations where step-children, adopted children, and children born after the insured's death come into play, the meaning of the word child can become unclear and again the policy may end up excluding someone that the insured did not intend. On the flip side, there are also benefits of listing one's children as a group as it would also include any children that were not currently born when the beneficiaries were listed.


Listing a loved one by name

Listing a loved by their name provides a clear idea of exactly who the insured would like to receive the policy payout. In most cases, this is the best way to make sure that the policy upholds insured's intentions. However, there is still risk in specifically naming beneficiaries as well if the insured forget to update the list when new meaningful relationships develop, such as new children or a new spouse.

Many other issues can arise when listing beneficiaries on a life insurance policy, but one clear solution to mitigating those problems is to make sure you are incredibly specific when designating beneficiaries.  The more specific you are in who exactly is to benefit from the policy, the less likely any discrepancies will arise.

For more information contact: Skyline Risk Management, Inc. at (718) 267-6600

Insuring Your Life after Death: The Need for Life Insurance

Insuring Your Life after Death: The Need for Life Insurance

Two things are certain in this world: death and taxes. Unfortunately, taxes are such a certainty, they even exist upon death. Because of these certainties alone, life insurance can be the answer many families look for when dealing with the less-than-perfect financial loss of a loved one. While many people view life insurance as a luxury to be bought and paid once necessities are out of the way, the truth is, life insurance is as much of a necessity as food, clothing, and shelter if you have any semblance of a family, whether it be a spouse and children, siblings, parents, or even an ex-spouse. Life insurance insures their life after your death and makes sure everyone is financially whole, even if they are emotionally in pieces.


Taxes and Death Expenses

It costs money to die. This is entirely apart from any estate tax, although that might be an issue as well. There are costs to bury or cremate a person. Then, the costs to appraise, administer, and probate a will and property disbursement must be added to the overall outpouring of money during this already difficult time. Without life insurance, your loved ones are left to worry about one more piece of the puzzle, which there may not be any liquid assets to cover. This may be the most costly endeavor your family will face and is the most obvious reason everyone should purchase even the smallest possible life insurance policy.


Peace of Mind

Once those issues are covered, it is important to review your family’s financial needs and well-being in the event of your death. Life insurance can be a wonderful resource to not only ensure your family’s financial well-being, but keep complex finances in order even when you are gone. For instance, business partners may utilize life insurance policies to cover the purchase of the partner’s business interest in the event of death. The payout will be enough to compensate the remaining family for the deceased party’s portion of the business while allowing the partner to both buy out his deceased partner and continue business as usual.

Life insurance is also a great resource to ensure large expenses will be covered in the event of the provider’s death. For instance, you may set up the policy to go to a child’s trust to be earmarked for college tuition. Or, your spouse may benefit by having the mortgage paid off to allow her additional money for living expenses without your added income.

This money can even be used for the added expense of retirement of the surviving spouse, such that she does not become dependent on the children. This can also be an amazing benefit for those with special needs children. Life insurance can be purchased to help cover the costs of raising a special needs child and caring for that child upon your death. Along with a proper estate plan and will, your child should be covered financially even when you and your spouse are no longer physically available to help.

The benefit to life insurance policies over other financial avenues is the non-existent transfer costs. Life insurance payouts are tax free and do not cost additional fees, such as administrative or legal fees. The money only becomes taxable upon the survivor’s death as a part of his or her estate, if your state has estate taxes. Therefore, life insurance becomes a desirable tax-free financial tool for your heirs. 

Adjustable Life Insurance: A Change Might Do You Good

Adjustable Life Insurance: A Change Might Do You Good

If you are interested in a life insurance policy, but you want more flexibility than the standard coverage that universal or term life insurance policies provide, you may want to consider an adjustable life insurance policy.  An adjustable life insurance policy, also known as flexible premium adjustable life insurance, is a type of insurance policy that allows you to make more changes than your typical life insurance policy.  It combines features from both term and universal health care policies.

Policy Changes

One of the most significant benefits of an adjustable life insurance policy is the ability to increase or decrease the level of policy coverage as your situation changes, similar to a universal life insurance policy.  If you go through a life event such as a promotion or adding a family member, you may determine that it is necessary to increase your policy coverage.  With an adjustable life insurance plan, you have the ability to make the necessary changes. The insurance company may require proof to show that your insurable interest has changed, but it still allows for much more flexibility than a term life insurance policy. The policy also allows for changes such as altering the length of the policy term and changing the type of protection.  There may also be a time requirement on how long before you can make changes to the insurance. If the insurance company does put a required length of time on the policy before you can make a change, it is typically for one year.

When it comes to making changes to your life insurance policy, another big benefit that an adjustable life insurance policy offers is that it does not require you to cancel an existing policy, only to purchase a new insurance policy in order to obtain the coverage that you need. With an adjustable life insurance policy, being able to make changes to the current policy prevent you from having to get a new one.


Cash Value

Unlike a universal health insurance policy, an adjustable life policy includes the option to invest part of the cash value. While the policy is not likely to get the whole percentage of the return if the market is good, these policies can offer much higher returns than a universal health care policy. On the other hand, if the market is performing poorly, there is typically a zero percent return for the insured, so they do not risk losing the money that they paid toward their premium. An adjustable insurance plan offers a low- to no-risk option for your investment. You can withdraw returns whenever you'd like or leave them to mature.


Cons of Adjustable Life Insurance

In addition to not getting the full return on a well-performing investment, there is an additional drawback to adjustable premium life insurance policies.  Unfortunately, there is no guaranteed interest rate because the interest depends on how well the investment does. If the investments fail, you may not lose money, but you will not make any either.  You also face the risk of an increased premium over time, since the policy has allowances for such adjustments.

Adjustable life insurance policies offer the benefit of flexibility that other types of life insurance policies do not, as well as providing similar cash value opportunities to what a universal health insurance policy provides.  If an adjustable life insurance policy sounds like something that might be up your alley, contact your agent to review your portfolio and see if it may be beneficial for you to purchase one. While this type of life insurance may not be a good fit for everyone, it could be a good fit for you.

Has it been a while since you reviewed your life insurance policy? Contact Skyline Risk Management, Inc. at (718) 267-6600 to get free consultation on your life insurance policy!

Final Expense Insurance: What, Why, & When?

Final Expense Insurance: What, Why, & When?

If you watch television at all, especially on the weekend, you've probably noticed commercials with some seniors talking about Final Expense Insurance. For most people, this topic is seldom discussed unless they've had to chip in for Cousin Ed's funeral because he died without life insurance. Final Expense Insurance may sound like a reasonable purchase, but the television ads aren't very specific about what it is.


What Is It?

All life insurance, no matter the product type, is a funding vehicle for a specific event or events that will financially affect you or your loved ones. It is, in simple terms, an affordable solution to a foreseeable financial problem:

  • Funeral and burial expenses
  • Final medical expenses
  • Debt reduction or elimination
  • Tuition expenses for surviving family members
  • Mortgage reduction or satisfaction
  • Income replacement
  • Financial legacy

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As clearly indicated in its moniker, Final Expense Insurance is life insurance that is specifically designated to pay final expenses at the death of the policyholder. It is typically purchased in amounts sufficient to pay funeral and burial expenses, and other final expenses left for surviving loved ones to deal with.

Although any type of life insurance can be used as a final expense policy, the type of insurance most preferred is Whole Life insurance, because coverage lasts for a lifetime and the premiums are guaranteed never to increase over the life of the policy.

Typically, insurance companies that offer Final Expense products will accept applications for people up to 80 years old and with some companies 85 years old. This is especially helpful for seniors who may have cashed in their regular life insurance policies or let them lapse because of financial difficulties. Also, many people go through life having their life insurance provided by their employer and then discover that they cannot keep it after retirement.


Guarantee Issue

Most life insurance companies that offer Final Expense Life Insurance also offer a "guarantee issue" product. This type of coverage is also referred to as graded benefit life and is an insurance plan that will cover you without regard to your medical history.

Typically, the policyholder must live two or three years before the full death benefit is available. If the policyholder dies during that period, the insurance company will return only the premium paid in up until death plus, in some cases, a small percentage of that amount added to the premium.


Why Purchase Final Expense Life Insurance

Final expense life insurance is the preferred product for people who want to designate a specific death benefit for their surviving loved ones to pay their final expenses. The policyholder wants to make certain they do not leave a funeral/burial expense debt to their survivors. With a moderate funeral costing about $10,000, you certainly don't want to have your grieving survivors responsible for paying for your funeral expenses.

For the many people who have waited until late in life to purchase life insurance, a final expense product may be their only option for obtaining coverage because of medical conditions or limited finances.


When to Purchase Final Expense Life Insurance

Most consumers understand that life insurance rates go up as you age, and for that reason, the earlier in life you purchase coverage, the less you will have to pay for it. Typically, hard-working individuals will put their careers ahead of their health and end up with medical conditions that could prevent them from purchasing a standard life insurance policy later in life. Fortunately, the guaranteed issue products offer a great solution, but with additional cost and a graded benefit period.

To speak with an insurance professional about Final Expense Life Insurance, contact Skyline Risk Management for help with identifying the most appropriate coverage at an affordable price.

The Living Benefits of Cash Value Life Insurance

The Living Benefits of Cash Value Life Insurance


We hear it all the time "never buy cash value life insurance, it's just not worth the money." Some consultants insist that creating an emergency fund that is supported by cheap term life insurance makes much better financial sense.

What they neglect to point out, however, is that when you are starting a family and creating debt that results from mortgages and car loans, it can take substantial time to put aside a large emergency fund. What happens if you need low-cost loans in the meantime? And what happens if you, the primary earner in the household, die unexpectedly? This is when cash value life insurance makes a lot of financial sense.


Universal Life Insurance

By using a Universal Life (UL) product, the consumer can save for a rainy day or supplement their retirement while also financially protecting their family in the event of death. Universal Life insurance is an insurance hybrid that uses Term insurance with a cash account attached to it.

The UL was originally designed as a more affordable way to purchase permanent insurance and have the flexibility to change as the policyholder's needs might change during their lifetime. The policyholder pays more than the cost of insurance during the early years of the policy, and the overage is directed to a cash account that earns tax-deferred interest. In the later years, when the cost of insurance may be more than the periodic premium, the premium shortfall is made up using the funds in the cash account thus, keeping the policy in force for the life of the insured.


Index or Variable Universal Life

Not long after the UL hit the market with huge success, the insurance industry went to work at designing additional products that would appeal to investors as well as life insurance customers. The products created were are very similar to Universal Life, but the funds in the cash account can now be directed to other investment vehicles such as mutual funds or traditional investments such as the S&P 500 and NASDAQ.

The Index and Variable UL products provide a more aggressive growth to the cash account and create a fund suitable to supplement retirement income. The greatest advantage with the UL products is the manner in which you can withdraw funds on a tax-free basis:

  • Policy Withdrawal (Partial Surrender) - Once your policy value achieves an amount that will accommodate withdrawals, you can make a withdrawal of the basis funds (amount premium paid in) on a tax-free basis. Your death benefit will be reduced by the amount of your withdrawal.
  • Periodic Policy Loans - You are entitled to borrow against the cash value of your policy on a tax-free basis with no repayment commitment or credit check. As long as your policy remains in force until the death benefit is paid out, there will be no tax liability for the periodic loans you take. You can pay the interest out-of-pocket or opt to have it withdrawn from the cash account as well. It's very important to stay up to date with your policy value statements to make certain your policy doesn't cancel for insufficient premium to keep it in force.

It's important to keep in mind that while you are using your permanent life insurance as a means to earn interest and withdraw the cash tax-free, you also have that all-important death benefit that will provide financial protection for your family in the event of your death.

For more information about cash value life insurance and the benefits it can provide, contact an insurance professional at Skyline Risk Management  (718) 267-6600 for a free and confidential consultation.


6 Reasons to Convert That Term Life Insurance Policy

6 Reasons to Convert That Term Life Insurance Policy

Almost anyone who understands life insurance knows that whole life insurance is a vital long-term planning tool for your finances, yet many individuals opt for the cheaper term-life policy. Many consumers use term-life policies to satisfy an immediate coverage need – while forgetting to think about the long haul.

In theory it sounds like a good idea but, it's terrible in practice. Only 2% of term-life policies ever pay out. Thus, 98% of individuals virtually flush money down the drain with these policies. On the other hand, whole life insurance policies provide your family the peace of mind they need because it covers you throughout your entire life.

Luckily, you have the ability convert your term life policy to a whole life policy. Here are a few good reasons why you may want to convert your term life policy:


1. Outliving Term Life Insurance

Americans are living longer than ever. Everyone in the insurance industry knows this. You've seen the premiums. The average lifespan for people in our country is reaching a staggering 79 years of life. That's impressive. It also means you're more likely to outlive your term life insurance policy. Consider what the average lifespan will be in 20 years once your policy expires!


2. Practical Estate Planning Measure

Term life policies cannot be perceived as a meaningful resource for estate planning. Whole life insurance plans carry security and value while taking your estate into consideration. Wealthy consumers concerned with estate taxes for beneficiaries after death may find great value in converting their term policies to whole life. 


3. Upgrades Are Preferable

Many families buy term life coverage because they cannot afford whole life when they're younger. They may have student loans to pay down or kids to account for. Once these consumers are more financially secure, they may desire the security that a whole life policy can offer.


4. Family Cost Anticipation

Some families know that steep costs will continue to rack up once a family member is gone. If you believe your family will find themselves in such a position, then a whole life policy can ensure the financial security your loved ones will need in the future.


5. Retirement Restructuring

If retirement is on the horizon, then ensuring a sufficient income throughout your golden years may be a priority. A whole life policy, which is tax exempt, is an excellent way to save and ensures a particular chunk of change down the road. In addition, this savings plan is tax-free. Tax-free permanent life insurance plans can also be cashed out in later years for retirement income.


6. Changing Financial Perspective

Term life insurance is popular when individuals are young and healthy. As aging occurs, permanent life insurance becomes more and more necessary. Many convert a term life policy when anticipating a medical exam may be required to purchase a whole new policy.

The Choice Is Yours

No matter what financial goal one is shooting for, a whole life policy can add value to your potential income down the road. Term life insurance is ideal for the young and healthy, but things change as aging occurs. By understanding the reasons to convert your term life policy, you can save yourself a lot of hassle down the road. Be smart with your life and the lives of those that depend on you. 

If you have questions about your Term Policy, or other Life Insurance questions contact Skyline Risk Management, Inc. (718) 267-7700 to voice your concerns.

Why Break the Bank When You Can Borrow from Your Life Insurance Policy?

Why Break the Bank When You Can Borrow from Your Life Insurance Policy?

For most people, financial emergencies happen. Your water heater blows up; your transmission dies, or your roof leaks when it rains. We all know that we're supposed to have that "emergency fund" in our savings account, but sometimes everything comes at us at once.

Then you remember that insurance guy was telling you that you can borrow against your life insurance. Oh yeah! Yes, you can borrow against your life insurance because it's YOUR money.

There are, however, a few things to take into consideration.

Your Type of Policy

If you've been paying into your life insurance for at least a few years, the chances are good that there is some cash available to you, depending on the type of policy you purchased.

  • Whole Life - If you purchased a whole life policy then you will definitely have some cash available if you've owned the policy for three or more years. The key word here is "own". You must be the owner of the policy to access the cash value. If your Mom owns it and you are the insured, you'll have to get her to do it for you.
  • Universal Life (UL) - With UL or a similar version of UL, the rules are pretty much the same. If you are making minimum payments into the policy, it may take five or more years before your cash builds up to anything worth borrowing.
  • Term - If you opted for the cheap stuff, you're out of luck. Term insurance does not build cash value. Sorry.

The Next Step

Visit or call a life insurance agent and ask what your available cash value is. It's okay to let them know you want to take out a loan; it's your money, and they'll give you the advice you'll need. Your agent can check your cash value balance and also answer any questions you have about interest, repaying the loan, and how it might affect your policy. Typically, you'll be required to sign an authorization form for the insurance carrier, and your check will arrive in about seven to ten days.

The process for borrowing against your life insurance is pretty simple, as it should be. Your agent told you about this benefit, and now you're just exercising your right to borrow. There are, however, some pros and cons when borrowing against your life insurance.

Pros

·         No credit check. You're borrowing your money. No credit needed!

·         Favorable Interest - In most cases the interest on a life insurance loan is lower than the interest charged for a personal loan or a cash advance against your credit card.

·         Payback on Your Terms - Since you are lending money to yourself, you decide when and how you'll repay it, if you repay it at all. Typically, the insurance carrier will add unpaid interest to the loan balance each year. This will be shown on your annual report.

·         Your Choice Where You Spend - There are no limitations on where you spend the borrowed funds. You can buy a new water heater for your home or go to Vegas. It's completely up to you.

Cons

·         The death benefit of your life insurance will be reduced by the amount of any outstanding loans until the loan and interest are repaid.

·         If you elect not to pay the interest when due, the amount will be added to the balance of your outstanding loan.

·         For policies that pay dividends, your dividend amount will be reduced because of the outstanding balance of your loan.

·         Policy Lapse - If your policy is a Universal Life Policy, the interest that is credited to your account is based on the cash value of the policy. The lower the cash value in your policy, the lower amount of interest will be credited. Since Universal Life Policies rely on interest to keep them in-force in the later years, it is possible that your policy may lapse if the interest credits are significantly reduced.

When you purchased your life insurance, your agent probably told you about cash value and how you can access it during your lifetime. If that time has come, contact Skyline Risk Management, Inc. by calling (718) 267-6600 to get the information you need to make an informed decision.