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| LIFE INSURANCE...
A husband kills his wife so he can take the insurance and make himself rich. What's the fuss all about? Why does insurance lead to so much goodness, and yet so much trouble? What is life insurance? Dr. Mégane Fabre
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GUIDE TO BUYING LIFE INSURANCE
CONTENTS
ABOUT BUYING LIFE INSURANCE
WHO NEEDS LIFE INSURANCE?
PERMANENT LIFE INSURANCE
TERM LIFE INSURANCE
WHAT ARE ANNUITIES AND HOW DO THEY WORK?
WHAT ARE POLICY PROVISIONS?
WHAT IS A RIDER?
HOW ARE PREMIUMS DETERMINED?
EXPLAINING DIVIDENDS
WHAT ARE NON-FORTEITURE AND SETTLEMENT OPTIONS?
WHAT ARE POLICY LOANS?
WHAT IS UNDERWRITING?
QUALIFIED AND NON-QUALIFIED RETIREMENT PLANS
LIFE INSURANCE AND TAXES
GOVERNMENT PLANS
ABOUT BUYING LIFE INSURANCE
Everything You Need to Know About Insurance on Your Life
Parents take out life insurance on themselves "to protect their children." A husband kills his wife so he can take the insurance and make himself rich. What's the fuss all about? Why does insurance lead to so much goodness, and yet so much trouble? What is life insurance?
Life insurance (also known as life assurance in the United Kingdom) is, put simply, a financial package designed to protect those who depend upon you for monetary support. A life insurance policy is a legal contract. Within it are terms and conditions of the risks assumed. Any misrepresentation by the policy holder or the insured will be grounds for nullification of the insurance.
To understand the concept of life insurance, you have to know the parties involved. In general, there are three: the insurer, the insured, and the policy holder.
The insurer is the party that provides the insurance policy. The insured is the person who benefits from the insurance. The policy holder is the person who takes out the insurance and pays for it. For instance, if you buy a policy for your spouse and take a policy on his or her life, then you are the owner, and your spouse is the insured. The policy holder and insured can sometimes be one and the same, as in when you buy a life insurance policy for yourself.
In some cases, a fourth party is involved. The beneficiary is the person or persons who will "benefit" from the death of the insured. The beneficiary is strictly not party to the policy, but may be designated by the policy holder. The beneficiary may also be changed by the policy holder, unless the policy has a clause preventing it. Should a policy have such a clause, the beneficiary must agree to any changes made in the policy.
Insurance involves investment - and investment involves money. If an insurance agent talks about a face amount, he or she is referring to the amount paid when the policy matures, that is, when the insured dies or reaches a certain age.
Insurance costs are calculated by actuaries, who are mathematicians educated in social statistics and probabilities. Actuaries consult a mortality table, which shows average life expectancy in a population, as based on statistics, health, and lifestyle. Mortality tables are statistically based tables that show life expectancies based on three main aspects: age, gender, and tobacco use.
Before insurance is granted to a person, an insurance company gives a barrage of health questions to calculate the person's risks. Such questions will include inquiries on a person's lifestyle, such as tobacco use, frequency of alcohol consumption, and sports that the person concerned is engaged in; and if the person's family has had any cases of severe illness, such as heart problems, liver problems, or cancer. The evaluation and investigation of risk is called underwriting, and is done by underwriters.
Proceeds from a policy are granted to beneficiaries upon the insured's death. They may be paid in two ways: with a lump sum, or a single payment; or with recurring payments, which will be given to the beneficiaries in parts over a specified time period.
There are two main classes of life insurance: permanent and term.
Permanent life insurance is life insurance that is valid until the policy matures, and will be nullified only if the policy holder does not pay the premium when he or she has to. Permanent life insurance also accrues, or accumulates a cash value, and this cash can be accessed by withdrawal, borrowed in the form of a loan, or recovered in part should the person concerned surrender the policy.
Term life insurance, on the other hand, provides life insurance coverage only for a certain amount of time, and for a specified premium. Unlike permanent life insurance, term life insurance does not accrue cash value. The premium also buys financial protection for the beneficiary in the event that the insured dies, but it will provide for nothing else.
Another type of life insurances includes accidental death, a limited life insurance package meant to provide coverage to an insured's dependents should the insured suffer fatally from an accident. This insurance does not cover death due to health problems or suicide, but it is frequently purchased, as it is much less expensive than other life insurance types.
Whatever the type of insurance you may prefer, consult with a reputable insurance agent, or with someone close to you who has purchased one or more insurance packages. Life insurance, like your life, is a precious thing, and it involves investment and a lot of know-how.
WHO NEEDS LIFE INSURANCE?
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Parents take out life insurance for their children's benefit, or children write their parents in as dependents on their insurance. The assignation is easy when it's on paper, but taking out a life insurance also means investment - and in this world of spend, spend, spend, it is increasingly difficult to save, save, save, and set money aside for the future. Can we set our money aside for something else besides that life insurance? Does everyone need life insurance, and is it that important?
Again, life insurance (also known as Life Assurance in the United Kingdom) is, put simply, a financial package designed to protect those who depend upon a certain person for monetary support. If that person dies, those who need him or her will need money. Life insurance can cover their needs depending on the policy they choose.
In other words, life insurance is designed to insure a provider and protect the provided.
So, who needs life insurance?
Unless a child is earning enough money to sustain him or herself, then a child does not need life insurance because no one depends on him or her for income. The premium payments, however, are much cheaper when life insurance is taken out for a person at a very early age, so if you have money to spare, then you still have the choice (though unnecessary) to take life insurance out on your child.
If you are starting a family, it would be advisable to take out insurance on yourself. This is because payment rates will be cheaper than when you get older, and this will be advantageous as you build your children's future early. The payment rates given, however, will still depend on your income, so if you are not yet earning a lot, you may have to buy cheaper insurance packages that take longer to mature.
Life insurance is most needed by an established family. Remember that insurance is for people on who others depend for financial sustenance. If you are at the head of an established family, then you need life insurance now before you get older and the payment rates become harder to meet.
If you are a working couple without children, you may not need life insurance, as neither of you depends on each other for financial support. You may invest in life insurance, however, if you think it would be necessary to cover funeral costs, or if you think that you or your spouse's source of income is not stable enough, and will require him or her to depend upon you for support in the future.
Young single adults will usually take out life insurance to either pay for their funeral costs should anything untoward happen to them; or if they want to support an elder whom they may help financially. If you are a young single, earning a stable income, and have people depending upon you for support, then take out life insurance on yourself. Otherwise, you can set your money aside for when life insurance will really be a necessity. What you do need to remember, however, is that payment rates will get higher as you grow older, so the insurance might be expensive by the time you decide that you need to get it.
If you are above the age of 60, it may be difficult to find a suitable life insurance package for you, as the risk of you dying is so much greater. This risk is taken into account by insurance underwriters and actuaries, and will play a role in determining the premiums you have to pay. Premiums are inevitably higher, and the accrued cash will not be any greater than the sum of all the premiums you will have to pay.
However, if you have cash on hand, then taking out life insurance on yourself is not a problem. Just remember that an investment in the stock market, a time deposit, or mutual funds will earn you more money for a smaller initial deposit.
There are two main points to remember if you're thinking about purchasing life insurance: take it only if you have people depending on you for financial support, and if you have the cash on hand to pay the premiums. If you think you do need it, consult with your insurance agent, or with someone who has purchased a life insurance package. After all, you have every right to decide how you want to build your future, whether you have five decades, or five years ahead of you.
PERMANENT LIFE INSURANCE
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Pegged to the End: Permanent Life Insurance
In this world of uncertainty, people are relying more and more on long term methods to keep their money, and themselves, safe. One such method is to take out a permanent life insurance, perhaps in the form of an endowment or whole life insurance. Is this type of insurance for you? What is permanent life insurance?
Life insurance (or life assurance, as it is known in the United Kingdom) is, put simply, a financial package designed to protect those who depend upon you for monetary support. Remember that a life insurance policy is a legal contract. Within it are terms and conditions of the risks assumed. Any misrepresentation by the policy holder or the insured will be grounds for nullification of the insurance.
In the case of permanent life insurance, there are three important aspects to remember: the policy is for the life of the person insured; the payout is assured when the policy ends; and the policy accumulates (or accrues) cash value.
How does this compare with term life insurance?
A term life insurance is taken only for a short period, and payment to beneficiaries occurs only with the insured's death. Term life insurance, moreover, does not accrue cash. Since permanent life insurance is for a longer term, however, this means that it will cost at least eight to ten times more than term insurance. Although expensive, permanent life insurance will allow the insured to take out a "policy loan" after a certain period of regular premium payments. You can think of permanent life insurance as a bank, where withdrawal can be done only after a specified period of time; term insurance, on the other hand, is more like gift-giving. Money is turned over to the beneficiary only after a special event has occurred.
Permanent life insurance may be divided into three categories: whole life, universal life, and endowment.
In whole life insurance, the policy holder pays a specified premium during a specified period of time. Premiums are often high, and are inflexible; that is, the amount you pay cannot be changed or adjusted according to your current income. Whole life insurance, however, has assured death benefits and cash value: aspects such as expense charges and mortality will not diminish the cash value that the policy promises.
The money accrued from whole life insurance, however, is low, and those who buy whole life insurance often purchase "riders." These are extra insurance perks, such as insurance on accidental death, which can be obtained by paying additional premium.
Universal life insurance, on the other hand, is a new type of life insurance with the same coverage as whole life. However, premium payment values are not fixed, and the internal rate of return will most likely be higher. Universal life insurance also has more flexible death benefits.
Variable universal life insurance, like universal life insurance, has cash values attached to it. The two differ, however, in how the cash accounts are treated, and how the money will be taxed.
Limited pay life insurance is another kind of permanent insurance. In limited pay, the insured is given a certain period of time in which to pay the premium. After the time period elapses, a premium will no longer have to be paid, but the policy will still be in effect. A common limited pay life insurance type is the twenty year limited pay, which means that the policy holder will pay the premium for a period of twenty years, after which the policy matures. Yet another kind of limited pay life insurance is considered paid when the policy holder reaches the age of sixty five.
Another kind of permanent life insurance is the endowment. Endowments are policy packages that reach maturity (or endow) before a certain age. Payment of endowments is usually done annually, and payment is much, much higher than premium payment for whole life or universal life insurance. This is because the paying period is much, much shorter, and the policy maturity date comes earlier. An advantage to endowments, however, is the fact that the cash accrued can be withdrawn or loaned much quicker than other life insurance types.
Permanent life insurance is a great thing to have if you have many people depending on you for financial support, and if you have money to spare for the premium payments. If you think you need permanent life insurance, then consult with your insurance agent, or with someone who has purchased a permanent life insurance package. Life insurance, when chosen carefully, is a good investment for anyone who wants to build a secure future, whether for himself or herself, or for his or her children.
TERM LIFE INSURANCE
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Money and a Few Changes: Term Life Insurance
Young people are always advised by their elders to save, and set aside some money for the future. They are also told to invest, especially in time deposits, mutual funds, high-earning stocks, and life insurance. But can you afford to fork out money month in, month out to pay for a lifetime premium? Are there any other types of short term life insurance available?
Life insurance (or Life Assurance, as it is known in the United Kingdom) is, put simply, a financial package designed to protect those who depend upon you for monetary support. A life insurance policy is a legal contract. Within it are terms and conditions of the risks assumed. Any misrepresentation by the policy holder or the insured will be grounds for nullification of the insurance.
In the case of term life insurance, there are three important aspects to remember: the policy is for the life of the person insured; the payout is assured for a specified number of years, and for a specified premium; and the policy does not accumulate (or accrue) cash value.
How does this compare with permanent life insurance? Because term life insurance is taken out only on the insured's death, term life insurance is eight to ten times cheaper than permanent life insurance.
There are three factors to be considered if you are thinking of buying term insurance. These are the face amount, or the monetary value of the protection which your beneficiaries will receive; the premium, or the amount you have to pay as owner or policy holder; and the term, or the length of coverage of the insurance. Insurance companies will sell term insurance with combinations of these three aspects, along with a constant or declining face amount.
Before you consider purchasing a term life insurance, be well acquainted with the Theory of Decreasing Responsibility. Remember that insurance is purchased because the insured would like to have fewer financial burdens in the future. The theory assumes that the insured will always prefer liquid cash (that is, constant income from investments) than insurance with a monthly premium.
One kind of term life insurance is the annual renewable term. This is a one year policy, where death benefits are paid to the beneficiaries by the insurance company if the insured dies within the period of one year. Death benefits will not be paid, however, if the insured dies a day after the last day that the one year term expires. However morbid it may sound, the probability of anyone positively dying in the period of one year is low, unless the policy holder plans to commit murder or stage a suicide. Thus, purchasing a single year of coverage is not usually done, as it is not cost effective.
What policy holders do, however, is renew the insurance after another year, or purchase policy packages that guarantee that the policy will still be in force year after year, for a given period of time. Insurance companies have packages that renew the annual term life insurance for periods that vary from ten to thirty years, or until the policy holder turns ninety-five. As the insured person gets older, however, premium payments also increase, until they approach the face amount.
Another type of term insurance is referred to as level term, where the premium being paid is the same for a specified period of years. Common durations for paying level term insurance premiums are ten, fifteen, twenty, and thirty years. The amount of money to be paid each year is the same; the longer the term, the higher the premium that has to be paid, since premiums are more expensive as you get older. One type of level term life insurance is mortgage, which has a declining face value.
A new type of term life insurance is juvenile insurance. This insurance package is purchased for minors, usually as a gift from their parents. It is designed for children from the ages of fourteen days to as old as twenty three years, and will usually cover financial expenses incurred due to illness, injury, or death. Death benefits from this insurance will remain level until age twenty five.
What makes juvenile insurance a type of term life insurance? Children who are insured under such a scheme may choose to convert their coverage to permanent life insurance when they are earning their own income, or when their elders rely on them for financial support.
If you think you need term life insurance, consult with your insurance agent, or with someone who has purchased a term life insurance package. There are many more kinds of term life insurance packages available, and one (or more) of them may greatly benefit you.
WHAT ARE ANNUITIES AND HOW DO THEY WORK?
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Life insurance policies these days do not come single-handedly. In many cases, people who get to obtain life insurance policies will also have the chance to acquire annuities. In fact, the package is so prevalent that you have probably been offered already with annuity by your local insurance agent.
However, as much as you want to obtain such thing, you know what this is all about. You do not even know what good it can bring to you and your family. So the best thing that you can do now is to know everything there is to know about annuities.
Annuity Defined
An annuity is a contract usually being offered by a particular insurance company. This contract exists between a particular financial institution such as the insurance company and the investor or the benefactor.
Annuities are generally marketed as a "retirement investment" and are shelled out before the retirement age in trade for pre-established disbursements after the specified retirement period and within a specific agreed time frame known as annuity period.
On its fundamental nature, whenever an individual purchases an annuity, he has to pay the insurance company a certain amount of money. In return, the company will present disbursements within the stipulated annuity period.
However, there are some instances that annuities can be paid out lifetime. This means that in some particular provisions of the policy, benefactors or their beneficiaries can enjoy annuity payments for the rest of their lives.
The company's main theory behind this condition is that there are little chances that people may live longer than the 'life expectancy" foreseen by "actuarial tables." Hence, the insurance company can put some of your money into feasible investments and earn profits more than what they have to reimburse to you. They get to earn more, so to speak.
Investment Choices
When investing in an annuity, you have two choices to make. Either you take a variable or a fixed annuity. Both options can be workable, however, it is still important to know the distinction between the two.
1. Variable annuity
This is considered as insurance enveloped in a shared account. With variable annuity, the investor has to choose from a roll of "mutual funds" and his expenses are put in funds that he had chosen. This means that with variable annuity, the benefactor has the full right to decide on how his "annuity funds" are devoted. Choices may range from bonds, stocks, and money markets.
Variable annuity has an established reimbursement amount that may be expanded by extra payments depending on how the annuity's "investment portfolio" has carried out.
2. Fixed annuity
Fixed annuity holds an "interest rate" that begins as an arranged profit. It is commonly regulated and announced every year. The definite preliminary interest rate for a precise time is usually defined within 5 years, three, or one year. After the specified year, a new interest rate is established.
Payout Preferences
Annuities may also vary depending on the payout preferences of the investor. If you want to put off your payments at a later time, you may choose the deferred type of annuity payout. This means that disbursements will start at a precise impending date. This usually commences at the start of the retirement period.
On the other hand, for people who are eager to receive their disbursements immediately, they can choose the immediate type of payout.
As its name suggests, disbursements are immediately commenced as soon as the investor had fully settled the agreed amount to be paid to the insurance company.
Immediate annuity is usually applicable to individuals who are already at their 60's or those who are about to stop working.
Immediate annuities are usually established by the sum of your payment. Other factors may also affect the amount of disbursements such as your age and the current interest rate.
Given all these things, one can simply surmise that annuities are enhanced in an advanced interest-rate setting. Since an annuity is commonly focused on interest rates, investors as well as the insurance companies will surely benefit from it.
However, the only drawback is that since it is entirely dependent on interest rates, there is no guarantee that the investors and the insurance companies will be protected from imminent inflation problems.
So if you are deciding whether to take annuities or not, try not to jump into conclusions right away. Learn to consider all the factors and see for yourself if buying an annuity can work best for you.
WHAT ARE POLICY PROVISIONS?
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Insurance Basics: What are Policy Provisions?
While the principal source of a policy owner rights are found in the policy provisions, there are of course other provisions governing nearly all other aspects of life insurance policies. But all laws under which policy owners depend on are supposed to be written in black and white such as those that are stipulated in the policy provisions.
Policy provisions generally refer to the written laws that govern the rules and regulations promulgated by various government administrative agencies in order to implement the legislative enactments of insurance companies.
Here, the basic procedures of the "insurance contract" are stated. Policy provisions are usually located at the page subsequent to the "face page" of a particular insurance policy.
Policy provisions are the preliminary factors that people look into whenever they are considering a particular insurance policy. Hence, it is important that people buying insurance policies should consider policy provisions first before signing the contract.
Policy Provisions and Life Insurance
Nowadays, people are getting smarter knowing that they have to be practical on things that concern their hard-earned money. Hence, for people who wish to protect the future of their families even if they are gone will absolutely buy life insurance.
Life insurance is usually bought to take the place of the loss of earnings brought about by the investor's death. All financial matters concerning the deceased will eventually stop, thereby, rendering the family left with inadequate income.
Whereas, if a person had bought a life insurance policy, the disbursements that the family will be receiving at the time of the benefactor's death will be enough to supplement their resources.
However, not all life insurance policies are created equal. There are some instances that certain policy provisions do not just work with some individuals. But whatever differences each policy provisions makes, every consumer would most likely want a life insurance policy that would provide him the appropriate coverage that will suit his needs as well as his funds.
Since everything involves money, careful considerations must be made in order to ensure the dependability of the life insurance. We have discussed these in the previous chapters.
In order not to limit the capacity of the policyholder to meticulously understand the provisions stated in the policy, most life insurance policies have a "10-day free look period." With this feature, an individual may evaluate, assess, study, and do some necessary research regarding the policy provisions that are included in the life insurance that he has purchased.
The 10-day free look period is generally stipulated on the "face of the policy" and is commonly described as the "right to examine." If, in case the policy owner has realized that the particular insurance policy does not fit him best, all he has to do is to return the policy to the same agent or company where he purchased it.
Take note of the 10-day period. The insurance companies assume that this 10-day look period renders enough time to the policy owners to identify whether the policy will work best for them or not.
Deciding and Identifying Your Beneficiaries
Every policy owner has the right to designate specific beneficiaries that should be stipulated in his life insurance policy. Beneficiary designations will define the primary recipient of your life insurance profits.
Beneficiary designations are not limited to individuals. Beneficiaries can also be a legal entity, a corporation, or a business.
Based on the primary rules in beneficiary designations concerning the beneficiary designation of a minor child, it is important that the policy owner should assign an adult as the child's custodian based on your preference.
On its fundamental nature, the policy owner may modify his beneficiary at any instance. To change, the policy owner just has to sign a new beneficiary designation form and forward it to his insurance company.
However, there are certain conditions where this ruling may not apply. For instance, if a policy owner had previously designated his beneficiary as an irrevocable one, it is important that the investor must ask the concerned person's consent in order to make the necessary changes in the policy provisions. With revocable beneficiaries, changes can be made even without the consent of the designated beneficiary.
In addition, the benefactor may also stipulate more than one prime beneficiary and more than one dependent beneficiary. In fact, some insurance companies allow their policyholders to name up to a maximum of four prime beneficiaries and four dependent beneficiaries.
Common Disaster Provisions
When designating beneficiaries, it is important that everything must be settled by the policyholder in clear writing in order to avoid possible tricky beneficiary designation.
Here is an example of a common disaster provision that you should know.
1. Identifiable and unidentifiable beneficiary designations
When designating beneficiaries, policyholders may not necessarily state the name of his beneficiary. As long as the policyholder has fully made his designated beneficiary as fully identifiable, no problems are expected to happen.
However, if certain condition arises such as one of the designated beneficiary has died earlier than the benefactor, it is important that clear definition of the "customized beneficiary designation" should be included in a "per stripes clause."
Given all these things, it is really important to understand everything that is stipulated in policy provisions. Keep in mind that the policy's reputation is entirely based on the insurance company that distributes it. Hence, whether a policy provision is good or not, its overall performance will still depend on the status of the company.
WHAT IS A RIDER?
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What is a life insurance rider?
A rider is a word commonly found in insurance contracts. A contract of insurance is an investment made by a person with the end view of protecting him from possible future losses. It is really a contract allowing a company to manage a person's finances so that he can look forward to getting the capital money he invested as well as the interest later on which we have covered already in depth.
Every person who gets an insurance contract expects to get something in return a few years from then time he entered into the contract. However, most insurance contracts end up as court cases because of the failure of some insurance companies to fulfill the terms of the contract. Those who have had sad experiences with insurance claims said that insurance companies will woo you and will promise you the sun and moon until you give them your hard earned money and then when the need arises, they just ignore you.
In an insurance contract, the insured party may be an individual or a company, the insurance company is known as the insurer and the insurance contract between them is known as the policy.
An insurance contract may be in the form of a life insurance, fire insurance, Political risk insurance and other kinds of insurance.
Since an insurance policy is a contract, it must adhere to the requisites of a contract meaning there must be a meeting of the minds between the insurer and the insured as to the fulfillment of the obligation or consideration of the contract. .
A rider, which is usually attached in a life insurance, refers to the extra coverage or protection offered by the insurance contract, aside from the primary coverage indicated in the policy. However, since the rider is not originally covered in the policy, the insured has to give an additional payment for such rider.
A life insurance rider can be in the form of a disability income or accidental or accelerated death benefit for the insured, or it can come in the form of a waiver of premium or guaranteed insurability clause.
An accelerated death benefit means that when an insured has a terminal illness, he is allowed to collect a part or all of his death benefits while he is still alive. An accidental benefit rider means that an additional sum may be paid to the beneficiaries of the policy if the insured dies in an accident. To be more technical about it, the additional amount can only be obtained if the death comes as a result of the accident and not of anything else.
On the other hand, a disability income rider provision means that the insured is given an income in case he becomes disabled. The income or allowance would be given for as long as the disability exists,
A guaranteed insurability rider is a provision which allows the person insured to get another insurance policy at a certain period and he would not be required to present or prove his insurability. This means that even if the insured becomes uninsurable during that period, he could still be issued the policy because of the rider.
The waiver of premium is the kind of rider commonly found in life insurance policies. An insurance contract is so strict it requires continued payment of premium no matter if the insured no longer has the financial capability to continue paying. Failure to continue with the payment will cause the insurance to lapse. With a waiver of premium rider, the policy holder is assured that the insurance contract will continue even if he becomes disabled and can no longer pay the policy.
Most people get insurance policies without taking the time to read the fine lines very well. And when the inevitable happens, they complain that they have been duped into getting the insurance contract. To avoid this, you should always ask the agent to explain provisions which you do not understand.
Some people who are not aware of what an insurance rider is, hesitate to get the rider as it has an additional price. However, if you are aware of the benefits that some of these riders can offer you, then perhaps, you will waste no time in agreeing to the rider.
HOW ARE PREMIUMS DETERMINED?
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People who get insurance policies often get confused about the terms used by insurance agents. Others allow their ignorance to rule and they sign insurance contracts without even knowing some of the important terms that they should know before signing the contract.
Again, an insurance contract is a contract between the insured and the insurer, the insured being an individual or a company and the insurer referring to the insurance company managing the risk. Since insurance is a form of a contract, it should follow the essential requites of a contract such as consent or meeting of the minds of the parties and a consideration.
Before there can be a meeting of the minds, the insurer or the party who has prepared the contract, should explain the intricacies of the insurance contract to the insurer. Legal experts refer to insurance contracts as "contracts of adhesion" because the contracts have been pre-worded in such a way that the person being insured no longer has a say on any of the provision.
Once the insurance contract has been entered into, the insured now has the responsibility to pay the insurance premium. The premium is the amount to be paid as agreed upon by the insured and the insurer, so that the insurance contract becomes and remains in force. Failure to pay the premium can be fatal because it can mean you lose your insurance coverage.
Various insurance agencies offer different premium rates depending on the policy and the protection offered to the insured. A person who wants to get any kind of insurance, whether for his car, house or life should consult different insurance companies and decide later on as to whom among them can offer him the greatest benefit for the lesser premium.
In auto insurance, the considerations for the amount of premium paid is base don a number of factors including the age and sex of the person, the hobbies, occupation, driving record, vehicle mileage and lots of other factors. Thus, the premium for a 20-something male getting an insurance policy for his sports car would be greater as compared to the premium on the sedan of a 40-year old male. The premium for auto insurance is usually based on statistics, and in this case, the insurance company has a bias against a young man who may be considered an insurance risk because of the common belief that men his age drive faster.
In life and disability insurance, much value is placed on the persons' age, sex occupation, hobbies and the risk factor. Thus, the premium for life insurance would be more expensive for those who are considered as insurance risks like people who work in hazardous occupations and people who smoke. Some companies will also do research on your background, where you live, your family history and other factors that may make you a big insurance risk.
An insurance premium can be paid by the insured on a monthly, quarterly, semi- annually or on an annual basis depending on his choice. Paying an insurance premium on an annual basis can be less expensive than paying it on a monthly basis. However, an annual payment can be a big dent on the pocket due to its cost.
Before getting an insurance policy it is best to determine your paying capacity first because failure to pay an insurance policy can cause it to lapse or to be cancelled. The sad thing is that most insurance agents ignore their clients once they have earned their commissions. Because of this, the insured often forgets the due date until the insurance has already lapsed.
It is another story when the time comes for the insured to collect what the insurance company owes him. Since these insurance companies are business entities operating for profit, most of them try to look for causes or faults on the part of the insured so they can avoid paying the insured amount.
Getting involved in a messy insurance claim can be psychologically traumatic for the insured and his beneficiaries. Sometimes, people think that the benefit one gets from an insurance coverage is defeated by the possible headaches that can be brought about by unscrupulous insurance companies. However, majority agree that being covered by an insurance policy does give you a good night's sleep.
EXPLAINING DIVIDENDS
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When are dividends distributed?
People get insurance policies because they acknowledge the possibility and the existence of risk and they would want such risk to be managed by a company that would not only return their capital investments to them at a future time, but also the corresponding earnings.
Insurance companies are known as risk managers who get money from their policy holders in the form of premiums. Most insurance companies invest these premiums and get surplus profits if the accounts are properly managed by them or their fund managers. Failure to properly manage the premiums they invested is also one of the reasons why some insurance companies go bankrupt and are no longer able to pay the claims of some policy holders.
There are insurance companies that give out or distribute dividends to their policy holders when they do get surplus profits. Insurance companies that distribute profits to their policy holders are known as mutual companies. These insurance companies consider their policy holders as their stockholders because it is through them that they get the premiums which are then invested. Most companies do not, however, guarantee the payment of dividends as this will depend on how their investments fare in the investment market.
Dividends are paid when there are surplus funds. These surplus funds come from the company's investment earnings, mortality savings and their operational savings. Mortality savings happen when the premium or life insurance package taken by the insured is more than the actual death claims paid by the company. Insurance companies are required to maintain reserves for death benefit claims. When the profit they get from their investments is more than the required reserves, then they earn savings. The operational savings happen when the insurance company spends less in terms of the expenses necessary to sell insurance products.
Insurance companies pay or distribute dividends to their policy holders not because of sheer generosity but because it also entitles them to a tax break since the dividends are subtracted from their income. With lesser income, the insurance companies will be paying less tax.
Insurance dividends are different from stock dividends primarily because the insurance dividends are considered return of premiums paid by the policy holders while stock dividends are issued by corporations to their stockholders when they cannot issue monetary dividends. Publicly listed corporations issue dividends to their stockholders to assuage them and keep them from withdrawing their stocks.
In most cases, people who borrow from their policy in the form of loans, get higher dividends when the company declares and distributes them. Once the insurance company declares a dividend, the policy holder can choose to convert his dividends into cash, allow them to accumulate or use them to pay the premium, or pay an existing policy loan.
Insurance dividends are generally exempted from tax except when the dividends received are more than the premiums that have been paid. The dividend gets taxed though, if it is converted to cash. Most insurance agencies distribute dividends by sending dividend certificates to policy holders. Most often, these dividends are so meager it would be more practical to allow them to accumulate and be withdrawn when the policy has matured. However there are policy holders who opt to convert their dividends into cash, believing that they had better spend their money while they still have the opportunity to do so,
To qualify for an insurance dividend, you must already be a policy holder at the time the declaration to pay dividends has been made.
Most insurance agents do not really explain very important matters that should be explained to insurance policy holders. Most of them get confused and do not know what to do when they receive their dividend certificates. Before getting an insurance policy, better know all the nuances of the policy so you would know what you are getting into and what you are getting out of the insurance policy. This way, you would be able to maximize the benefits that you would be receiving through the policy.
Remember that for every insurance policy you get, you may be entitled to benefits. However, you will only be able to enjoy these benefits if you know what they are and how to avail yourself of them. So know the common terms of your insurance policy and who knows, you may just be entitled to a dividend sooner than you think.
WHAT ARE NON-FORTEITURE AND SETTLEMENT OPTIONS?
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The importance of non forfeiture and settlement options
People get insurance policies to make sure they have something to turn to when losses occur. Insurance policies are contracts that require the insured or the party getting the insurance, to pay for the insurance amount at a certain period and it likewise requires the insurer or the company managing the risk, to pay the insured or his beneficiaries at a certain period agreed upon in the contract.
Insurance contracts do not come cheap and most people who get insurance policies end up not paying their policies until such that it is already too late. The question is, can an insurer recover what he has paid when his insurance policy lapses, or is everything loss, and everything gained by the insurance company?
Insurance policies have non forfeiture benefits which provide that even if the owner fails to pay the policy and it lapses after a specific period, the insured or policy owner gets something from the policy. Under the non forfeiture clause of an insurance policy, the policy holder who fails to continue paying his premium has a choice of getting the cash surrender value of his insurance or the loan value. There are several non forfeiture options that are available to a policy holder but even if he fails to choose, the law provides that the specific non forfeiture value indicated in the insurance contract will automatically take effect.
In New York City, the law mandates the existence of a non forfeiture benefit for care insurance with long term payment options. Another non forfeiture option which is common for long term care insurance is the reduced paid-up benefit. This option provides that if the policy holder fails to pay his policy and it lapses after a specific period, the policy will still exist but the benefits reduced.
People should not get insurance policies if they are not sure they can continue paying the premiums. Of course, the non forfeiture provisions of insurance policies is an assurance that their payment will not go for naught but such provision will not ensure they will get the full benefits or their money back a hundred percent. Before signing any insurance contract, one should always check the specified period before the non forfeiture provisions may be availed of. It is also important to note that the policy holder will have to pay extra for the non forfeiture provisions.
Another important feature of an insurance policy is the settlement options or the choices available to the person insured or his beneficiaries as to how the insurance proceeds will be paid. To make things easier for his beneficiaries, the policy holder can choose a method by which the proceeds of the insurance will be paid to his beneficiaries upon his death. If he fails to do so, the choice is up to the beneficiary.
The owner of an insurance policy or his beneficiaries can choose to have the proceeds paid in lump sum or in installment basis for an agreed period with varying payment rates. The beneficiaries can also choose not to get the proceeds but only the interest of the proceeds which will be managed by the insurance company.
Others opt for a life settlement or viatical settlement. This is done when a beneficiary sells the insurance policy before it matures. The amount he gets though is lesser than the face value of the policy but it is a better option because while the sale value is less than the face value, it is nevertheless greater than if he opts for the cash surrender value. This type of settlement is more like investing for the future, just like when a person buys bonds and selling them later on.
People buy life insurance for protection, for savings purposes, for retirement and investment. While most people would want to be secure with their own insurance policies, the majority of them cannot afford to purchase one, or are hesitant because they are not sure if they can continue paying the policy for several years.
The options offered by the non forfeiture provisions of insurance policies offer these people an assurance that if they do fail to pay their policies and it lapses, the premiums they paid will not be wasted because they can still recover a portion of it or enjoy some benefits arising from the insurance contract.
WHAT ARE POLICY LOANS?
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Making use of policy loans. Thus far we have discussed the different types of policies and briefly mentioned borrowing on a policy. Here, we will review the types and discuss policy loans in depth.
People enter into insurance contracts because they would like to have something to fall back on in case they experience a loss in the future. The contract of insurance provides that the insured or policy holder must pay premiums during a specified period and when the maturity period comes, the insurer or the company paid to manage the risk is mandated to pay the policy holder the agreed proceeds.
An insurance contract is specifically entered into by the policy holder to cover him in times of losses, both referring to the loss of his life or a family member, or any financial loss.
The common belief is that the insurance policy can only be used to shield the policy holder against losses upon its maturity. On the contrary, policy holders can benefit from their insurance policies even before they reach their maturity stage.
An insurance policy holder who is in need of cash can opt to take a policy loan on his life insurance policy. This means that the policy holder can borrow money from the insurance company by using the total value of his life insurance as a collateral or guarantee.
A policy holder who is in the middle of a financial crisis and who has no other means of getting financial aid has no choice but make use of his policy loan option to solve his problem. However, people who still have other means of getting financial aid should consider the advantages and disadvantages of getting a policy loan.
People opt for policy loans because of the relatively low interest as compared to other loans. Other people borrow on their policies with lower interest rates and pay their loans that are high interest-bearing. Others borrow on their policies so they will get more dividends when the time for dividend distribution comes and they have paid up their loans. It is always easier to borrow under a policy loan because of the hundred percent approval rating provided the amount loaned is not greater than the total cash value of the life insurance or the premiums you have paid.
Availing of a policy loan is usually the fastest way to get a loan and there are no restrictions as to how the amount would be spent.
Taking a policy loan is always a better option than terminating your insurance policy as it may have a very low cash surrender value at that point. It is also a better option as compared to withdrawing from your accumulated or total cash value because the latter choice will entail tax payments.
While a policy loan may have its advantages, it is also disadvantageous for the policy holder because his ignorance or failure to know the basic rules on policy loans can result to a greater financial problem.
Policy loans are just like regular loans in the sense that the borrower has to pay them at a specified period. Also, if you avoid paying your policy loans with your total cash value because it will result in a lower or even zero cash value in the long run. When this happens, the insurance company can terminate your insurance contract and you will be forced to either pay the policy loan or surrender your policy. The latter choice will result in more financial problems as it will require you to pay charges as well as taxes.
Some people who can no longer pay their premiums resort to taking a policy loan and allowing their insurance policies to be terminated. If you think you can benefit from this then better think again because it may just backfire or work against you. Taking a policy loan is advisable only for the best reasons like if you no longer have other sources of funds and you are faced with an emergency. If you feel the need to take a policy loan just because you want to go on a tour or you want to buy something which is not a necessity then better forget it.
Borrowing on your insurance policies should not be done capriciously because it can endanger your coverage when you need the money most. When borrowing on a policy loan, make sure you pay it back or take the risks of having your cash value depleted, your insurance policy terminated, or your lifeline reduced or even removed when you need it most.
WHAT IS UNDERWRITING?
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What is underwriting and why is it important?
Life's unexpected ups and downs have made contracts of insurance a must, particularly for those who have families who will be left behind. People who are concerned about their loved ones make sure that they make provisions for them when they are no longer around to support them. This concern for family members as well as a desire to protect one's self from adversity, have made insurance policies expensive but in demand.
As we have discussed, an insurance contract is really a contract entered into between the insured, the party who pays premiums in exchange for insurance coverage and the insurer, or the party who manages the premium and pays the policy holder the insurance proceeds at a specified time.
Insurance companies operate not because of charity or for anything else but for profit. They profit by investing the premiums paid by the policy holders, in various financial markets. And since the underwriting company is a business entity existing for profit, a contract of insurance most often than not becomes the center of a court case between the insured or his beneficiaries who is in need of money and an underwriting company who does not want to part with its money.
The insurance company is known as the underwriter as it underwrites or manages the risks paid for by the insured or policy holder. By underwriting an insurance policy, an insurance company makes itself responsible for the risks being insured by the policy holder. In some cases, underwriters or insurance companies also have their companies insured and this is called re-insurance.
Underwriting is a big business but it is very risky as underwriters promise to provide protection to individuals or companies who may suffer or face financial losses in the future. To make underwriting a profitable business, it must make use of underwriters who are able to analyze risk factors and insurability factors.
The people who usually deal or offer insurance contracts to prospective policy holders are technically called underwriters also. These underwriters play a very important role in making sure that insurance companies do not suffer great losses out of the insurance they policies they take.
Underwriters are the front liners who decide on the insurability of a certain individual or company. These underwriters are responsible for the proper premiums to be paid up, the calculation of the policyholder's risk and the writing of the insurance policies that are aimed at covering these risks.
There are professionals who work as risks analysts and they collaborate with the underwriters when deciding on the insurability of a client. Sometimes the risk analysts work as underwriters themselves. Underwriters are the people who know the ins and outs of an insurance business and they can give good advice to prospective policyholders who would like to be guided in getting the right insurance plans. Underwriters are however guided by computers in assessing the risks involved for particular clients.
Underwriters are very influential people and they can sway an insurance company into approving the insurance policy of a person. They are the main people behind the approval of thousand, if not millions of policy loans, that they are responsible for the rise and fall of many insurance companies.
Underwriters sometimes have specializations but they can also work on all insurance categories like health, casualty, life and property. Property underwriters can be further divided into the areas of automobile, fire, liability, homeowners or marine insurance.
A good underwriter must be a good analyst and must place high importance on details and good research skills. Majority of those in the underwriting business earn big bucks and have very comfortable offices that allow them to think and analyze. Underwriters study a potential policy holder's life history, hobbies, preferences, and even that f his family and friends, just so they can arrive at a safe estimate or conclusion of that person's insurability. Otherwise, the insurance company suffers the effects of a wrongful underwriting analysis.
The growing safety and health concerns all around the world is expected to make the insurance business a bigger industry than it already is. The business of underwriting risks has never been much lucrative than now when population is growing and the risk increasing.
QUALIFIED AND NON-QUALIFIED RETIREMENT PLANS
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Qualified and Non-qualified Retirement Plan Options to Better Prepare You When Retirement Comes
As long as we are discussing life insurance and what the long and/or short term benefits are, let's take a look at retirement plans. As you've learned, some life insurance policies can be included in your discussions of retirement options.
Each retirement plan is different and each is designed to cater to different employer goals and employee needs.
Qualified retirement plan
This is a retirement plan that is certified by the " Internal Revenue Code Section 401(a)" and the "Employee Retirement Income Security Act of 1974 (ERISA)" therefore it is entitled for advantageous tax treatment, permitting employers to subtract yearly permissible contributions for every participating employee and earnings on said contributions are "tax-deferred" until taken out for every participant; some taxes may even be deferred further by means of transferring into another different kind of IRA.
For employers, subsidizing a "qualified retirement plan" can:
Draw experienced employees into their company.
Motivate and retain good employees.
Help employees set aside financial aid for future use or for retirement because the benefits of the Social Security alone are not enough to support a sensible way of living for retirees.
Protect plan assets from creditors.
Two main categories of "Qualified retirement plans"
1. "Defined benefit plans" are "company retirement" plans, like pension plans, where when an employee reaches retirement, he will receive a specified amount that is usually based on his salary and number of years in the service, whereby his employer carry the risk in investment. The employee alone, or both employer and employee, can contribute.
2. "Defined contribution plan". This type of plan outlines the amount that flows to employees on how much should be contributed by an employer each year to the retirement plan. This kind of plan keeps account balances of all participants and dictates that no participant can receive an allotment of beyond the "lesser of 25 percent" of compensation or 30,000 dollars throughout any year.
Principal "defined contribution plan" types:
1. "Profit sharing plans". Accumulate funds by way of employer contributions in an individual account for every eligible employee. Every participating employee's share of his employer's contribution generally is based on his compensation level. These plans let employers establish, within clear and specified limits, the amount to be provided or contributed annually.
2. "Money purchase plans". Similar to "profit sharing plan", however the contribution rate is a "fixed percentage" for every year, like for instance 15 percent of every eligible employee's salary.
3. "Target benefit plans". This is an adaptation a "money purchase plan" but instead of beginning with a "fixed percentage" for every employee, it specifies a particular benefit, like 50 percent of compensation at retirement; it also bases contribution of employees on the funds needed to fulfill that obligation.
Contribution for older employees will generally be a lot higher compared to the contribution of younger employees for the same amount, because older employees have a shorter duration to build up the essential funds. Here, the real "retirement benefit" is not assured but will largely depend on investment earnings.
4. "401(k) Plans." These plans permit employees to state the "pre-tax" income amount that must be subtracted from the salary of the employee and deposited into their retirement account. Employees are given the right to establish the level contribution that will suit their individual financial situation best.
5. "Stock bonus plans and employee stock ownership plans". ESOP's are meant to utilize company stock for accumulating equity as a retirement resource or supply for company employees.
6. "Simplified employee pension". SEPs function similar to "profit sharing plan" or "money purchase plan" whereby the employer sets an amount to contribute into every employee's account every year. However the contribution is not deposited to a retirement trust but is converted into IRA so that the employee has jurisdiction over the funds in his IRA.
7. 403(b). This is a "tax-deferred retirement plan" for specified tax-exempt employers like public schools, "non-profit organizations" and some hospitals. Contributions may grow "tax-deferred" until it is withdrawn then it is taxed like an ordinary income.
"Non-qualified retirement plan"
This type of retirement plan do not meet requirements set by "Internal Revenue Code Section 401(a)" and the "Employee Retirement Income Security Act of 1974 (ERISA)". These plans are financed by employers therefore are flexible compared to "qualified retirement plans" however do not include tax benefits that "qualified retirement plans" offer. Benefits, structured in annuities form, are paid generally at retirement age and are "taxed" just like "ordinary income tax"; or in "lump sum" or one single payment that may be transferred or changed into IRA so to suspend or defer taxes.
"Top-Hat plans" (THP), "Excess benefit plans" (EBP) and "Supplemental executive retirement plans" (SERP) are types of non-qualified and deferred compensation plans patterned to complement or enhance "qualified retirement plans".
"Non-qualified retirement plan" accomplish to supplement "qualified retirement plans" by compensating the benefits that are unavailable to qualified plans and typically covers highest company paid employees. It may be non-funded or funded. The main drawback with this plan is that actually nothing is promised to the employees should the company goes into bankruptcy, or is sold to another company.
You must always know your options and should develop an opportunity strategy way before your retirement. Pursuing professional investment advice will help you manage and synchronize your options with a complete estate and financial plan.
LIFE INSURANCE AND TAXES
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Tax Treatment of Life Insurance 101: Is There an Exception to the Rule?
People nowadays are getting more value for their money. That is why life insurance policies are getting more popular each day.
Life insurance is usually obtained by people who would like to protect the future of their family by providing feasible means of financial support in case they die. This is to replace the imminent loss of finances. All finances and income will be stopped once the concerned person dies. Hence, the premiums that the beneficiaries will be getting will be adequate sources of additional income.
For some people, getting a life insurance policy may be easy. All they have to do is to find a reliable insurance company and file an application. Once approved, the benefactor must pay a specific amount as stipulated in the policy that he had chosen.
However, in its real meaning, life insurance policy is not all that. Like any legal documents, a life insurance policy is executed under certain laws and must be followed in conformity to the regulations stated by the provisions.
One of the legal concerns of life insurance policies are the taxes. Hence, it is important that the policyholder should know the basic concept of taxes as applied in life insurance policies.
To know more about the tax treatment of life insurances, here are some pointers that you should know. However, these ideas should not be regarded as applicable in every life insurance policy. These are general concepts regarding tax treatment of life insurance.
Keep in mind that not all life insurance policies were created equal. Hence, it is advised that you discuss with your lawyer or any person who has proficient knowledge on tax to understand your policy better.
1. Life insurance enjoys privileged treatment under the law
As provided in Section 101 of the "Internal Revenue Code," the incomes generated from a life insurance policy that has been stipulated in the policy as "death claim" and are subject to the exemptions as stated in the regulation are not accountable for any income tax when disbursed.
For this reason, the development of life insurance industry continues to flourish.
2. Certain types of life insurance have particular tax treatment
Certain life insurance policies, such as permanent life insurance, likewise take pleasure in constructive tax treatment.
According to the provisions of Internal Revenue Code, policyholders as well as their beneficiaries are not entitled to pay any taxes on any profits in the permanent life insurance policy provided that the policy remains in effect. This privilege is commonly known as "cash value growth."
However, the law requires that the policyholder as well as its beneficiary should conform to some "premium limits" in order for your permanent life insurance policy not to be considered as "modified endowment contract."
3. Modified endowment contracts
In the cases of modified endowment contracts, tax treatments of life insurance are entirely different.
In essence, modified endowment contract or MEC is classified as any "permanent policy" that falls short in the "seven pay-test" as stipulated in the Internal Revenue Code 7702A.
In this context, the government has resolved that modified endowment contracts must develop a particular class of life insurance and be accountable to specific taxation laws.
Modified endowment contracts are still considered as life insurance policies, but the government regards them as comparative to "investments" because of the stress on tax-suspended accumulation of "cash values."
In other words, the government had concluded that if "cash values" build up too quick in a particular life insurance policy, it may well be regarded more as an investment channel rather than security against untimely death.
Hence, modified endowment of contracts may still enjoy some tax treatment but not entirely the same as the usual life insurance policies.
One of the main disadvantage of getting a modified endowment contract is its 10% federal fine for premature withdrawal before the age 59 ?.
4. Law defines any policy loan as not taxable income
One of the greatest and most favorable tax treatments of life insurance is that as a policy loan, any amount of money generated from a life insurance policy is not considered as a taxable income.
Moreover, all of the withdrawals from the policy can be obtained up to the sum of disbursed premiums without being subject to any kind of tax.
Given all these facts, life insurance policies may be enjoying advantageous tax treatment but it is still necessary for every individual to consider the possible problems that may caused by these provisions. That is why it is important to always consult experts and do some research regarding money matters before committing to such contracts.
GOVERNMENT PLANS
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Government Life Insurance Plan: Introduction to Federal Employees' Group Life Insurance or FEGLI
"Federal Employees' Group Life Insurance" or FEGLI is a "group life insurance" plan that is employer-sponsored and constructed for Federal employees.
Considered the world's largest "group life insurance program" covering around 4 million "federal employees", retirees, and family members.
However the government does not limit Federal employees to only the benefits granted through FEGLI. Individual insurance policies today are prevalent and are readily acquired through the help of private vendors.
In the U.S., life insurance is a universal benefit offered to employees. In fact, about 98 percent of employers provide several life insurance protections to their employees.
FEGLI offers group life term insurance.
Meaning, FEGLI does not accumulate any cash or paid-up cost or value. It comprises of basic coverage for life insurance as well as three other options. In general, a new "federal employee" will be covered automatically by a basic "life insurance" and your employer deducts insurance premiums automatically from your salary or paycheck unless that you up the coverage.
FEGLI is meant for use as a type of immediate security against financial difficulties or death and not intended as a kind of life term insurance having a monetary or cash value like what "private insurance" agents will offer you.
OFEGLI or "The Office of Federal Employees' Group Life Insurance" is a private firm that has an agreement with the "Federal Government" to deal with, process and compensate insurance claims in the "FEGLI" program.
Besides the "basic life insurance", there are other three types of optional insurances that can be elected. However you need to have a basic insurance so you can elect an option. Unlike the basic, registration or qualifying in the optional insurances is not "automatic", meaning that you should take action in order to elect an option.
Generally, the government and you shares the basic insurance cost. Two thirds of the entire insurance cost will be paid by you and one third by the government. Note that your age will not influence your basic insurance cost. However, take note that you will pay the entire optional insurance cost, whereby your age will influence the insurance cost.
It is very essential that you are well familiar and educated about FEGLI so you are able to make the correct choice as far as your insurance plan and coverage is concerned.
Part-time employees who are not restricted to less than a year, and those that do not display recurrent appointments without scheduling, frequent duty tours scheduled are normally qualified to enroll or sign up in the program of FEGLI and their insurance coverage amount is determined and established in the exact manner as those of "full-time" employees.
Coverage options:
1. Basic Life - Amount that is equal to the employees' yearly salary "rounded up" to the following 1,000 dollars, plus 2,000 dollars whichever is larger.
2. Option A - Standard 10,000 dollars employee's coverage.
3. Option B - Additional 1-5 times base compensation coverage awarded for employees, excluding the additional 2,000 dollars which is generally added to your life insurance.
4. Option C - Coverage for qualified family members:
"Family life Insurance" provides coverage for employee's spouse and qualified children. When employees choose option C, then all their qualified" family members" are covered automatically. They may choose to elect any "one, two, three, four, or five" multiples of insurance coverage. Every multiple is equivalent to 5,000 dollars for their husband or wife and 2,500 dollars for every qualified dependent child.
Qualified and dependent children means that they should not be married and are under 22 years old, or if they are 22 years old or over, but are not capable to support themselves due to a physical or mental disability and that the disability came before the dependent child have reached 22 years old.
Qualified and dependent children can include natural-born children, stepchildren (if they are living with employees), adopted children, accepted natural children, and "foster children" (if they are living with employees).
"The Federal Employee Service Center" suggests that you demand a benefit analysis in order to investigate and assess your present FEGLI coverage, rates and cost of ongoing or continuing insurance coverage. The cost analysis will assist you in making the correct choice towards your retirement.
*********
DISCLAIMER: This information is not
presented as being from a medical practitioner and is for educational and
informational purposes only. The content is not intended to be a substitute for
professional medical advice, diagnosis, or treatment. Always seek the advice of
your physician or other qualified health provider with any questions you may
have regarding a medical condition. Never disregard professional medical advice
or delay in seeking it because of something you have read.
Since natural and/or dietary supplements are not
FDA approved they must be accompanied by a two-part disclaimer on the product
label: that the statement has not been evaluated by FDA and that the product is
not intended to "diagnose, treat, cure or prevent any disease."
*********
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Slimirex™, because of its combination formula, is the MOST RESEARCHED weight loss supplement on the market today
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Slimirex - 180 count
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Weight Loss Supplement
Slimirex™, is the MOST RESEARCHED weight loss supplement on the market today - You can put your trust into Slimirex™!
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BioFlu-9 Essential Oil Blend
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Essential Oil Blend
BioFlu-9 Essential Oil Blend was created from research concerning 15th-century thieves who allegedly rubbed oils on themselves to avoid contracting the plague when robbing the bodies of the dead and dying.
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Weight Loss Plan Kit
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Weight Loss Secrets
Includes: Oxy-Powder, Slimirex (180 Count), Weight Loss Secrets Revealed, Ten Super Secrets for Weight Loss
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Fresh Mouth
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Fresh Breath
Fresh Mouth - is our newly formulated treatment spray to which we have added Coenzyme Q-10, Xylitol, and Colloidal Silver.
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