A participating life insurance policy is any policy eligible to earn dividends payable by the insurance company that issued the policy. While a policy may have participating status, it is not guaranteed to necessarily receive dividends. Many financial resources confuse the definition of participating by claiming that it means the policy will earn dividends. This is …
Being the life insurance guy often puts me in a place where I answer questions about dividends. Turns out a lot of people have a vague understanding that (some) life insurance policies pay dividends so we often answer the questions: “how do you pay for whole life insurance using policy dividends?”
If this is a question you've often pondered, you're really going to enjoy what follows.
The 1035 exchange is a tax-free transfer of cash values from one insurance contract to another. The exchange also carries the cost basis from the old contract to the new one. Functionally speaking, the 1035 exchange is a great strategy current life, endowment, and annuity policyholders can use to purchase a new policy with better features than their old policy while bringing over the value from the old policy with no tax consequences for making the change.
However, there are several important rules you must understand before you decide to replace an old insurance contract using the 1035 exchange. Ignoring these rules could result in unfavorable consequences leaving you worse off.
Some life insurance policies use a portion of the premium you pay to build cash value–specifically, whole life insurance all types of universal life insurance (current assumption, variable, and indexed).
Technically speaking, this cash value exists by insurance regulation to provide policy owners with a nonforfeiture benefit. However, if you own one of these cash building forms of life insurance, you do not need to cancel or irrevocably alter the policy to use the accumulated cash value.
An irrevocable beneficiary in a life insurance contract is a person or entity named as beneficiary that a policy owner cannot remove or alter without the approval/agreement of the beneficiary. Normally speaking, the beneficiary is not a party to the life insurance contract and has no authority over decisions the policy owner makes concerning him/her. …
There are a number of ways to pay for a college education and today we want to spend time discussing how you can use whole life insurance to pay for college. While certainly not a default option presented by the mainstream financial media, whole life insurance can work as a wonderful way to pay for college.
But keep in mind that using whole life to foot the bill for higher education comes with a few best practices you should understand. To ensure that you extract the greatest amount of benefit from this strategy, we'll spend some time looking at how people use whole life insurance to pay for college while also giving you some insider knowledge on how to best set up your policy if this is your goal.
Premium financing is a process of borrowing money to pay life insurance premiums. I know this sounds strange, but there is a perfectly good reason behind the idea. I’ll forewarn you, however, that this good idea only takes flight among those with substantial assets. Financing life insurance premiums works to minimize the net out-of-pocket cost …
Internal rate of return (IRR) is a commonly quoted measurement when talking about whole life and universal life insurance. This is because IRR is well equipped to tell us what sort of return we are achieving on these types of life insurance. That answer, while very simple, satisfies the curiosity of most. But the exact …
Most other websites that publish information about permanent life insurance will insist it is ALWAYS a bad idea. The implication is that no one needs to have life insurance that sticks around forever. In fact, most financial gurus, mega personal finance websites (nerdwallet, valuepenguin, lifeant, Nasdaq etc.) all agree that term life insurance is superior. …
You can usually borrow around 95% of a life insurance policy’s cash surrender value in any given year. The rules that govern life insurance policy loans do vary from company to company, however, so it’s important to understand a few basic rules about how much and when specifically you’ll have the option to borrow money …
