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LIFE INSURANCE • HEALTH INSURANCE • DISABILITY INSURANCE • ANNUITIES
Life insurance
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62 East Shenango St
Sharpsville, PA 16150
phone: 724.962.5757
fax: 724.962.0228
Who needs life insurance?
Nearly everyone does. Life insurance is meant to make up for the income you planned to earn, the expenses you expected to pay off, and the savings you hoped to accumulate—all but for an untimely death. It ensures that when you die your family will have the financial resources they need. Moreover, given its tax advantages, life insurance is also often used to accumulate funds for retirement or other future needs.
Life insurance serves an important role in the financial protection of both men and women ... single or dual income households ... and even for children. In addition to replacing the lost income of a wage earner, life insurance should also be considered on the stay-at-home spouse, to ensure the availability of child care and household maintenance. College students might not have much income to replace right now, but they have high potential earnings (and often a lot of debt); they too should consider life insurance.
There are two basic kinds of life insurance—Term and Permanent, with many variations on these standard forms of coverage.
Term Insurance
Term Insurance does just what the name implies—provide protection for a specified term of years: typically, 10, 15, 20 or 30 year terms. Benefits are paid only if you would die during the time the policy in force, nor is there any accumulation of cash value. Most term policies sold today have a guaranteed level premium throughout the selected term.
At the end of the term, some policies allow you to renew for another term of coverage (though at a higher premium, since you’re older). With most term policies, you are presented with two options: 1) Apply for another term policy, at your present age and subject to any changes in your health. 2) Convert the policy to a type of Permanent Insurance. This right of conversion is guaranteed by the policy contract and allows you to purchase insurance at the same rate class (at your present age)—even if your health has deteriorated and you would be otherwise uninsurable.
Under a typical scenario, a person will buy life insurance at a fairly young age—motivated mainly by a major life event such as purchase of the first home or birth of a child. With budget often tight, yet a substantial need for insurance, term insurance is often purchased. Once family and business obligations are mainly satisfied, usually a more moderate amount of insurance is needed—for funeral expenses and maybe to wind up some miscellaneous loans and other expenses. Here, a smaller amount of permanent insurance is purchased to replace the larger term policy which is likely near the end of its term.
Over the past decade, life insurance rates have dropped, particularly for those with better-than-average cardiovascular risk. Our agency sells a complete range of the most competitively priced term policies on the market.
Permanent Insurance
Permanent life insurance provides you with protection for as long as you live. In order to maintain a level premium throughout your lifetime, premium costs are averaged. In effect, you are overpaying in your younger age to subsidize the cost of insurance in your older age. While starting out permanent insurance is thus more expensive than term insurance, the level premium feature allows it to remain affordable in your later years. Note that the “overpayment” that results from the level premium feature does not disappear; it accumulates in the policy’s cash value. The cash value is available to you should you later elect to cancel the policy. It can also extend protection should you later elect to discontinue premium payments. Alternatively, it can be borrowed against. Life insurance policy cash values accumulate on a tax deferred basis.
The most basic type of permanent insurance is Whole Life. Whole life policies have a guaranteed premium, face amount, and cash value build up. Universal Life policies are also a form of permanent insurance, but unlike Whole Life they have a built-in flexibility allowing you (within limits) to vary the premium, face amount, length of protection, and emphasis on build-up of cash value. The cash value of a Universal Life policy will also vary depending on the current interest rate that is credited (above a guaranteed minimum interest rate). As with a Whole Life policy, you can withdraw or borrow against the cash value of a Universal Life policy.
INDIVIDUAL HEALTH INSURANCE
Information on this section coming soon.
GROUP HEALTH INSURANCE
Information on this section coming soon.
GROUP & Payroll Deduction
In comparison to other employee benefits, Group Life Insurance is usually the most affordable. Coverage amounts may be a multiple of salary or a flat amount for various employee classifications. Let us know if you would like us to provide your firm with a competitive quote.
Worksite or Payroll Deduction plans are growing increasingly popular. At no cost to your firm, these plans offer a convenient way for your employees to purchase a moderate amount of life insurance at a premium level they can afford. Aside from setting up your payroll system to allow for a payroll deduction, and setting aside time for us to meet with your employees, our agency can handle all aspects of explanation of benefits and enrollment.
Worksite or Payroll Deduction plans are growing increasingly popular. At no cost to your firm, these plans offer a convenient way for your employees to purchase a moderate amount of life insurance at a premium level they can afford. Aside from setting up your payroll system to allow for a payroll deduction, and setting aside time for us to meet with your employees, our agency can handle all aspects of explanation of benefits and enrollment.
DISABILITY INCOME INSURANCE
Disability Income insurance pays you a specified monthly income if you are unable to work due to accident or sickness. There are three basic elements to Disability Income coverage: the monthly benefit, the benefit period, and the waiting period. The premium will be based on the selected coverage, your current age, your occupation, and your health condition.
You select the monthly benefit desired, up to a maximum amount determined by the insurance company (usually around 60 to 67% of your actual gross income). Some people choose an amount just to cover a loan payment, while others want to buy the maximum available. Note that if you are paying the premiums for the insurance (i.e., it is not an employee benefit), the benefits flow to you tax free.
The benefit period specifies how long benefits will be paid, once you are disabled, usually 2 years, 5 years, or to age 65. Not all occupations will be eligible for age 65 coverage.
The waiting period can be thought of as like a deductible: Payments won’t start until your disability exceeds the waiting period, which is usually 30, 60, 90 or 180 days.
Some optional endorsements you may want to consider are:
You select the monthly benefit desired, up to a maximum amount determined by the insurance company (usually around 60 to 67% of your actual gross income). Some people choose an amount just to cover a loan payment, while others want to buy the maximum available. Note that if you are paying the premiums for the insurance (i.e., it is not an employee benefit), the benefits flow to you tax free.
The benefit period specifies how long benefits will be paid, once you are disabled, usually 2 years, 5 years, or to age 65. Not all occupations will be eligible for age 65 coverage.
The waiting period can be thought of as like a deductible: Payments won’t start until your disability exceeds the waiting period, which is usually 30, 60, 90 or 180 days.
Some optional endorsements you may want to consider are:
Additional purchase options: The insurance company gives you the right to buy additional insurance at a later time, regardless of your future health.
- Coordination of benefits: Offsets a portion of your benefits by other disability payments you may receive, such as Social Security or Workers’ Comp. A reduced rate is offered for the portion of your coverage subject to coordination of benefits.
- Cost of living adjustment (COLA) : The COLA increases your disability benefits over time based on the increased cost of living measured by the Consumer Price Index.
- Residual or partial disability rider: This provision allows you to return to work part-time and collect part of your salary and receive a reduced benefit payment if you are still partially disabled.
- Return of premium: Part of the premium you have paid in is refunded if no claims are made for a specific period of time declared in the policy.
- Waiver of premium provision: This clause means that you do not have to pay premiums on the policy after you’re disabled for 90 days.
annuities
Annuities come in two basic forms: deferred and immediate. Because annuity payments can be structured to extend as long as you live, they are often thought of as “life insurance in reverse”.
If you are in a saving-money stage of life, a deferred annuity can:
Help you meet your retirement income goals. Employer-sponsored plans such as a 401(k) are an important part of planning for retirement. However, contributions to these plans are limited, and they might not add up to enough for the retirement income you need, especially if you started saving for retirement late or had contributions interrupted—perhaps due to job changes and/or family responsibilities.
Help you diversify your investment portfolio. Investment experts routinely advise that, to get the best return for a given level of risk, you should diversify your investments among a number of asset classes. Fixed annuities, in particular, offer a unique asset class—an investment that is guaranteed not to decrease and that will actually increase at a specified interest rate (and, often, potentially more). The guarantees are supported by the claims-paying ability of the insurer.
Deferred annuities can be held within an IRA and thus enjoy the tax advantages of an IRA. Even if not part of an IRA, the investment gain on an annuity is tax-deferred, offering a significant advantage over comparable investments such as bank CDs.
If you are in a need-income stage of life, an immediate annuity can:
Help protect you against outliving your assets. Social security pays retirement income for as long as you live, as do defined-benefit pension plans. But the only other source of income available that continues indefinitely is an immediate annuity.
Help protect your assets from creditors. Generally the most that creditors can access is the payments from an immediate annuity as they’re made, since the money you gave the insurance company now belongs to the company. Some state statutes and court decisions also protect some or all of the payments from those annuities.
If you are in a saving-money stage of life, a deferred annuity can:
Help you meet your retirement income goals. Employer-sponsored plans such as a 401(k) are an important part of planning for retirement. However, contributions to these plans are limited, and they might not add up to enough for the retirement income you need, especially if you started saving for retirement late or had contributions interrupted—perhaps due to job changes and/or family responsibilities.
Help you diversify your investment portfolio. Investment experts routinely advise that, to get the best return for a given level of risk, you should diversify your investments among a number of asset classes. Fixed annuities, in particular, offer a unique asset class—an investment that is guaranteed not to decrease and that will actually increase at a specified interest rate (and, often, potentially more). The guarantees are supported by the claims-paying ability of the insurer.
Deferred annuities can be held within an IRA and thus enjoy the tax advantages of an IRA. Even if not part of an IRA, the investment gain on an annuity is tax-deferred, offering a significant advantage over comparable investments such as bank CDs.
If you are in a need-income stage of life, an immediate annuity can:
Help protect you against outliving your assets. Social security pays retirement income for as long as you live, as do defined-benefit pension plans. But the only other source of income available that continues indefinitely is an immediate annuity.
Help protect your assets from creditors. Generally the most that creditors can access is the payments from an immediate annuity as they’re made, since the money you gave the insurance company now belongs to the company. Some state statutes and court decisions also protect some or all of the payments from those annuities.
