FREQUENTLY ASKED QUESTIONS ABOUT WHOLE LIFE

1. How can whole life help me during retirement?

In two basic ways. First, cash values can be accessed for retirement income. For example, you can obtain this income through tax-free policy loans. Another income option is to permanently withdraw cash value in a "partial surrender." This also can have tax advantages because you generally will not pay income tax on a partial surrender until the value withdrawn exceeds total premiums paid.

Secondly, your policy's death benefit provides a ready-made estate for your heirs, allowing you to use your other financial resources more freely during your retirement years.

2. Why are the premium payments generally more expensive than in term life insurance?

With term insurance, almost all premiums apply to the cost of insurance. If premiums stop, the insurance protection terminates soon after, and the policyholder has no value left. This makes term insurance most effective in providing temporary coverage. With whole life, only a part of premiums apply toward the cost of insurance. Other parts pay for valuable features and options, and also build cash value.

In addition, yearly renewable term insurance premiums start out lower than whole life, but typically increase during the insured's lifetime.( There are level term insurance premiums that range up to 30 years without change in premium). These yearly renewable term insurance policies can become extremely expensive in the later years, when the coverage may be needed most. Whole life premiums on the other hand, are stated in the policy at issue and will not increase.

3. How do I evaluate riders (options), including their costs and benefits?

Your financial professional will work with you to develop clear goals for your whole life policy. The key decisions involve the appropriate amount of protection (death benefit), the premiums you find comfortable, and how you want to treat any dividends. After these issues are addressed, you can determine which optional riders will enhance your policy to meet specific financial objectives.

4. Is it possible to avoid paying one or more premium payments in whole life and still maintain policy benefits?

You should know that premiums are due and payable every year that your whole life policy document indicates. However, if you accumulate enough cash value in your policy to maintain the policy and pay the premium, you can skip "out-of pocket" premium payments. At your request, dividends and policy values can be used to cover the premium amount due and you do not have to write a check. Your financial professional can help you determine if your policy values are sufficient to avoid "out of pocket" premiums and discuss the impact this strategy has on your overall financial plan.

5. Why does the death benefit paid to my beneficiary avoid probate?

Probate is a court proceeding in which the terms of a will are enforced and arrangements are made to pay a deceased person's debts and taxes. The death benefit of a whole life policy csn be paid directly to a named beneficiary (as long as the beneficiary is not the estate), bypassing probate. Since the money passes directly to the beneficiary, without reference to terms of a will, it avoids the public disclosure, extra costs and delays of probate.