Life Insurance Workbook

Questions & Answers on Life Insurance, The Workbook, Presents:
Q: How Will This Workbook Help?
Created by the author of The Questions & Answers on Life Insurance Workbook
The Life Insurance Toolbook, Tony Steuer, CLU, LA .
07/18/2011 www.lifeinsurancetoolbook.com

This presentation will give you an overview of the Questions and Answers on Life Insurance Workbook.
Highlights important topics in the workbook;
Gives you simple answers to the top questions on life insurance; and
Helps you to know the right questions in order to plan well and spend wisely.
07/18/2011 www.lifeinsurancetoolbook.com This presentation:

Life insurance is for the benefit of someone who is dependent upon your income, like a child, spouse/partner, or business partner.
To purchase the right policy, it’s important to take the time and evaluate your situation.
07/18/2011 www.lifeinsurancetoolbook.com Part I: Evaluate Your Needs & Situation Take charge! It’s your money, so plan your way to smart spending.

Step 1 : Calculating your need for life insurance
To determine how much life insurance and which type of policy best serves your needs, use the spreadsheet attached to this presentation.
You can also use planning tools on my website. Just click the image below:

What if I have group life? (For example, through an employer.) If not, skip to the next slide.
Premiums typically increase annually or every fifth year for group insurance plans;
Coverage is usually not portable (you can’t take it with you);
Generally, group plans are more expensive for those in good health (due to simplified or modified underwriting); and
Coverage amounts are limited.

Step 2: Finding the life insurance that is best for you Term Insurance Overview
Term Insurance provides protection during a limited number of years and expires without value.
Types (most common):
Guaranteed Level Premium Term
Annual Renewable Term
Decreasing Term (a.k.a. Mortgage Insurance)
Return of Premium Term
View my Slideshare presentation, Understanding Term Life Insurance , at:
http://www.lifeinsurancetoolbook.com/slideshare

Step 2: Finding the life insurance that is best for you Permanent Insurance Overview
Permanent (Cash Value) Insurance provides life insurance up to age 120 (maximum age depends on policy) and can accumulate a cash value.
Types (most common):
Whole Life
Universal Life
Variable Life
Equity Indexed
View my Slideshare presentation, Understanding Permanent Life Insurance , at:
http://www.lifeinsurancetoolbook.com/slideshare/
07/18/2011 www.lifeinsurancetoolbook.com Insurance policies may look alike, but each one is different.

Step 3 : Assessing health and other factors that impact premium rates
Evaluate your health (examples: physical build, cholesterol, medical conditions, family history, etc.)
Medical Records - review your medical records to understand your history and health.
Think of your health rating like a credit rating. In finance the better your credit score, the more favorable your interest rate. Good health and physical fitness earn you a good credit score and thus a better rate.
Financial Underwriting
Different life insurance companies have different underwriting standards. Because these standards determine the rates you pay, you want to be well aware of the differences among them before you sign on the dotted line. -------------------------------------------------

Part II: Evaluate Companies & Agents Step 4: Evaluating Life Insurance Companies
The workbook gives you details on how insurance companies are rated so that you can evaluate your company, and explains:
Financial Strength Ratings
What these ratings are & where to find them
Financial Analysis
Ethical Standards
NAIC/State Insurance Department - Complaints (for Variable Products - FINRA)
Links to the major rating services & NAIC Consumer Information Center & FINRA can be found at: http://www.lifeinsurancetoolbook.com

Step 5 : Choosing an Agent or Advisor
Check on whether the professional working with you is properly licensed with the Department of Insurance in your State (and for Variable Products with FINRA) at: http://www.lifeinsurancetoolbook.com
What are there qualification & designations? Chartered Life Underwriter’s (CLU’s) have comprehensive Life Insurance training (use www.designationcheck.com to confirm)
Be aware of rogue designations - See the California Department of Insurance Bulletin on Senior Designations.
Find an advisor at the Society of Financial Services Professional (SFSP) website ( www.financialpro.org ) or at the LIFE website ( www.lifehappens.org )

Step 6 : Selecting Policy Components & Riders
The workbook helps you to prioritize what is important and empowers you to ask questions. Keep in mind the following as you choose or evaluate a policy:
Beneficiaries - always make sure to name a contingent beneficiary.
Policy Owner - know how this financial tool works and how changes or events can seriously affect it (I.e. policy loans). Ask questions if you don’t understand something.
Policy Riders - are they worthwhile? Popular riders include:
Waiver of Premium
Accelerated Death Benefit Rider
Complete the application accurately, completely and truthfully along with all forms.

Part III: Understand, Maintain, and Monitor Your Policy
The workbook reviews what you need to know after you’ve obtained a policy (or found an old policy in a drawer.)
Key information is explained so that you can decide to keep, replace or terminate a policy.

Term Policy Owners: Is There A Difference in How Often Premiums Are Paid?
Changing how often you pay your premium could save you money (it may be a lot!). You almost always have a choice of paying your premiums monthly, quarterly, semi-annually, or annually. Make an informed decision by calculating the annual percentage rate you are paying when paying other than annually.
Try my calculator at: http://www.lifeinsurancetoolbook.com/apr-calculator/

Step 7 : Assess Your Policy Is It Living Up To Your Expectations?
Gather and check for this information:
Death Benefit
what is the current benefit?
Type of Coverage
Term, Whole Life, Universal Life, Variable Life, Equity Indexed or something else...
Cash Value (if any)
Loan Values (if any)
Conversion Eligibility
If it’s term insurance, some policies allow conversion to permanent.
Any and all information is helpful in your assessment!

Assessing A Permanent (Cash Value) Policy
Here is what you need to monitor an existing life insurance policy:
Current (most recent) annual statement
In-force illustration based on current assumptions
In-force illustration(s) with any desired modifications
Sign up for an annual review package at: www.lifeinsurancetoolbook.com
Read about why (and how) a policy can under-perform in the Resources section at: www.lifeinsurancetoolbook.com/resources/
07/18/2011 www.lifeinsurancetoolbook.com Is your policy running out of time?

Step 8 : Replacing a Policy Term Insurance
To replace a term policy, consider these facts:
Premium
What is the actual net premium & is it guaranteed?
Length of guaranteed premium period
New Incontestability Clause & Suicide Provision
Most policies are issued with an incontestability clause , which means that unless you don’t pay your premium, the insurance company cannot contest the insurance contract during your lifetime as long as the original policy is in-force , no matter how your health may change. Check for the period of time that the company is allowed to contest.

Step 8 : Replacing a Policy Permanent Insurance
What are the different assumptions & guarantees in your policy?
Interest Rate, Dividend Scale, etc.
Cost of Insurance/Mortality Cost
Expense Charges
Qualification as an IRS Section 1035 Tax-Free Exchange
Is there a surrender charge?
Comparing permanent policies can be a complex & tricky area. Proceed with caution .

Step 9 : Terminating/Unwinding a Policy
If there is no longer a need for the policy, consider your options on terminating it:
Surrender the Policy
If there’s a cash value (keep in mind that the basic rule* is that income tax is due on any gain above basis - usually the sum of premiums paid).
Exchange to a Single Premium Immediate Annuity using an IRS Section 1035 Tax-Free Exchange (if your policy qualifies)
Gift the policy to a Non-Profit/Charitable Organization
Sell the Policy through a Life Settlement
Make sure you understand the full ramifications of this option.
Keep in mind this is not tax advice and you should consult a qualified tax advisor.

Answers to Your Questions
For more answers, go to: lifeinsurancetoolbook.com
To order the workbook, click on the cover:
To receive a discount code, follow me on Twitter , Google + or subscribe to my newsletter.
07/18/2011 www.lifeinsurancetoolbook.com For training, speaking, consulting, and free webcasts for your group, contact Tony Steuer at: [email_address]

About the Author Tony Steuer
Life & Disability Insurance Analyst
Member: California Department of Insurance Curriculum Board
Author: Questions & Answers on Life Insurance
Recipient of Excellence in Financial Literacy Award from the Institute on Financial Literacy
Forbes: 1 of 9 Great Investment Books
Member: Lucille Packard Children ’s Hospital Foundation Advisory Board
Member: St. Joseph Elementary School Advisory Board
Member: SFSP, FPA, PPP & NCPGC

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Life Insurance Workbook

by Tony Steuer on Aug 22, 2011

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Life Insurance Workbook — Presentation Transcript