If you’re just starting to look into life insurance, the myriad of choices can be confusing.
Man is Mortal. That makes life insurance a little unique and interesting, doesn’t it? We purchase things like health insurance, car insurance and home insurance, then hope we never have a need to use them. Life insurance is different, because it’s a widely accepted fact that sooner or later, each one of us will die.
So many choices. When it comes to life insurance, there are many options. You may have heard terms like “whole life insurance”, “term insurance” or “variable insurance” … but what does it all mean? And what are the differences? Well, first let me point out what they have in common: all life insurance policies provide payment to a beneficiary in the event of your death. Except for that basic tenet, the differences between policies can be major.
Whole life insurance. This type of insurance covers your entire life (not just a portion or a “term” of it). Insurance companies tend to be cautious when selecting their investments, so the rate of return could be lower than if you invested on your own. Whole life policies also tend to cost more than “term” policies. This is both because they grow what is known as “cash value”, and because after a time, you will be able to borrow against or withdraw from your whole life benefits.
Term insurance. Rather than covering your whole life, “term” insurance covers a pre-determined portion of your life. If you die within that term, your beneficiaries receive a death benefit. If not, generally you get nothing. To put it simply, term insurance allows you to purchase more coverage for less money. Basically, you are betting on the probability of your death occurring within that specified “term”.
Variable life insurance. Variable life insurance is a permanent insurance. However, unlike whole life insurance, variable insurance allows you to invest the cash value of your policy in “subaccounts” (which can include money market funds, bonds or stocks). Variable insurance offers a bit of control, as the value and benefit depend upon the performance of the subaccounts you select. However, that means there could be significant risk involved, since the performance of your subaccounts cannot be guaranteed.
Universal life insurance. With universal insurance, it all comes down to flexibility. It is permanent life insurance that provides access to cash values that build up tax-deferred. You can choose the amount of coverage you feel is appropriate, and you retain the ability to increase or decrease that amount as needs change (subject to minimums and requirements). You also have some flexibility in determining how much of your premium is goes towards insurance, and how much is used within the policy’s investment element.
So, which is right for you? Many factors come into play when deciding what type of life insurance will best suit your needs. The best thing to do is speak with a trusted and qualified insurance professional who can assist you in looking at all the factors and help you to choose the policy that will work best for you.
These are the views of the author and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information. 16833 | 2520310
This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. This information should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. www.petermontoya.com, www.montoyaregistry.com, www.marketinglibrary.net
By Bart Astor, Next Avenue Contributor
How do pre-retirees and retirees feel about retirement these days? Glad you asked.
Since this is “National Retirement Planning Week” (dreamed up by 40-odd financial industry and advocacy groups), a passel of retirement surveys have just been released. I’ve read them — so you don’t have to — and here are the highlights and four action steps to take based on the findings.
Interestingly, the results are somewhat contradictory.
Mixed Messages From Retirement Surveys
On the one hand, 60% of Americans worry they won’t ever have enough money to retire, according to a survey from the Insured Retirement Institute (IRI), and 55% ofboomers told PNC Financial they worry their savings may not hold out for as long as they live. The top financial concern of boomers (cited by 53%) in the PriceWaterhouseCoopers (PwC) Employee Financial Wellness 2015 survey was “not being able to retire when I want to.” Yet about half of the New York Life retireessurveyed said they wish they had retired four or five years earlier than they did.
(MORE: 3 Ways to Avoid Outliving Your Nest Egg)
Some of those retirees in the New York Life survey are undoubtedly enjoying theirnewfound freedom. But others likely wish they’d retired earlier because their failing health has kept them from doing some things they’d planned to do in retirement. Even when you take finances out of the equation, though, about half of the retirees surveyed said they should have taken the plunge earlier. Most of the retired men felt they should have retired between three and five years earlier and most of the retired women would have preferred retiring one to three years earlier.
“Many of the clients we work with didn’t realize until after they retired that they should have done it sooner,” said David Cruz, senior managing director at New York Life.
Survey after survey released this week, however, shows that roughly half of non-retired boomers plan to postpone their retirement, usually because their savings are coming up short. (The boomers PNC surveyed said $1.3 million is the minimum amount they think they need to have saved for retirement.) According to IRI, last year about a quarter of boomers postponed a planned retirement.
(MORE: Why You’ll Need Less In Retirement Than You Think)
One Retirement Worry: Free Time
A second, and important, reason cited by working boomers for postponing retirement was uncertainty about what they’d do with themselves.
In IRI’s survey, about a fifth of the boomers listed not knowing what they’d do with theirfree time as one of their top two retirement concerns.
While researching my personal finance books, I’ve heard many people worry about retiring, saying they have no hobbies and that they’d go stir crazy without a job and purpose. But as I point out in my book, AARP Roadmap for the Rest of Your Life,chances are, sooner or later in retirement, you’ll decide that there are things you want to do other than veg out on the couch. Then you’ll start filling your days with exciting and rewarding challenges, such as volunteering or continuing your education.
Now for four action items based on the latest retirement surveys:
Start dipping your toes into the retirement-life waters. Volunteer. Take a class. Join a gym. Explore what turns you on and begin to make preparations for retirement. Then maybe you’ll become one of those retirees who said they wished they’d retired sooner.
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Baby Boomers are a very diverse group with varying backgrounds and, therefore, have many concerns and expectations related to preparing for retirement. Using IRI’s Retirement Expectations Checklist with your financial professional can help determine your individual set of needs, and prioritize them in order to build a retirement income plan for your future.
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NAIC Buyer's Guide for Fixed Deferred Annuities
It's important that you understand how annuities can be different from each other so you can choose the type of annuity that's best for you. The purpose of this Buyer's Guide is to help you do that. This Buyer's Guide isn't meant to offer legal, financial, or tax advice. You may want to consult independent advisors that specialize in these areas.
This Buyer's Guide is about fixed deferred annuities in general and some of their most common features. It's not about any particular annuity product. The annuity you select may have unique features this Guide doesn't describe. It's important for you to carefully read the material you're specific annuity features.
This Buyer's Guide includes questions you should ask the insurance company or the annuity salesperson (the agent, producer, broker, or advisor). Be sure you're satisfied with the answers before you buy an annuity.
Click HERE for the NAIC Buyer's Guide for Fixed Deferred Annuities