Filing Life Insurance Claims

If you are the listed beneficiary on a life insurance policy, it is your responsibility to file a claim on the proceeds of the policy. In order to do this, you'll have to furnish proof that the insured is dead. This may seem trite at first, but life insurance companies are wise to protect themselves from fraud.

Obtain as many copies of the death certificate as you can. If there is a funeral or cremation ceremony the director can help you get hold of these. In the rare case where there aren't any parting rites, contact the hospital or facility wherein or nearest to where the insured died.

Next, contact the insurance company that underwrote the policy. Preferably contact the field agent who wrote the insurance if he is still with the company. You will need to take the insurance policy with you to the meeting and "surrender" it in exchange for the money due you, and of course you'll need ID to prove you are the person listed as beneficiary.

It can take a quality life insurance company up to two weeks to pay you the money as the claim must undergo investigation, although it's possible for you to have your money within a couple days. Virtually every time an agent of the company will deliver your check or come do your payout paperwork with you in person.

PAYOUT OPTIONS

Most commonly, beneficiaries take a lump sum payment. This is simply asking the life insurance company to cut them a check for the grand total amount of money the deceased was insured for, known as the death benefit. But this is not the only payout option available, and the agent will want to know what option you're choosing.

Another option that's not uncommon is that of Specific Income. With this you'll receive an equal amount of the total death benefit every year for a stated period of years until it's all paid out. You can choose a second beneficiary to receive the remainder of payments should you die before receiving all the money.

Probably the most popular option after Lump Sum is Interest Income. With this option the insurance company invests the death benefit for you and you are paid the interest that the invested money earns but you aren't paid any of the principal. You can name a beneficiary to receive a lump sum payout of that principal when you die.

With the Life Income option, you can choose to receive an annual payment for the rest of your life. The annual amount will be calculated based on the total death benefit and the amount of years you are expected to still live--this is known as "annuitizing" your payment. If you die before the total death benefit is paid out the insurance company keeps what was left over. You can also choose a variation on this, the Life Income with Period Certain. With this option you are guaranteed an income for the period you choose (usually a multiple of five years). The longer the period the smaller the monthly or annual payments. If you die before the period is up, another beneficiary of your choice receives the remainder of the money. If you survive the payout period, payments stop and you'll need to rely upon another income source.

A Joint And Survivor Life Income annuitization option lets you vary this yet more, and annuitize the payout based on two or more beneficiaries, with the payments based on the death benefit plus the life expectancy of the beneficiary who is expected live the LONGEST. The payout continues to pass from beneficiary to beneficiary as one of them dies until the final one has died.

WHAT TO DO WITH DEATH BENEFIT MONEY

The very first thing the majority of people do with their death benefit proceeds--which are tax-free, by the way (if taken in a lump sum)--is go on a vacation. But this is likely not the wisest of actions.

First, you should make sure all of the deceased's debts are paid off, especially if it was your spouse. Also be sure any funeral expenses are paid off.

Next, use the money to pay off any debts of your own. If there isn't enough left to pay them all off, pay off or pay down as much of them as you can.

If you still have money left over, consult with a financial advisor about how to best invest it. But above all things, do not just go blowing the money on things like vacations.

A FINAL NOTE

Taking the lump sum payout is the best option for at least 80% of all beneficiaries. Using death benefit money for some kind of income should never be considered without first talking to a financial advisor and your accountant.

The author lives with her husband in Maryland, with their two dogs and cat. She put together the website [http://www.affordable-life-insurance-guru.com] in order to help the everyday person navigate the often confusing world of life insurance

Article Source: http://EzineArticles.com/expert/Julie_Shields/40523

5 Reasons to Purchase an Indexed Universal Life Insurance Policy

As a financial planner, I feel like Indexed Universal Life insurance is one of the most misunderstood and underutilized tools and asset classes in the market today. I believe that this is because of the newness of the product itself. Indexed Universal Life(IUL from here on out) has only been around for a little over 15 years. Because of this, most financial advisors don't fully understand it. IUL's came around after they received their education and set their practices. Thus, individuals aren't learning from experts, but rather, they rely on media pundits for any information on these programs. In an effort to further educate you, and promote a wonderful product, I give 5 reasons to buy an IUL.

The first great reason to have an IUL in your retirement portfolio is the fact that these products provide minimum guarantees. Unlike placing your funds directly into the market, these funds are protected from the market. They earn interest in a unique way. Interest is credited based on the performance of a chosen index. Rather than being invested in the actual market, you merely receive a portion of the index return. Again, the worst-case scenario is that you earn 0% in a given year. You can never lose money due to market fluctuations. Each year that you do earn interest, that interest is locked in and becomes part of the principal amount guaranteed to not be at risk to the market. What a great way to plan for retirement. This system of guarantees also removes the risk of retiring at the wrong time, when your account value is low due to market losses. It also prevents catastrophic damage to your retirement due to losses in the early years of your retirement.

In addition to the downside protection, these products can perform very well; often times outperforming the market returns seen in a typical investment portfolio. So you don't have to give up a good return to find a safe haven for your retirement nest egg.

The second great reason for purchasing an IUL is the tax-free death benefit.

Life insurance is often used as a tool in estate planning. It is treated favorably by the IRS tax codes. Often, the funds coming from a death benefit from a life insurance policy are passed on to beneficiaries income tax free. Indexed Universal Life is no different. It becomes a wonderful tool to pass on assets tax free. Unlike other retirement options, such as a 401k, the assets held in an IUL pass on without taxes and give you immediate access to the funds, unlike assets held in real estate. It is also very typical, due to the death benefit common in all life insurance policies, that the death benefit will exceed the accumulation value of the account, meaning you not only leave more to your beneficiaries by paying less in taxes, but also because of the higher death benefit.

The third great reason for looking at an IUL is for the incredible supplemental retirement income that can be generated from it. What if you could put an unlimited amount of money into a Roth IRA, pay taxes on the principal now and have an income generated, tax free, for your retirement, and you could even access it early if you wanted? That would be an incredible deal, right? Well, it exists. It's called an IUL. You can create a tax-free income through these IUL's without having to worry about the timing of the market. Rather than rolling the dice of where the tax brackets fall out over your lifetime, why not draw at least part of your income through a program that allows you to fund it limitlessly, and not have to worry about paying taxes on the gains?

This is achieved through policy loans. It's a new concept, but hear me out. Through a policy loan, you are able to draw out an income from your IUL tax free. Everyone always asks me "what if tax laws change?" Valid question. In theory, it is possible that the laws change and these funds do become taxable, but that would be odd. The government doesn't tax our loans, only the asset by which the loan is guaranteed. Think for example of your car loan... you pay a property tax on that auto, but you don't have to treat the loan from the bank that you used as income because it wasn't income, you have to pay it back. These policy loans function the same way.

Diversification is the fourth reason to purchase an IUL. Since the bulk of your retirement funds are probably in taxed deferred savings accounts, like traditional IRA's and 401k's, IUL's can provide a diversification, not only in asset class, but also in the tax treatment of the account. We typically believe in diversification and have been taught that since our high school years, yet we all have our retirement in the same types of vehicles. All are tax-deferred time bombs with minimum distribution ages and minimum distribution requirements or maximum contribution amounts controlled by the government and current economics in the USA. We are all typically in a blend of stocks and bonds, crossing our fingers that when that day comes to retire, we are up, not down. Hopefully we've picked well, though we be uneducated as can be, and yet we bank on this as our retirement program and a whole industry has built itself around it. Amazing that we've heard this same concept preached for over 2 decades and we're still drinking the kool-aide. I'm not going to tell you to not drink, just try a different flavor for a minute. It should be noted that when taxes go up, and they inevitably will, you will pay taxes on those funds that are in taxed deferred accounts. This can hurt the value of the dollars you have saved in those accounts. There is also a little thing called an RMD. Required Minimum Distributions are what the federal government requires us to withdraw from our retirement accounts, based on our age, as a percentage of our account balance. There is always the possibility of these percentages increasing so the taxes can be collected on these funds. This could also cause you to withdraw funds you don't need. An IUL gives you a great hedge against these potential tax issues.

Finally, the fifth reason to purchase an IUL is because they allow you to work towards becoming your own banker. Have you ever found it odd that you borrow money from a bank even though you have money in the bank? I have. Most IUL's have loan provisions allowing you to borrow from and pay back your life insurance. The nice thing is, by doing this, you pay yourself the interest rather than the bank. You continue to have a retirement fund that is growing and you aren't losing years' worth of interest to the bank. Think of all the interest you have paid for credit cards, auto loans, your mortgage, etc. You can borrow yourself the money instead and you don't have to worry about the approval process at the bank. Many business owners feel that term insurance is the only type of life insurance for them because they don't want to tie up their money. This is a false assumption. The funds "tied up" in life insurance are not locked up, but rather, provide more access to funds than most investment opportunities. The funds can be borrowed and replaced with relative ease, making it a wonderful program for creating your own personal banking system.

One final little bonus is that your IUL is permanent insurance, as long as it is built correctly and you fund it properly. You'll likely have lifetime coverage, even after stopping your premium payments and taking withdrawals. Long after your term insurance is gone, you'll still have a death benefit to leave those you love.

For these reasons, along with many others, indexed universal life insurance is a great way to help fund your retirement. It is not perfect for all situations, and it is always wise to consult your advisor before purchasing any retirement funding program. That being said, there are five reasons you should give your advisor a call and find out if an IUL is right for you.

Article Source: http://EzineArticles.com/expert/Ed_F_Kinsey/1251402

Whole Life Insurance or 529 Plans - The Choice for Funding a College Education

Whole life insurance is the workhorse of the insurance industry. It is designed to be in force throughout the life of the policyholder with the premium never changing. It has often been compared to buying a home with a 30 year fixed rate mortgage where your monthly note containing your principal and interest never change throughout the life of the mortgage all the while your home equity is building up. Similarly, all the while your whole life policy is in force, your cash value is building up tax-free.

529 plans are best described as a way for parents to save money for tuition in a tax-deferred account. The state income tax break together with not having to pay federal income tax on your earnings have made these financial instruments attractive to some parents and grandparents. However, given this current economic climate, some states may begin to restrict qualifications for the tax breaks by limiting the amount that you can claim as a tax deduction. You need to closely monitor the tax laws relative to this issue in your state. In addition, with returns on managed funds and FDIC insured plans being historically low, you simply may not get the value that you were promised.

Now contrast a whole life insurance plan with a 529 plan. As earlier mentioned, the growth in the cash value feature of the whole life insurance plan is guaranteed and builds up tax-free. And, because it is in the private sector, it is not subject to the whims of the politicians who not only decide who manages your funds but also how much you can declare as a tax deduction.

But, even more importantly, it must be emphasized that permanent whole life insurance is an asset that is guaranteed to grow each year as long as you continue to pay your premiums. It is not a commodity purchase with fluctuating returns.

While many assets lost as much as 50% during this recessionary period, permanent whole life insurance has continued to grow. Therefore in choosing a whole life plan choose the largest face amount that you can afford. For unlike a 529 plan, a whole life insurance plan is self completing if you should die before your children are old enough to begin college. And, if you become seriously ill or disabled, with waiver of premium as a part of your policy, your premium is paid for you.

So in choosing a permanent whole life insurance plan, you have a guaranteed, tax-free cash buildup, a face amount that would be paid to your beneficiaries if you should experience a premature death, and, if you become seriously ill or disabled the company would pay your premiums for you.

Which choice gives you the greatest piece of mind?

Will Barnes, Business-Financial Consultant, for over thirty-eight years has helped individuals and families make sound decisions in the areas of home buying, planning for the children's education, protecting one's family and business, and planning for a secure retirement. Visit Educational Planning for more articles and to subscribe to the newsletter to get up to date information.

Article Source: http://EzineArticles.com/expert/Will_Barnes/170374