Transferring Life Insurance To Lower Estate Taxes
Filed Under Afforable Life Insurance, Life Insurance Costs, Life Insurance Premiums, Transfer Life Insurance | 1 Comment
Federal estate taxes will affect your estate if it is worth more than $2 million at the time of your death. One way to lower your beneficiaries’ estate taxes is to transfer the ownership of your insurance policy. This works especially well if you have Afforable Life Insurance.
Owning your own policy adds the amount received to your taxable estate, but any other parties owning an insurance policy on your life will not be taxed. This does not apply to spouses; anything left to a spouse is not taxed, but anything left to children, family members, and other beneficiaries is taxed. You can transfer ownership of the policy, to the beneficiary or any other adult, but keep in mind that with ownership they receive complete control of the policy, even in the case of divorce. This applies even for more much lower priced Life Insurance.
You cannot give away your policy if you are expecting to die shortly because life insurance policies given as a gift are disallowed if three years do not pass before the death of the insured. If you use this option, be sure to transfer the policy completely. If you retain ANY control over the policy, this is considered “incidents of ownership” and will make the insurance benefits a part of your taxable estate.
A gift tax will be taken out of the policy upon your death for any amount over $11,000, based on the policy amount at the time of transfer, but this will cost less than the estate tax. The transferee will be responsible for paying premiums once you name them the owner of your life insurance policy. If the policy is paid in full, they will not have to pay but a gift tax will be taken out upon payment of the policy. If not, you can give them the money to pay; if it is less than $11,000 per year, it will not be taxed. This is another good reason to always look for Cheap Life Insurance policies.
A second method of avoiding estate taxes on a life insurance policy is to hold the policy in an irrevocable life insurance trust. This will eliminate ownership without eliminating control. This way you have the power to rename the beneficiary, and it avoids the possibility that a new policy owner cashes in early, fails to pay, or changes the beneficiary. Be sure that this trust is irrevocable, that you are not the trustee, and that three years pass between the establishment of the trust and your death (if you can). If you are able to revoke the trust, you will be considered owner of the policy, and the same three-year disallowment rule applies as the rule regarding policy transfers.
How To Choose A Life Insurance Agent
Filed Under Afforable Life Insurance, Compare Life Insurance, Life Insurance Agents, Life Insurance Costs, Life Insurance Plans, Life Insurance Premiums, Life Insurance Quotes, Long Term Care Insurance, Term Life Insurance, Whole Life Insurance | Leave a Comment
It is important to choose a life insurance agent that you trust, make sure the company is reliable, and compare your rate with others before you purchase a life insurance policy. The first thing you need to do is get familiar with the basic types of life insurance policies.
Some common types are term and whole life insurance. Then it’s time to look into the costs. Depending on the company you choose, the price of you coverage may vary greatly. Usually, smaller mutual companies don’t charge as much as the larger companies you may see on TV. Also, you may be able to find a broker who can offer you a “discount” commission. This can often result in Afforable Life Insurance.
An easy way to compare rates is to visit a web site that offers free life insurance rate shopping. These sites may not cover every company but they are a good place to get started at. If a site only provides a quote for one type of product you should look for various types to you can make a better decision.
After you have chosen a policy you can do one of two things: buy it straight from the company or through a broker or salesperson. The cost will probably be similar, but it may still be wise to get help from a local agent. A salesperson usually sells for only one company and a broker can set you up with many others. Through experience you will learn that the integrity of who you choose is much more important than the relationship between your company. It’s important to look for a person who will work with you as a close partner and offer you information and several alternatives to whatever choice you are going to make.
This person should not try to force you buy a product; if you get a lot of this kind of pressure, you should contact someone different. Also remember that some variations in policies aren’t really as important as some agents may make them seem. Another important thing to remember is that many agents will try to convince you not to buy term insurance just because they will make much more if you buy whole or universal life insurance. This can be to your disadvantage, as whole life is usually not as cheap as other types of Life Insurance.
Knowing that you want a person you can trust and finding one are two totally different things. One of the best ways to find a good agent is to get references from family members, people you work with, and friends. You can even put out a note asking for recommendations from a local newsletter or bulletin.
Agents and brokers are required to get a license form the state that they do business in. You should contact the licensing agency and check to make sure that the person is really licensed and hasn’t had any disciplinary problems. Some states provide this information online also. You can call the Better Business Bureau and ask about any consumer complaints against the salesperson.
The last thing to do is to talk to several agents and find out if the agent will ask a lot of questions or just try to sell you the product. Also you should compare the products each agent offers you to find the best deal possible. Before you sign your contract you need to make sure that your company is reliable. Some companies pose the risk of having financial troubles or even going broke. Even if it seems like Cheap Life Insurance, you want to make sure it’s a reliable company as well.
There isn’t any guarantee fund for life insurance companies, but in every state but Colorado, Louisiana, New Jersey, and Washington, D.C., there is some type of industry-sponsored state guarantee fund. These funds do offer the holder hope that they won’t lose everything, you still don’t want to wait for state regulators to take control. you should investigate and see how much money you can get back.
An easy way to avoid this entire scenario is to check the reliability of the company. There are several ways to rate the financial stability of a company by visiting various online sites. It’s a good idea to compare your company to a few online rating systems to be sure it gets the top rates.
10 Ways To Get Cheap Life Insurance
Filed Under Afforable Life Insurance, Compare Life Insurance, Life Insurance Claims, Life Insurance Costs, Life Insurance Premiums, Life Insurance Quotes, Low Load Policies, Poor Health Life Insurance | Leave a Comment
As you probably already know, your age and health will affect what you pay for your life insurance. If you are in the military or into anything that is risky to your heath, forget about looking to get a really cheap policy. We have taken all this into consideration and have come up with the following 10 suggestions to save you money on your life insurance premiums so you can get truly Afforable Life Insurance:
- When an employer offers health insurance coverage, the premium costs are split between you and the employer. When you terminate service with your employer, you probably won’t be able to remain on the employer’s group plan unless the termination comes with some sort of severance package. Even then, the duration of coverage is typically limited to a few months. So don’t count on being able to save as much if you are no longer employed.
- Remember that you must be honest when applying for insurance. Ensure that when you are asked if you smoke, that you are specific in your answer.
- Be aware of premium discounts for particular amounts of insurance. Typically, you can pay your life insurance premium once a year, once every half-year, once a quarter, or once a month. Although paying quarterly or monthly might seem to be easier to fit into your budget, some companies levy high charges for paying premiums frequently. Others levy quite small charges to do this. If a company levies high charges for paying more frequently, try budgeting so that you can pay your premium only once or twice a year. This can help you get Cheap Life Insurance.
- If your application for life insurance is rejected because of poor health, there other are companies that specialize in high-risk applicants, although the premiums for these policies can be expensive and in many cases the face amount is limited. Some companies specialize in particular diseases or lifestyles. Companies such as Connecticut National and U.S. Financial offer competitive rates. These companies employ underwriters who are trained to analyze the extent of a given problem.
- Anytime someone is acting as your paid intermediary, whether he be an agent, a fee-only consultant, or some other capacity, there is a potential conflict of interest. You want your money to be used in the most reasonable, legal, and financially sensible way it can be. Your intermediary wants to get paid, whether through commission or direct fees. What easier way for him to generate this income than use and reuse your money, making a “sale” each time. The general term for this is churning — someone reusing your money for no purpose other than to make him money.
- A sure way to save money on term life insurance – lose weight! With a reported 65% of American’s weighing in as overweight, the American Obesity Association in Washington, DC found 40% of all US women and 25% of US men are trying to lose weight at any given time. Being overweight costs more than most can imagine – overweight people spend more on life insurance because increases in weight are related to increases in diseases and bad health.
- Whatever type of policy (or policies) your family decides to buy, it is important to keep your plan flexible. To do this, you can add special clauses, known as riders, to your policy. Two of these clauses, the renewable and convertible clauses available with term insurance, were described in the paragraphs on term insurance. Three other widely available riders add to the policy cost and may or may not be worthwhile for your situation.
- All policies are not the same. Some give coverage for your lifetime and others cover you for a specific number of years. Some build up cash values and others do not. Some policies combine different kinds of insurance, and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. Your choice should be based on your needs and what you can afford, so that you get low-cost Life Insurance.
- Low Load Policies are a valuable part of a sound business insurance plan. High immediate cash surrender values are carried as an asset on the corporate books so no assets leave the corporation. Companies can also use Low Load Policies to fund employee benefits using corporate dollars, thus reducing their at-risk capital.
- There are often hidden costs in life insurance policies, such as fees and large commissions, that you may not find out about until after you purchase the policy. There are so many different kinds of life insurance, and so many companies that offer these policies, that I recommend using a fee-only insurance advisor who, for a fixed fee, will research the various policies available to you and recommend the one that best suits your needs. To ensure objectivity, your advisor should not be affiliated with any particular insurance company and should not receive a commission from any policy.