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Insurance, Income
Planning & More... |
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for the
Residents of Arizona! |
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About Life
Insurance
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On the surface, life insurance is
attained for one important purpose: Protect the life of an
individual. But really what we're saying, is life
insurance is needed to protect the income which that life
produces. Take this example. We have a dual income
family with a husband, a wife, and two children. Let's
suppose the husband passes away prematurely, and like that, the
family income is cut in half.
To make matters worse, the
mortgage, the car payments, the children's school supplies and
all the other bills remain almost exactly the same. It can
be
absolutely devastating to a family! Many times, the
remaining family members are forced to prematurely sell their
home, and in some cases, beg for money from friends, family, and
even complete strangers (ever see a car wash "drive"
that's used to raise money?).
The
good news is that this type of unforeseeable event can be
minimized (at least, financially) using life insurance. In it's most
simplistic form, life insurance can be broken down into two broad
categories, defined as Term Insurance and Permanent
Insurance. Both plans have certain pros and cons which
need to be considered when making your decision. |
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| Term Life
Insurance |
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| Term life insurance is coverage that is based on a certain time frame, or term.
For example, most policies have a term length between 10 – 30 years.
A person who is 26 years old, and purchases a "20 year term policy" will own that policy until age 46...or 20 years.
Term insurance is typically less expensive than Permanent
insurance, but the fundamental concern is that most insured's
"outlive" their policy. Therefore, the premiums paid into
the policy are never refunded. |
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| Return of
Premium (ROP)
Life
Insurance |
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| ROP Insurance, like term insurance, is based on a certain time
frame (ie. 20 years). However, the biggest difference is
that if the insured "outlives" their policy, all of the premiums
are refunded to them, income tax-free. Although the premiums tend to be
higher priced, they can still be less expensive as permanent
insurance premiums. |
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Inexpensive.
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For most policies, the premiums
are guaranteed for the length of the term.
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Return of Premium (ROP)
policies are now widely available, which returns ALL premium
dollars to the insured at the end of the term length.
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Once the term is completed,
the policy is terminated, and all premium dollars are lost
(assuming policy is not ROP).
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When policy term is expired,
the renewal of policy is not guaranteed, and if the policy
is renewed, the premiums will be more expensive.
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If the insured dies AFTER the
term policy expires, the beneficiary receives no financial
benefit.
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| Permanent Life
Insurance |
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| Several types of permanent insurance products are available,
and are generally categorized into Whole Life, and Universal Life
(with several variations of Universal Life avaiable).
Permanent insurance, if set up correctly, is a policy that will
last your entire life, assuming all necessary premiums are paid.
Certain types of policies will even build a significant
personal "cash value," that can become a valuable part of your
financial independence... Including the ability for your
cash value to grow tax deferred, and your ability to use that
money 100% income tax-free... Essentially eliminating any
of the rules and regulations of the IRS! |
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The beneficiary is
guaranteed to receive a financial death benefit
(assuming the policy is set up correctly during the
initial application) when the insured dies.
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Some policies have a
cash value that grows inside the policy. The owner of
the policy has the ability to use this cash when
he/she feels it necessary (as opposed to term
insurance, where the policy has no financial value to
the insured).
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Flexible premium
payments.
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Typically, less
stringent underwriting requirements than a term
policy.
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More expensive
premiums.
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Setting up a plan properly requires time and serious thought. A full comprehensive financial profile is
strongly required.
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Premiums are generally
guaranteed, but can vary during long economic
draughts.
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| Life Insurance
and the Business Owner |
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Business owners may want to consider key person life insurance
for those employees who are vital in keeping your company running
smoothly. Multiple Business owners will need to verify that their
Buy/Sell agreement is properly funded in the event of an
untimely death of one or more of the business partners. |
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| Life Insurance
Review |
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| So which type of life insurance is right for
you? Obviously, different types of insurance have
different advantages and disadvantages, so it's important to
make sure you have the right type of policy to meet your
specific needs. Simply contact Jed Maslowski at 480-661-1005
or
jed@mazinsurance.com. |
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