Snellville Car & Home Insurance :: Gwinnett County Agency

You need life insurance if anyone depends on your income. In such cases, life insurance solves many personal and business financial problems.

Personal needs

If you are a young parent, you may need life insurance on your own life to enable a surviving spouse to raise the children. When you are older, you may need life insurance if you are financially responsible for an aging parent or want to provide funds to take care of final expenses, debts or taxes.

A general rule suggests buying protection equivalent to FIVE TO EIGHT TIMES YOUR ANNUAL INCOME. Your needs may vary according to your financial assets and liabilities.

Life insurance can solve your heirs' immediate and long-term needs.

This is the person or financial institution (a trust fund, for instance) named in an insurance policy as the recipient of the funds in the policy, in the event the policyholder dies.

In addition to naming a specific beneficiary to receive the proceeds of your life insurance policy (permanent or term), you should name a secondary or "contingent" beneficiary, just in case you outlive the first beneficiary.

If there is no living beneficiary, the proceeds will be paid to your estate and have to go through probate proceedings, resulting in a possible delay before your family receives the money. If the proceeds go into the estate, these proceeds may be subject to estate taxes.

If you suspect that someone who has died may have had a life insurance policy and named you beneficiary, there are several steps you can take to track down the missing policy:

Call your state’s department of unclaimed property to see if the insurance company put the policyholder’s name on their list.
Check the deceased’s safety deposit box at the bank, their file cabinets and personal computer records to see if you can find the policy.
Look for old checks written to insurance companies in the past to trace old policies.
Ask older relatives if the deceased ever mentioned that they had a life insurance policy and which company they had it with.
Call the insurance company that provided auto and home insurance to the deceased, because they might have used the same company for life insurance.

To help you decide how much and what type of life insurance you need, you have to evaluate your family’s financial needs.

Organize your family’s financial information and estimate what your family would need after you have died and are no longer producing income. Include ongoing expenses such as day-care, tuition costs and retirement savings, as well as immediate expenses at death such as medical bills, burial costs and estate taxes.

You should also count on additional money to help your family readjust to the changed situation. For example, the family may want to move to another home or your spouse may need to be retrained for another job to support the family.

As a general rule, you should buy protection equivalent to five to eight times your annual income. But your needs will vary greatly according to your financial assets and liabilities, income potential and level of expenses.

Insurance is sold both as individual and group policies.

Individual policies are sold either through licensed insurance agents or brokers or directly from the company over the telephone, through the mail or over the Internet.

If you buy a policy through an agent, you will pay a commission called a “load.” It is deducted from premiums paid by the policyholder, with the vast majority deducted in the first year of the policy.

Policies sold directly from the insurance company to the policyholder, through direct mail, over toll-free phone numbers or over the Internet are called “no or low load.” Since there is no salesperson to compensate, the savings are passed on to the policyholder in the form of faster cash value build-up. Remember that the personal service provided by an insurance agent may not be available if you purchase the product directly from an insurance company through the mail or online.

Ask insurance agents about their qualifications to sell insurance. One designation that shows they have passed a series of rigorous exams is the Chartered Life Underwriter (CLU). You can find out more about CLUs from the American Society of Financial Service Professionals at 270 South Bryn Mawr Avenue, Bryn Mawr, Pennsylvania 19010; 888-243-2258; http://www.asclu.org/

Group policies are bought by employers, unions or trade associations and offered to employees or members either as an employee benefit or a member benefit. Employers usually pay most of the cost of premiums, while associations arrange for group rates but have the premiums paid by members who buy policies.

There are hundreds of life insurance companies and thousands of agents to choose from. Here are four main considerations you should use:

Price

Premiums vary widely between different companies, depending on their expenses, investment experience and underwriting standards.

Compare prices from at least three companies before buying to make sure you are getting the best value for your insurance dollar. When you compare prices, make sure you compare similar insurance plans, based on your age, the kind of policy and the amount of insurance you are purchasing. Prices may differ between companies because of different features or different levels of service quality or the financial strength of the insurance company.

Make sure you can afford the premiums because you will be wasting your money if you are forced to drop it in a few years. Some state insurance departments publish guidelines showing what different companies charge. You can also check prices on your own at many of the insurance price-quoting web sites or at their toll-free numbers.

Insurer's stability

In addition to a reasonable price, you want to be confident that the insurance company will be in good health financially to pay your claim if necessary.

Companies that rate insurer’s financial stability include:

Service

The insurer you select should offer excellent service. The agent or company representative you deal with should explain options to you in a way you can understand so you can make the best choice for your needs.

If you have a claim or question, the company should handle it promptly and accurately. Your state insurance department will be able to tell you if the insurance company you are planning to do business with has any consumer complaints about its service.

Comfort

You should be comfortable with your insurance purchase. Your agent or company representative should answer all questions to your satisfaction before you buy any policy.

Term Insurance

It provides protection for a specified period of time, typically from one to 30 years. It pays a death benefit only if you die during this term. Some policies can be automatically renewed at the end of the coverage period, and some can be converted to permanent insurance without need for a medical exam.

There are several different types of term insurance you can consider:

Renewable Term Insurance.
These policies have a provision allowing you to renew coverage at the end of the term without having to show evidence of insurability. The company has to renew your policy even if your medical condition has deteriorated. However, the premium rate will rise with each renewal.
Convertible Term Insurance.
These policies allow you to convert your term coverage into a permanent policy without providing evidence of insurability. Premiums for convertible policies are usually higher than for nonconvertible policies. Once converted, the premiums for the permanent coverage will be higher than those of the term policy with the same death benefit. However, the permanent policy premiums will remain the same while the term premiums will rise.
Level Term Insurance.
These policies provide a fixed premium for a certain number of years, usually 10 or 20 years, while the death benefit remains unchanged. The death benefit is the amount the life insurance company will pay, as stated in the policy, when the insured person dies. The advantage is that you lock in a certain rate for the period of the policy. The disadvantage is that the premiums will tend to cost more than the earlier years of the renewable policy, and when the level policy expires, premium rates will jump considerably if you want to renew with another level policy.
Decreasing Term Insurance.
The death benefit in this type of policy decreases over its term. For example, you might start with $100,000 of coverage and the amount of coverage decreases by $10,000 each year for 10 years. The premium usually remains the same over the term of the policy. This type of insurance allows you to pay the same premium for less insurance over time, rather than have your premium increase for the same amount of insurance.
Increasing Term Insurance.
This kind of policy starts at one level of death benefit which gradually increases over the life of the policy. You may start with a $100,000 policy and increase the death benefit $10,000 each year for 10 years. The premium will increase each year. This kind of policy may be appropriate if you see your insurance needs growing in coming years because, for example, you expect to have more children.

Permanent (cash value) Insurance

It provides life-long protection as long as you continue to pay premiums. The premiums are based on your age at the time of purchase, and generally remain level. They do not increase as you age. Therefore, the younger you are when you buy the policy, the lower the premium you will pay for the life of the policy.

Because premiums remain level, permanent insurance is more expensive than term insurance. But permanent insurance accumulates cash value, which may be refundable upon surrender of the policy. While the policy is in force, cash values can be borrowed against or used to pay premiums.

The proceeds of many permanent life insurance policies can be used to ease the financial burden of catastrophic illness, terminal illness or long-term care. These accelerated benefits may be offered as part of the basic policy or as a rider to an existing policy.

With a permanent life insurance policy, you may borrow up to the cash value at an interest rate (fixed or adjustable) stated in the policy. Any unpaid interest is added to the loan. Any unpaid loan, including interest, will be deducted from the death benefit. The cash value can be used to pay premiums for a period of time, keeping the stated death benefit, or it can be used to purchase paid-up insurance in a lesser amount with no further premiums due.

There are four basic types of permanent insurance:

Whole Life.
Sometimes also called life or ordinary life, this policy has a fixed guaranteed rate and develops guaranteed cash values. There are two variations on traditional whole life:
1. Joint Whole Life: The policy insures two lives instead of one. Also called first-to-die coverage, the policy pays the death benefit to the surviving insured person when the first one dies. This is often purchased by a husband and wife.
2. Survivorship Life: The policy insures two people and pays a death benefit only when the second person has died. It is designed for married couples who want to provide funds to pay estate taxes that may be due after their deaths. Also called second-to-die coverage.
Universal Life.
This policy has more flexibility. Within certain limits, you can change the death benefit, the amount of premium and payment frequency. Unlike whole life, this is an "interest driven" policy, which normally pays a minimum guaranteed interest of 4% to 4.5%. If the interest rates are continuously low, additional premiums may have to be paid to avoid a lapse of coverage.
Variable Life.
This policy has death benefits and cash values that vary with the performance of an underlying portfolio of investments that you select. The death benefit and cash value are not guaranteed. They can go down as well as up, although there may be a guaranteed minimum death benefit.
Variable Universal.
This policy combines the premium and death benefit flexibility of universal life with the investment flexibility and risk of variable life.

On all of the above policies, riders are available at an additional cost for the following coverages:

Disability waiver of premium.
A feature added to some life insurance policies providing for the waiver of premium, and sometimes payment of monthly income if the policyholder becomes totally and permanently disabled.
Accidental death.
A provision in a life insurance policy for payment of an additional benefit if death is caused by an accident. This is sometimes called double indemnity.

Key life insurance terms

It is important to understand some of the key terms in life insurance policies, before you purchase one:

Accelerated death benefit.
Some insurers offer you the ability to collect life insurance benefits while you are still alive to cover the costs of catastrophic illness. Accelerated death benefits, also known as living benefits policies, are generally offered as part of the policy or as a rider to an existing insurance contract. They will pay you either a percentage or all of your death benefit under certain specific circumstances, including terminal illness where you have a life expectancy of less than 12 months, contraction of a disease or need for long-term care.
Cash value.
The savings portion of your premium in a permanent insurance policy. The cash value is invested in stocks, bonds, real estate and other investments by the insurance company and your returns grow tax-deferred. If you surrender the policy by stopping premium payments, you will be paid whatever remaining cash value is in the policy.
Endowment.
An endowment plan provides a particular death benefit whether or not the insured person survives to the end of a specified term. If the person dies before the maturity date, the policy’s death benefit is paid to the beneficiary. If the insured person is still alive on that date, the benefit is paid to the policyholder. Changes in tax law means that most of these plans no longer qualify for advantageous tax benefits because these plans are not considered to be life insurance for tax purposes.
Medical Information Bureau (MIB).
A clearinghouse used by the life insurance industry to screen insurance applicants’ medical histories. This ensures that applicants do not withhold medical information from one company that they have given to another when applying for life insurance. The medical history is only given to an insurance company if you have applied for insurance with that company. No company is permitted to base its decision on approving or rejecting an application solely on the MIB report, but it can be a key determinant of the insurance company’s decision. You have the right to know what is listed on your MIB report. You can contact the MIB and get a copy of your report for a small fee at P.O. Box 105, Essex Station, Boston, Massachusetts 02112, 617-426-3660, or at http://www.mib.com/
Policy loan.
Loans against the accumulated cash value in a policy. The interest rate on the loan may be fixed or adjustable. You can repay the policy loan at any time without penalty. If you don’t pay the interest due, it is added to the loan amount. If the unpaid interest and loan amount exceed the cash value in the policy, the policy will be terminated without any cash value payout. If you die with an outstanding policy loan, the amount of the loan plus interest will be deducted from the death benefit.

There are pros and cons to buying both term or permanent (cash value) insurance. Each has advantages and disadvantages. One or the other or both may be appropriate to meet your insurance needs.

Term premiums are lower than those for permanent insurance so you get more insurance coverage for less money. This allows you to buy more coverage when you need it the most, such as when you have young children.
Because term provides insurance for a specific period of time, it is ideal for covering specific financial needs such as covering your life until your children are through college, until they are self-supporting, or covering your life until you pay off your mortgage.

The disadvantages of term policies include:

Premiums increase every time a policy is renewed, so the cost of term insurance can become prohibitive as you near your late 50s and 60s.
Term life doesn't provide a savings feature known as cash value. Term policies only pay benefits if you die while the policy is in force.
If your insurance company wants you to take a medical exam when you want to renew your policy, you may be turned down if your health condition has deteriorated.
You could outlive your coverage, because term insurance is generally not renewable after age 70 or 75, depending on your state’s insurance regulations.

Permanent (Cash Value) Insurance

The advantages of permanent insurance are:

You lock in a premium rate at whatever age you start the policy and the benefits are guaranteed for as long as you live.
Your policy accumulates cash value that grows tax-deferred. Your premiums are invested by the insurance company in stocks, bonds, real estate, venture capital and other funds, and you receive a return on your money in the form of annual dividends, which increase your cash value.
You can tap that cash value while you are alive with low-cost loans. Any outstanding loans will reduce your policy’s cash value by the amount of the loan. Or you can withdraw the cash value, though you will have to pay income taxes on those withdrawals. You can also convert your cash value into an annuity that will provide fixed-income throughout your retirement years.
If you surrender your policy by discontinuing to pay premiums, you will receive any accumulated cash value.
Dividends can be used to pay your premium in whole or in part.
Once you have passed the medical tests and have been issued a policy, your policy cannot be cancelled for medical or any other reasons if you continue to pay the premium.

The disadvantages of permanent insurance are:

It is far more expensive than term insurance. This means that you can usually afford far less permanent coverage than you can afford term. If you start a permanent policy and then must drop it because you cannot afford the premiums, you will have lost a great deal of money.
Insurance companies invest your cash value quite conservatively so it is possible that you could earn higher returns on your own if you are a skillful and knowledgeable investor.
The return you earn on your cash value is determined by current interest rates in money markets. So if interest rates are high, your cash value will grow much more quickly than if interest rates are low. Periodically, the insurance company deducts its expenses and a mortality charge from your cash balance. The mortality charge is the amount of money, based on a premium rate per thousands of dollars of death benefits, required to provide you with life insurance. The company will guarantee a minimum interest rate and a maximum mortality charge. Some will also guarantee a maximum expense charge.

Yes! But, if you already own a life insurance policy, think carefully before you replace it with another. Do not give up your old policy, until you can determine if you are:

Still insurable.
If your health has deteriorated, you may be refused coverage after a medical exam by the new insurance company.
Going to save money.
You are now older than when you bought the existing policy and your premiums will be higher based on your age alone.
Not giving up valuable benefits.
Your older policy may have protections, dividend rates or other provisions that the newer policy may not offer.
Not leaving behind cash value.
Ask your agent what will happen to any cash value that has accumulated in your old policy if you replace it with a new one.

It is possible that a new policy will offer superior features, lower premiums and more coverage that would make a switch worthwhile. Just make sure before you proceed with the replacement.

An annuity is a financial contract issued by a life insurance company designed to provide a steady stream of retirement income. In return for a sum of money, paid either in one lump-sum (known as an immediate annuity) or in regular installments (known as a deferred annuity), the insurance company guarantees a regular income for the rest of your life so that you won’t outlive your assets.

The cost of an annuity depends on how much monthly income you want to receive, your age when you buy the policy and the time when you want to start receiving income. The cost will also vary depending on whether you invest in a lump-sum or in installments.

When you price an annuity, compare the returns promised, sales charges, surrender charges and payout rates.

There are two kinds of annuities:

Fixed annuities.
These guarantee a fixed rate of return for a specific period of time, usually one to five years. The insurance company invests your money in a fixed rate vehicle like a bond or mortgage to provide this return. When you begin to withdraw the money from the annuity, you are guaranteed a specific minimum amount each pay period.
Variable annuities.
These offer you various options to switch among stock, bond and money market funds. Some funds are actively managed to beat the benchmark indexes, while others, known as index annuities, are tied to popular indexes like the Standard & Poor’s 500.

Annuities offer tax advantages, because all returns compound tax-deferred until the money is withdrawn. Once you start to receive a monthly payment, you will be taxed on the accumulated interest and capital gains. Part of each payment is considered interest and is taxed as regular income, while another part is considered return of principal and is not taxed.

If you withdraw money from an annuity before age 59 1/2, the interest and capital gains earned must be withdrawn first and subject to regular income taxes and a 10% early withdrawal penalty, just as you have to pay when withdrawing early from an IRA.

When it comes time to receive payments from an annuity, you have several choices to make. These are your four options:

Straight life annuity.
You receive a fixed income for the rest of your life. Whether you get back all of the money you put into the annuity depends solely on how long you live. After you die, no more payments will be made to the beneficiaries. This type of annuity will maximize your monthly payments, but would not be appropriate if others, such as your spouse or children, will need to live on your income once you have died.
Joint and survivor annuity.
You and your spouse, or designated beneficiary, receive a payment from the insurer as long as both of you live. The monthly payments will be less than you would receive in a straight life annuity because the insurance company must pay benefits for a longer time.
Life income with refund annuity.
If you die before having received all the money you put into the annuity, your beneficiary receives the money you have not been paid.
Life annuity with period certain.
The annuity makes payments for a specified number of years -- usually 10 or 20 years -- after you start receiving payments. If you die before the period has elapsed, your beneficiary, usually your spouse, will continue to receive the payments for the balance of the period.

Yes! There are a number of policies for specific insurance needs. Some of these include:

Family income life insurance.
This is a decreasing term policy that provides a stated income for a fixed period of time, if the insured person dies during the term of coverage. These payments continue until the end of a time period specified when the policy is purchased.
Family insurance.
A whole life policy that insures all the members of an immediate family -- husband, wife and children. Usually the coverage is sold in units per person, with the primary wage-earner insured for the greatest amount.
Senior life insurance.
Also known as graded death benefit plans, they provide for a graded amount to be paid to the beneficiary. For example, in each of the first three to five years after the insured dies, the death benefit slowly increases. After that period, the entire death benefit is paid to the beneficiary. This might be appropriate if the beneficiary is not able to handle a large amount of money soon after the death, but would be in a better position to handle it a few years later.
Juvenile insurance.
This is life insurance on a child. Coverage is paid for by an adult, usually the parents or guardians. Such policies are not considered traditional life insurance because the child is not producing an income that needs to be protected. However, by buying the policy when the child is young, the parents are able to lock in an extremely low premium rate and allow many more years of tax-deferred cash value buildup.
Credit life insurance.
This insurance is designed to pay off the balance of a loan if you die before you have repaid it. Credit life insurance is available for many kinds of loans including student loans, auto loans, farm equipment loans, furniture and other personal loans including credit cards. Credit life insurance can be purchased by an individual. Usually it is sold by financial institutions making loans, like banks, to borrowers at the time they take out the loan. If a borrower dies, the proceeds of the policy repays the loan directly to the lender or creditor. For more information about credit life, call the Consumer Credit Insurance Association at 312-939-2242 ( http://www.cciaonline.com/ }.
Mortgage insurance.
This decreasing term coverage is designed to pay off the unpaid balance of a mortgage if you die before the mortgage is paid off. Premiums are generally level throughout the term of the policy. The policy is usually independent of the mortgage, meaning that the financial institution granting the mortgage is separate from the insurance company issuing the policy. The proceeds of the policy are paid to the beneficiaries of the policy, not the mortgage company. The beneficiary is not required to use the proceeds to pay off the mortgage.