Insurance Blog

When buying insurance you want to make sure you are putting your money and your trust with an insurance company that is very strong, stable and has high financial strength ratings.

Many times some of the Mutual Life Insurance companies are rated higher than stock Life Insurance companies. You want to find out the rating of the life insurance company before you deceide to buy your insurance.

Below are the top 4 ratings for the strongest insurance companies:

Life Insurance Company Rating Categories
Rank Number	A.M. Best	Standard & Poor's	Moody's	Fitch
	Financial Strength	Financial Strength	Financial Strength	Financial Strength
1	A++ Secure / Superior	AAA Extremely Strong	Aaa Exceptional	AAA Secure / Highest
2	A+ Secure / Superior	AA+ Very Strong	Aa1, Aa2, Aa3 Excellent	AA+ Secure / Very High
3	A Secure / Excellent	AA Very Strong	A1, A2, A3 Good	AA Secure / Very High
4	A- Secure / Excellent	AA- Very Strong	Baa1, Baa2, Baa3 Adequate	AA- Secure / Very High

There are four independent rating agencies A.M. Best, Fitch, Moody’s and Standard & Poor’s. These services rate the financial strength of most insurance companies. Each has its own rating scale, its own rating standards, its own population of rated companies, and its own distribution of companies across its scale. Each individual agency uses numbers or plusses and minuses to indicate minor variations in one rating from another rating class. The rating agencies do disagree often enough so that you really should consider a company’s rating from two or more agencies before judging whether you should buy or keep a policy from that particular life insurance company. Moreover, agencies will announce changes of ratings on any given day. It’s probably quite prudent to check annually on the ratings of any life insurance company you’re interested in. Some points for using the ratings: Don’t rely only on what the life insurance companies or their agents say about their ratings from these agencies. Life Insurance companies are likely to highlight a higher rating from one agency and ignore a lower one from another agency, or to select the most favorable comments from a rating agency’s recent report. To use the ratings from more than one independent agency, you need to understand that each agency’s rating code is different from the others. For example, an A+ from A.M. Best is the next-to-top rating of its 15 categories, but an A+ from Fitch or S&P is their 5th-highest rating (out of 24 categories for Fitch, and out of 19 categories for S&P). Moody’s doesn’t have an A+ rating.

Why Whole Life Insurance?

Whole Life Insurance is designed to provide coverage for the life of the insured. Whole life insurance policies generally offer fixed premiums, guaranteed death benefits and are designed to build federal tax deferred cash value. For that reason, a Whole Life Insurance policy can be described as providing life insurance protection with a savings feature.

1. When should I consider buying a Whole Life Insurance policy?

   Whole Life Insurance is generally used when the need for life insurance is lifelong, or permanent. In addition Whole Life Insurance has a built-in savings element since you will pay premiums and hence build up a cash value within the policy. Additionally, whole life insurance may be used as a part of your estate planning.

   Premiums for whole life insurance can be much higher than premiums you would pay initially for the same amount of term life insurance, but they are smaller than the premiums you would eventually pay if you were to keep renewing a term insurance policy until the insured's later years.
   
   Whole life insurance is a good choice for you if you want to ensure that you and your family have a life insurance policy in place for your entire lifetime and can comfortably afford the premiums, or if Whole Life Insurance fits within the framework of your estate or retirement plan.

2. How does whole life insurance differ from term life insurance?

   Whole life insurance is designed to provide coverage for your family on the insured for the insured’s entire life as long as premiums are paid and the policy has not been surrendered. On the other hand, term life insurance provides coverage only for a fixed period that is stated in the insurance policy.

3. What are the main types of traditional Whole Life Insurance policies available for purchase?

   Non-Participating Whole Life Insurance

   A non-participating whole life insurance policy has a level premium and face amount during your entire life. The advantages of such a life insurance policy are its fixed costs and relatively low out-of-pocket premium payments. Since the policy is non-participating it does not pay you any dividends.

   Participating Whole Life Insurance

   A participating Whole Life Insurance policy pays dividends. The dividends represent the favorable experience of the company and result from excess investment earnings, favorable mortality and expense savings. Dividends can be paid in cash, used to reduce your premium payments, left to accumulate at a specified rate of interest or used to purchase paid-up additional insurance which will increase your face amount of coverage. Dividends are not guaranteed to be paid to you.

   Within the two broad categories of traditional non-participating whole life insurance and participating whole life insurance there are various whole life plans that are available for you to choose.

   Level Premium Whole Life Insurance

   Level premium Whole Life Insurance features premium payments that are level and are required to be paid as long as the insured is living. In the early years the premium is more than enough to pay the current cost of insurance protection. The excess, including interest earnings, makes up the deficiency of premiums in later years when annual premium is not sufficient to pay annual cost of insurance. These extra premiums are held and invested by the insurer, creating the "cash value" of the policy.

   
   Limited Payment Whole Life Insurance

   If you want to pay premiums for a limited time, the limited payment Whole Life Insurance policy gives you lifetime protection but requires only a limited number of premium payments. Since the premiums are paid over a shorter span of time, the premium payments will be higher than under the ordinary whole life plan. Limited payment plans can provide for the payment of premiums for a set number of years e.g. 10 payment or 20 payment whole life insurance. Limited payment plans can also be based on age e.g. whole life paid up at age 65 or at age 85.

   Single Premium Whole Life Insurance

   Single premium whole life insurance is a limited payment whole life insurance plan with one relatively large premium payment due at issue. The policy is fully paid up and no further premiums are required. Due to the single premium payment the policy will have an immediate cash value and loan value which could be significant depending on the amount of the single premium payment. Since a substantial single premium payment could be involved, this type of plan may be viewed more as an investment-oriented type of Whole Life Insurance product.

   Indeterminate Premium Whole Life Insurance

   An indeterminate premium whole life policy is similar to ordinary whole life plan of insurance except that it provides for adjustable premiums. The company will charge a "current" premium based on its current estimate of investment earnings, mortality, and expense costs. If these estimates change in later years, the company will adjust the Whole Life Insurance premium accordingly but never above the maximum guaranteed premium stated in the policy.

4. Will the scheduled premium payments for whole life insurance change over time?

   Generally, in a traditional Whole Life Insurance policy, the scheduled premium payments remain level. Premiums are generally the same (fixed) every year the insured is alive. The premium payment consists of both life insurance protection and savings. These two elements vary over the life of the insured, but the total scheduled premium payment remains the same for the life of the traditional whole life policy. Some traditional whole life policies however provide for a modified premium payment schedule where the required premium payments may be lower in the early years and then increase to a higher amount which will then remain level for duration of the policy. Be sure to check the data page or specifications page of your policy (usually page 3) to determine the amount of your premium payments and the period for which they are required to be paid.

5. What is “cash value” and how does it differ from the face amount of the whole life policy?

   The face amount is the amount of Whole Life Insurance coverage you wish to provide your beneficiaries in the event of death. The cash value is the value that builds up in the policy. The minimum cash values are set by the Insurance Law and reflect an accumulation of your premiums after allowances for company expenses and claims. When you are young, your premiums are more than the cost of insuring your life at that time. Over time the cash value grows, usually tax-deferred, and the owner may be allowed access to that money in the form of a policy loan or payment of the cash value. The face amount of your policy will be higher than your cash value especially in the early years of your policy. If you surrender your Whole Life Insurance policy you will receive the cash value not the face amount. If you die your beneficiaries will receive the face amount.

6. May I surrender a whole life policy for its cash value?

   Generally, in a traditional Whole Life Insurance policy, yes. Over time, the policy accumulates a cash value, which is similar to building equity in a home. When a policy is surrendered, the owner is entitled to at least a portion of the cash value. The actual amount that the owner receives will depend whether there are any outstanding loans or unpaid premiums that can be deducted from the cash value.

7. May the policy owner borrow money from the whole life policy?

   Generally, yes, to the extent that there are sufficient funds in the cash value to secure the loan. There may be a waiting period of up to three years before a loan is available. If the Whole Life Insurance policy owner borrows from the policy, the cash value is used as collateral, and interest is charged at the rate specified or described in the policy. Any money owed on an outstanding policy loan is deducted from the benefits upon the insured's death or from the cash value if the policy owner surrenders the policy for cash.

8. Will I need to pay premiums for the rest of my life to keep the whole life policy in force?

   For traditional whole life insurance, the amount and duration of premium payments are the same for as long as the insured is alive, but some whole life policies allow you to pay premiums in a single installment, or for a shorter period such as 20 years or until age 65. Premiums for those Whole Life Insurance policies are higher since the premium payments are made during a shorter period. Additionally, dividends, while not guaranteed, in participating whole life policies may be used to pay some or all of scheduled premium payments if you so choose. Whole life policies may also be surrendered and the surrender value then used to purchase a reduced paid-up amount of insurance or used to provide term insurance coverage for a set period of time (extended term). In your whole life insurance policy the available options can be found under what is called the “non-forfeiture” provision.

9. What is the federal tax treatment of whole life insurance cash values, dividends, and death benefits?

   The "interest build-up" portion of the annual increase in the Whole Life Insurance policy's cash value is not taxed annually pursuant to the Internal Revenue Code. Dividends generally are considered to be a "return of premium" and are not taxable as long as the dividends you have received do not exceed the premiums you have paid. Although life insurance death proceeds will not typically be subject to income taxation, they may be subject to federal estate taxation. If you own part or all of the policy when you die, the value of the policy can be included in your gross estate for federal estate tax purposes. State inheritance taxes and federal gift taxes may also apply to life insurance policies/proceeds under specific circumstances. Contact your tax adviser regarding questions about possible income, estate and gift tax consequences surrounding any life insurance you own or are contemplating buying. If the Whole Life Insurance policy is surrendered for its cash value only the excess of the cash value over the amount of premiums you have paid less dividends is taxable.

Annuity Basics

In the most fundamental terms, an annuity is a financial instrument that provides a means to accumulate funds for a future point, and then systematically distribute those funds over a given period. With annuity contracts, which are issued by insurance companies, owners deposit money into the contract in the form of premiums. These funds are then invested by the insurer and are credited with interest earnings or grow in value in relation to the performance of the investments in which they are deposited.

At a certain point in the contract’s life, the insurance company—at the owner’s direction—will convert all or any portion of the contract’s funds into a series of periodic income payments. These payments are calculated actuarially to extend for a certain number of years or for the duration of the owner’s life. This is annuitization—the concept of applying capital to purchase income. By design, annuities can serve as both asset accumulation vehicles and asset distribution vehicles.

One of the unique aspects of an annuity is the product’s ability through annuitization to deliver income payments that can last as long as the contract owner wishes. This period may be for a specified number of years or for his or her lifetime. For this reason, annuities are aptly suited for retirement planning.

Types of Annuities

Annuities come in many flavors. The primary distinctions among these “flavors” and what characterizes one type of annuity from another are based on two fundamental factors:

1. when the contract is scheduled to convert its funds into a series of income payments (immediate or deferred); and

2. how the contract’s funds are invested, how the funds grow, and how the funds are paid out upon annuitization (fixed, indexed, or variable.)

Immediate Annuities

An immediate annuity is designed to serve exclusively as an income distribution vehicle. Within a very short time after the contract’s purchase—typically, within one month to one year—the funds the owner deposited are annuitized and converted into a guaranteed stream of income through periodic income payments. These payments are configured to last as long as the owner wishes: for a set number of years, for the duration of the owner’s lifetime, or for the duration of the joint lifetime of the owner and another, such as a spouse.

An immediate annuity requires the payment of a single lump-sum amount upon contract purchase. The contract is simply a mechanism for converting the lump-sum amount into a series of periodic income payments.

Deferred Annuities

A deferred annuity is designed to accumulate funds for the long-term. Accordingly, it is characterized by an accumulation stage. This is the period during which funds are deposited into the contract and are credited with a certain rate of interest earnings or grow in relation to the performance of the investments in which they are deposited. Generally speaking, the accumulation period associated with a deferred annuity is typically 8 to 10 years or more; contract owners may be assessed a penalty if they withdraw funds from their annuities earlier.

At the end of the accumulation stage, the owner may

· withdraw the funds in whole or in part;

· leave the funds in the contract to continue accumulating; or

· annuitize the contract.

Any interest or growth the contract earns is not taxed as long as those values remain in the contract. This is a distinct advantage that a deferred annuity offers over other investment products. If the contract owner or annuitant dies before the contract is annuitized, a death benefit is payable to the contract’s beneficiary. This death benefit is usually defined as the greater of the contract’s accumulated value or total premiums invested, less any withdrawals. Annuity death proceeds are paid directly to the beneficiary; they are not subject to probate.

A deferred annuity can be funded with a single, lump-sum deposit or with a series of deposits over time, as and when the owner wishes.

Choosing the right type of annuity always begins with choosing an immediate or deferred design which, in turn, is based on the buyer’s need. If the buyer desires to use an annuity as a way to save and accumulate funds, the choice is the deferred annuity. If the individual is ready to turn his or her savings into income, the choice is the immediate annuity. By far, the majority of annuities purchased today are deferred annuities. Deferred annuities are appropriately suited for long-term needs, such as retirement planning and retirement income.

There are two basic types of life insurance to choose from:

Permanent Life Insurance and Term Life Insurance. In many instances people find that their objectives are best met with a combination of both Term Life and Whole Life Insurance.

Permanent life insurance offers lifetime protection, which means your beneficiaries will receive a benefit no atter when you die. Some forms of permanent whole life insurance also accumulate a cash value, which can be used for a variety of life's opportunities and challenges. These features can provide flexibility in your long term financial strategy.

Term life insurance provides protection for a set period of time and offers death benefit protection only; there is no cash value component. Consequently, the premiums may be less costly initially than permanent whole life insurance. Term life insurance is an excellent way to get an amount of coverage that is comparable to permanent life insurance at an affordable cost.

Executive Bonus Plans are recommended when:

• A key employee or an executive has a need for life insurance.

• You are looking for additional tax deductions.

• You need to provide key employees with a section 162 benefit in addition to a qualified retirement plan. The bonus amount you pay is fully tax deductible to the company, provided this is considered reasonable compensation, and taxed as ordinary income to the employee. You have the option to work out an arrangement with the employee, such as offering a loan, to help cover the income tax liability.

Section 162 Plan or Executive Bonus Plans are an agreement between the employer and key employees to provide the with supplemental income and death benefits. The Section 162 (IRS Code)  plan can be funded with a cash value life insurance policy purchased by the company for their executives and key employees.

The employee would need to apply for (and would also own) the life insurance policy and the employee has the right to assign the life insurance policies beneficiary of the policy. The company would then pay the "section 162 bonus" premium to the life insurance company (not the employee). The employee's right to receive the cash value of the policy through loans, withdrawals or surrender is subject to a vesting schedule agreed upon by the employee and the  company. If the employee terminates their employment prior to the plan becoming fully vested, the company is repaid some or all of its "sec 162 bonus" premiums from the policy's cash value.

Whole Life Insurance Definition

What is Whole Life Insurance? Everyone seems to know a little about Term Life Insurance but most people know little or nothing about whole life insurance. One reason is that people know very little about whole life is that they probably have never looked into it. People usually tend to buy term life insurance more because of the perceived lower cost and that it just seems to be the right thing to do. Let us look at whole life. How do we define Whole Life Insurance?

Whole life insurance is simply life insurance coverage that is for the rest of your life, thus the name whole life insurance. Whole life has a level death benefit as well as a level premiums. There is much more to this policy though. It has certain advantages that most other policies cannot even think about offering you. Universal Life Insurance is a type of Whole Life Insurance.

Whole life insurance has cash values that build up and also accumulates dividends. You have the option of using your dividends in different ways. Dividends, however, are not guaranteed.

The whole life policy usually works best used in combination with another type of life insurance policy, usually a level or annually renewable term life policy. What you do is that you use your whole life insurance as your base policy and add a level term life insurance policy to it to increase the coverage at a lower cost. Your intention here would be to buy a large amount of life insurance, a whole life and term combination.

What is an Annuity?

Annuities only come in two types, Fixed and variable. A fixed annuities are the most popular and kind of like a Bank CD and we will explain them here. The insurance company that issues the annuity agrees to pay a you fixed rate.The investment along with the fixed annuity's associated profit or loss is also the insurance company’s responsibility and right. The performance of the fixed annuity investment is not directly connected to the return the owner gets. The insurance company acts like kind of a go-between with the index and the fixed annuity owner. This helps to pass on a stable return to the annuity owner.

Fixed Annuities are a preferable investment for a certain set of owners. These include seniors who are looking for more returns than traditional investments offer, but do not want the associated risk. Secondly, since annuities offer protection against creditors, this may be a suitable savings tool for high risk professionals such as physicians who face malpractice suits. Also to be considered is the fact that traders on the stock market might to use annuities as a way to reduce the IRS tax burden.

SPDAs (Single Premium Deferred Annuity) are always purchased with a single premium payment. Your SPDA annuity will grow with guaranteed interest until you choose to begin making withdrawals. Your interest rate for your Single Premium Deferred Annuity is established at the time of issue. Our SPDAs offer a range of initial interest rate guarantees. After the initial rate guarantee period, your rate may be adjusted each year but may never fall below the guaranteed minimum interest rate at the time of issue. The potential benefits of an SPDA are:

• Guaranteed Safety of Your Principal and Interest. Your SPDA annuity is guaranteed by a life insurance company.
• Federal Income Tax Deferral. Federal Income Tax deferral means postponing your taxes on interest earnings until a future point in time. In the meantime, you earn interest on the money you are not paying in taxes. You can accumulate more money, which ultimately will provide you with a greater income.
• Simplicity. There is no withholding tax or income tax due while your Single Premium Deferred Annuity is accumulating. Only when you begin making withdrawals from your SPDA annuity will you have taxable income reported. You determine that date.
• Flexible Payment Options. At the time you select to make withdrawals from your SPDA annuity, you may have a number of options available. You may be able to choose a lump sum or a series of payments.
• Avoid Probate. If you die prematurely, your SPDA annuity may be paid directly to your named beneficiary without the delay and expense of probate.

There is a lot of retirement-minded Americans living on their bank CD interest

 Unfortunately for them, the Federal Reserve has squashed interest rates to midget levels in an attempt to sidetrack a recession. While some Internet and "needy" banks are paying more, the typical local rates for one-year CDs are in the 2% to 3% range. This means that a retiree living on $250,000 in bank CDs is getting no more than $7,500 annually in interest -- all taxable. There must be a better solution! Let me introduce, or re-introduce, you to split or combination annuities.

The concept is simple: you split the CD money between two annuities, one that provides an income and the other that grows. The income is provided by a single premium immediate annuity ("SPIA") that generates the same, or more, after tax income as the CD while the deferred, or growth, annuity will grow back to the same or a larger amount than the current CD. The advantages come from (a) the tax savings of the annuities, because the income is mostly non-taxable return of principal and the growth annuity is tax-deferred and (b) by reducing the taxes on Social Security benefits. Let's look at an example.

Let's a widow aged 74, has a $250,000 CD earning $7,500 (3%) annually, a pension and investments that pay her $35,000 and Social Security benefits of $20,000. Her taxable income last year was $38,500 and her marginal tax bracket was 25%. Included in her taxable income was $4,500 of her Social Security benefits. Let's see what we can do by introducing Gladys to a split annuity.

Let's take $205,000 of the $250,000 CD and invest it in a 5-year annuity and assume we can earn 4% over the next five years. Parenthetically, BHC offers fixed rate annuities that are guaranteed to pay a lot more than 4% for five years, and odds favor an even better rate with an index-linked annuity. At a 4% annual interest rate, Gladys will have $250,000 five years from now. The remaining $45,000 would be placed in a SPIA that will pay $775 a month, or $9,300 a year (actual quote). Since 96.77% of the payments represent return of principal, the taxable income will be only $300 a year. Getting rid of the $7,500 in taxable CD interest and lowering taxable Social Security benefits means shewill save about $2,000 in taxes next year.

The following email was send to us by a consumer.

"My fiancé was on a website that offered Roth ira's and while she was on the website a chat box popped up from an agent monitoring the website and this agent began talking with her and answering any questions she had.  She told me that she preferred this because she didn't have to use her phone or talk on it and it make it a lot easier.  I asked her what she thought of the idea and she said that she felt that in today's age people prefer to do things online as opposed to the phone because it's less invasive."

In this day and age more consumers are getting educated online about financial products. We are seeing growth from our website from consumers wanting immediate service.

Some Americans are worried about the stability of the Life Insurance Industry. The markets have changes a lot of ways consumers think about their money and retirement.

You are unique. Your circumstances, responsibilities and goals for tomorrow dictate most of your financial strategies today. And today security should be a major consideration in every financial decision you make.

A more conservative stance is being taken by individuals and families about the money they have put away for retirement. Annuities are becoming more popular as a conservative way to think about retiring in todays times. All annuities are backed by claims paying ability, so be sure to find out more about the Insurance Company you do business with.

Paying a little more for your Whole Life Insurance may be worth the "peace - of - mind" you get for doing business with and putting your money and trust with a VERY Highly Rated Life Insurance Company. To find out more about Life Insurance company ratings both Mutual & stock companies,

You can check:

• 1. Moodys
• 2. Standard and Poors
• 3. Fitch
• 4. A.M. Best

Some Mutual Insurance companies have turned down funds from the US Government because they are already stable with enough reserves. Some other Life Insurance Companies are taking Federal funds to help with their financial issues.

These are some of the things to think about when you are getting ready to purchase Life Insurance.

The new updated version of our website launched today will include a completly redesigned website for consumers to learn more about and purchase Life Insurance, Long Term Care Insurance and Annuity products by obtaining online information and rates.

Try our free quoting service to compare quality National Insurance companies with the highest ratings and receive personal service from one of our licensed Insurance Agents today.

Please feel free to call us today at 866-392-INFO (4636)