Life Insurance Spartanburg SC is meant to account for any loss of income your beneficiaries might experience after your death. It can also help with final expenses and debts your family may have.
Whole-life policies are characterized by level policy face amounts over a specific term and premium guarantees. These policies can offer additional options like riders, providing more coverage without further underwriting.
In the event of your death, life insurance provides a lump sum of money to your beneficiaries to help pay for expenses such as mortgage, debt, and funeral costs. It can also help your family maintain a lifestyle and meet financial commitments they may have in the future. You can choose the amount of coverage you need based on your family’s needs and your current income.
There are many different types of life insurance policies available. Whether you want the affordability of term insurance, the lifetime protection and cash value of your whole life, or a combination of both, there is a policy to fit your budget and needs.
A term life insurance policy lasts a set period, usually between one and 30 years. The death benefit is paid out to your beneficiary once the contract ends. If you decide to keep the policy after the term has ended, you can renew it for another term or convert it to a permanent life insurance plan.
Whole life insurance policies offer coverage for your entire lifetime and build a tax-deferred cash value. This money can be accessed through policy loans and cash withdrawals. Whole-life policies also have a contestability period, which is two years after the start of the policy, in which your insurer can review your medical records to ensure there are no changes that would affect the payout.
In some instances, your life insurance benefits may be reduced or eliminated if you are found to have lied on the application. This is known as fraud and is a serious offense punishable by fine or imprisonment. Additionally, some life insurance policies have exclusions that specify certain activities that will void the coverage, such as dangerous hobbies and professions.
The premiums paid for life insurance help to keep the death benefit available as long as they are paid on time. They can be paid monthly, quarterly, semi-annually, or annually.
The amount of coverage required and the type of policy chosen can greatly impact the cost of premiums. For example, whole-life policies may have higher premiums than term policies of the same coverage amount. The age of the applicant also has an impact on the cost of premiums. Younger people typically pay less for life insurance than older applicants. Health conditions also impact life insurance rates. A person with a health condition like heart disease or diabetes usually pays more for life insurance than someone without a medical issue.
Choosing the right type of policy to meet your needs can be confusing. Consult a financial professional who can help you calculate how much coverage you need, explain the different types of life insurance, and present potential options that might fit your lifestyle and budget.
Other factors that can influence the cost of a life insurance premium include the number of beneficiaries named on the policy, whether it is a joint or single policy, and how often you make payments on the policy. In addition, the insurer will take into account your credit history and any negative events that could indicate a greater risk of mortality. Credit score impacts have a smaller effect on life insurance premiums than on auto and home policies, but a low credit score can make obtaining the coverage you need harder.
Generally, life insurance payouts are not taxable. However, there are a few exceptions to this rule. The amount of money paid out, the structure of the payout, and whether or not a policy is deemed a modified endowment contract (MEC) can all play a role when taxes are owed on a life insurance settlement.
With most whole and universal life insurance policies, cash value grows tax-free as long as the amount of money withdrawn is below your cost basis, which is how much you have paid in premiums. A portion of any withdrawal above your cost basis is considered taxable, and the IRS will tax you on this amount first. Typically, this reflects investment gains. You may also have incurred fees, such as surrender charges, and the amount you withdraw.
Beneficiaries do not pay taxes on the death benefit, but interest earned on those proceeds is taxable. In order to avoid paying taxes, choosing a life insurance policy with the lowest possible premiums is important. You can also avoid taxes by taking a loan or surrendering the policy early.
If the deceased person named their estate as the beneficiary, then the payout from the policy can be included in their taxable estate. Depending on the estate size, this could result in federal and state taxes. To avoid these taxes, it is a good idea to name individuals or trusts as beneficiaries rather than the deceased’s estate.
Sometimes, a life insurance policy can be converted to a permanent annuity or sold for a lump sum, both of which are taxed differently. If you decide to change your policy, speak with a financial professional.
Certain riders are designed to address specific misfortunes or circumstances depending on the policy. They may also change the coverage amount or policy type. A financial advisor can help determine if a life insurance rider is right for your situation. But be aware that adding any rider will sometimes increase the premium. Before making a final decision, you should quote your policy with and without the rider you’re considering to understand how much it will increase your price.
The most common life insurance riders include a guaranteed insurability rider and an accelerated death benefit rider. The guaranteed insurability rider allows you to purchase additional life insurance coverage in the future without having to take a medical exam. This is especially useful if your health declines or you’ve had a serious illness or injury. The accelerated death benefit rider lets you access part of the death benefit before you die if you’re diagnosed with a terminal illness.
Another important rider is the waiver of premium rider, which waives your future life insurance premiums if you become permanently disabled or lose your ability to work before a certain age. This can help you continue to pay your bills and maintain your family’s standard of living if you cannot work.
Many companies offer life insurance riders as add-ons to a whole or term life insurance policy. However, they are only unavailable with some policies, and you’ll need to read the fine print to find out how to apply for them. You can typically buy riders upon purchasing your policy, during an “option period” during your policy, or during a major life event, like marriage or having a child.
Many people believe that life insurance is meant to pay for end-of-life expenses, but it can cover a wide range of other bills. The policy beneficiaries can use the death benefit to pay for anything from a funeral service, casket, or cremation to medical bills, legal fees, obituary costs, and more. The money can even be used to pay off debt, help family members buy a home, or save for retirement.
One type of life insurance that specifically focuses on covering final expenses is known as a final expense policy. This is usually a smaller whole-life policy that doesn’t require the same health questions as traditionally underwritten policies and can be easier to qualify for, especially for seniors or those with preexisting conditions. These policies also typically have higher coverage amounts, making families more generous with funeral expenses.
In addition to the death benefits, final expense policies can offer other benefits, including tax-deferred cash value that builds over time and affordable premiums that can be customized to fit a client’s budget. This type of coverage can be useful for families not financially stable enough to cover end-of-life expenses without strain or financial risk or for those who have already prepaid their funeral services.
There are two main types of final expense policies: guaranteed issue and simplified issue. Guaranteed issues are best for those whose age or health prevents them from getting other life insurance. The application process is very simple — it often only includes answering a few health questions and can sometimes be approved in a few days. This type of policy can also have lower coverage limits.