The loss of a loved one can bring about tremendous emotional trauma, particularly when it is sudden and unexpected. One must deal with the emotional saying "goodbyes" while at the same time moving on with life for the survivors. Death is final with no turning back, but with death some things do continue on. When there is a sudden automobile accident or other unexpected event, it can leave the survivors unprepared for what lies ahead when that person that was depended on so greatly, is no longer here to provide. The saying "you don't know what you have, until it is taken away from you. Only then can you appreciate what you had". This is ultimately true with the death of a loved one.

After they are departed, we can't ask them,

What did you want to do with this?

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How am I going to pay all of these medical bills from the automobile accident?

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How am I going to put the kids through college without your income and support?

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What do I do with all of the responsibilities that the departed one has left?

These are very serious questions and can be overwhelming to someone facing a future of uncertainty caused by the death of a major supportive person in their life.

Life Insurance is sometimes never thought about until one experiences a death of a loved one and the difficulties facing them in the future. It's one of those things we don't want to think or talk about. Even though we know it is inevitable, we still want to postpone unpleasant thoughts and acts for a later time. But even though we want to postpone the unpleasant tasks, by delaying them we often can bring undue harm to our survivors.

Preparing for untimely death is sometimes an overwhelming process. When we look at what we do everyday and those things that we take for granted, it is often hard to decide how to plan for it.

• When we are gone, what do we want our survivors to do?
• How do we want our survivors to continue on with their lives without us?
• What do we need to do to help them survive?

Life Insurance provides some of those answers for us. It can provide the needed funds for them to survive. It can provide the funds to carry on with their lives that has left them with less income and less support since. It can provide the funds for the children's college education. It can provide the funds for immediate use for whatever the needs are.

In addition to the untimely death that causes a need for Life Insurance, it can also provide funds for those who want to build additional funds for later years. It can be used as a savings tool that can help to fund retirement income for that time when an individual is no longer receiving an earned income from a job. It can provide income to help pay expenses that are needed to be addressed when the earned income has stopped.

Life Insurance is defined as a method to provide an immediate cash estate to an individual designated by the named insured upon the death of the named insured. Life Insurance was developed to provide funds for survivors upon the premature death of an individual who is the source of support for the survivors. This named insured is often the breadwinner who is the sole support for family members and when death is premature, that source of support ceases. Life Insurance proceeds provide at least a partial replacement for that loss of financial support. It can provide funds for the insured in the form of a savings plan which is guaranteed and safe.


Types of Life Insurance Contracts
There are many different kinds of Life Insurance. Briefly let’s look at an overview of them. There are two basic types of Life Insurance. They are;

Permanent -
1. It can provide immediate death benefit in the event of the death of the insured.
2. It has some type of cash value accumulations that the insured can withdraw and use for various needs, i.e. retirement, college funds, etc.

Term -
1. It can provide immediate death benefit in the event of the death of the insured.
2. It can provide a higher death benefit versus the cost than Permanent Life Insurance


Let’s review some basic contracts in both of these types of Life Insurance Contracts. Bear in mind that some of the contracts have various clauses that vary amongst insurance carriers, but the basic contracts are all similar.

Level Term - Life Insurance issued for a particular period of time (term) for death benefit only that does not accumulate cash values. Death benefit remains level until the end of the term at which time it ceases.

Decreasing Term -Life Insurance issued for a particular period of time whereby the death benefit reduces on a regular basis throughout the term of the contract. At the end of the contract, death benefit is -0-.

Whole Life - Permanent Insurance, which requires premiums to be paid as long as insured lives or to the age 100.

Limited Pay policies - Permanent Insurance whereby premiums are paid for a limited period of time and then stops and the insured does not lose the benefit of having life insurance. Contracts become fully paid up. May be established to be paid for a certain number of years or may be until the insured reaches a certain age.

Endowments - Tax Reform Act of 1984 indicates that any policy which endows (matures) before the age of 95 does not qualify as life insurance and hence, the death benefits are taxable. If the insured is living at the time the policy matures, the cash value equal to the face amount of the policy is paid to the

Single Premium Whole Life - Only one single premium is paid and develops cash values immediately.

Combination or Blended Products - Combination of Term and Permanent to provide living benefits and additional death benefit at a reduced cost.

Joint Life - Insurance written on the lives of two or more persons. One death occurs to one person, the insurance terminates on the remaining survivors.

Survivorship Policies - Joint life which guarantees payment only when the second insured dies.

Adjustable Life Policies - Permanent Insurance whereby adjustments can be made by the policyowner in the following:

• 1. Face Amount of Death Benefit
• 2. Amount and or frequency of premium payments
• 3. Period of insurance protection to be provided.

Universal Life Policies - Flexible Premium, Adjustable Benefit Life Insurance Contract that accumulates cash values. They have options for:

• 1. Increase Death Benefit or remain level
• 2. Increase Contributions (premiums) to accumulate increased cash values.

Variable Life -Securities based Whole Life Contract. Death benefit varies to reflect the investment performance of the underlying separate account. May reduce if investment reduces.


How much Life Insurance does an individual need?
Determining how much Life Insurance someone needs, is a process of determining what will be needed when that individual is no longer able to provide the support provided when they were alive. It is often done in a process called "Estate Planning". It is a projection of what is anticipated and often needs to be changed as an individuals' life responsibilities change. For example, when an individual purchases a home, there is an additional financial responsibility. When there is a birth of a child, the responsible individual to provide for that child changes from what is was before the child was born.

For more information on Estate Planning, refer to the article on Financial Planning.


Beneficiary Designations
Along with the importance of the type of policy and amount of coverage, comes the designation of whom will receive the proceeds of the Life Insurance policy at the death of the insured. This is indicated as the beneficiary of the proceeds. There are various types of beneficiary classes to consider and what the insured's intent is in naming them. Without naming a beneficiary the proceeds will go into the insured's estate. When money enters an estate and if there is no will, the court handling the disposition of that estate is required to distribute the assets according to state law, which may or may not be the way the deceased would have wished.

Primary Beneficiary - This is the first person in line to receive proceeds of policy. May be more than one person in which case they share equally.

Contingent Beneficiary - Person designated, should primary beneficiary die before the insured, or if the primary elects not to receive the proceeds

Revocable Beneficiary - Beneficiary that can be changed by the policyowner.

Irrevocable Beneficiary - Beneficiary that can not be changed by the policyowner.

Minors - Unless trustee or guardian is named, usually company will hold funds and it will draw interest until the minor reaches legal age before proceeds will be paid.

Simultaneous Death Act - If the insured and the primary beneficiary die simultaneously, life insurance policy proceeds will be paid as if the insured had outlived the primary beneficiary, if there is no proof to the contrary. The proceeds would then go to the contingent beneficiary, if named, or into the estate of the insured.

The Act states that if the insured and the primary beneficiary die at the same time, the proceeds are to be paid to the contingent beneficiary, or to the insured's estate if there is no contingent beneficiary. But if there is any kind of proof - such as a witness who says he saw the primary beneficiary move, thus showing signs of life after an accident that kills both the beneficiary and the insured, then the primary beneficiary outlived the insured and the money must be paid to the primary beneficiary's estate.

For additional information on Life Insurance also refer to the FAQ's, and other articles which we have included. We will also be very pleased to discuss any other issues you might have or questions with regards to your Life Insurance Needs.