Joshi, Sarika

A Life Insurance Guide for Individuals, Families and Business Owners

The Bene ts and Flexibility of Whole Life

Instantly, with the payment of the rst premium, the entire death bene t is set aside for your family. Whole life insurance provides a guaranteed death bene t for the entire life of the insured. Whole life is uniquely di erent from all forms of savings and investment vehicles, such as bank accounts, IRAs, 401(k) accounts, mutual funds, and brokerage accounts, in that it continues to be funded even if you become disabled. Disability usually brings with it the strain of reduced income, increased expenses, and dissolution of existing savings and investments. The Waiver of Premium rider, when elected, guarantees that if disabled, your policy will continue to be funded by the insurance company as if you continued to make full premium payments. In e ect, you will have a self-completing savings plan (college, retirement). In many states, the bene ts of life insurance are protected from the claims of creditors. If your state provides this legal protection, the cash values and death bene t of a whole life policy will be protected from lawsuits that can result in the loss of other assets, such as bank accounts, mutual funds, and brokerage accounts. 4 Whole life avoids probate and has a named bene ciary: You specify who and howmuch of the bene t will be distributed to each bene ciary. Unlike a will, however, whole life insurance has the added bene t of privacy. Wills, once probated, become public documents. The distribution of a whole life insurance policy’s death bene t is a private, contract-driven transaction between the policy owner and insurance company— the distribution passes outside of a will and thus provides privacy for the bene ciaries. The death bene ts of whole life are generally free from all federal income taxes. The enormous value of this bene t must not be underestimated, especially in light of constantly growing government expenditures and taxes. The growth of the cash value inside a whole life policy is deferred from taxation while the funds remain in the policy. This is yet another wealth-protecting bene t that whole life provides to families and businesses. During the insured’s life, cash value additions can be accessed under favorable First- In-First-Out (FIFO) tax rules. This means withdrawals to the extent of cost basis are considered a tax-free return of cost basis.

The Protection of an Instant, Permanent Estate

Disability Protection 9

Liability Protection

Distribution Like a Will

Tax-free Death Bene t

Tax-deferred Growth

Tax-favorable Access to Policy Cash Values ThroughWithdrawals Tax-favorable Access to Policy Cash Values Through Policy Loans

During the insured’s life, loans taken against a whole life policy will not trigger a taxable event, even though the policy may have a large gain in excess of premiums paid.

Self-funding 10

You have the option of having the policy pay for itself over time by applying dividends to pay premiums. This feature may be invoked or changed at any time to meet the changing circumstances of your life.

Once a policy loan has been taken, the annual dividend can be used to help pay back a policy loan.

Ability to Pay Itself Back from Future Dividends

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