Brian Gruss Licensed Insurance Planner

Why Should You Buy Life Insurance on Your Children?

No parent could ever conceive the thought of outliving their children. It’s just too emotional a concept to bear. But the one detail that is consistent about life is that there are surprises around every bend; and sometimes those surprises aren’t happy ones. The untimely death of a child is one of those instances. As harsh as it may seem, at the time of a parent’s greatest emotional turmoil, is also the time they have to deal with some cold, hard financial realities.

If the child had an extended illness, chances are there are medical bills to be paid because health insurance coverage may have expired. There can also be bills for treatments and procedures not covered by the family health care plan. In addition to these expenses are the ever-rising costs associated with burial. Parents will want to give their children a nice funeral because it is the last thing they will ever be able to do for them. Part of the burial cost may also include purchasing a final resting place for the child if the family doesn’t currently own a burial site.

Even if the parents have sufficient personal wealth to cover any final expenses of a deceased child, life insurance can still be useful. The proceeds from a life insurance policy can be used to make a donation to a charitable organization in the child’s memory. It can also be used to set up a scholarship fund at the child’s school so that deserving students who are financially less fortunate can continue their education. Other parents may choose to establish their own foundation to encourage research to find a cure for the child’s illness. All of these uses help ease the grief of the child’s passing because parents know that from that sad event some good will come.

While the proceeds from a life insurance policy are usually connected with after-death events, they don’t have to be used in that way. Insuring children while they are in good health means that they will have life insurance though out their lives even if they develop medical conditions in the future. If the policy includes an additional insurance rider, the child will be guaranteed the ability to purchase additional insurance as an adult at specific times. Premiums for face amount increases will be based on the child’s health status at the time the original policy was purchased even if the child has current health problems.

And finally, life insurance can certainly be used to finance life events too. A college education, a dream wedding or the purchase of a first home can all be made possible by life insurance. Adult children have a significant cash reserve at their disposal because of the accumulated cash value of that life insurance policy Mom and Dad had the foresight to purchase all those years ago.

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Revisit Your Life Insurance Needs Annually

How long has it been since you last reviewed your life insurance coverage? If you are like most, chances are you long ago filed your policy away and haven’t thought about it since.

But life is not static, and circumstances do change. Major life changes such as marriage, the birth of a child, the purchase of a new home, or even an increase in salary can shape how much financial protection you and your family needs.

Even if a year goes by without any major life events, it’s still a good idea to review your coverage. The amount of your life insurance coverage should be sufficient to meet the current obligations and future needs of your loved ones. If you have taken advantage of historically low interest rates and recently refinanced, make sure you have enough coverage to satisfy your new loan obligations. If you’re single, consider the cost of a funeral, outstanding medical bills, credit card balances and ongoing financial assistance for elderly parents who may be dependent upon you.

And while you’re reviewing your coverage, it’s also a good idea to confirm that your current beneficiary elections are still accurate.

If you’re uncertain whether your current coverage is meeting your family’s needs, contact us for a needs analysis to provide you the peace of mind that your family will be taken care of should the worst happen.

Tags: Beneficiary, Circumstances, Contact, Credit Card Balances, Current, Elderly Parents, Elections, Financial Assistance, Increase In Salary, Insurance, Insurance Life, Life Changes, Life Insurance Coverage, Loan Obligations, Low Interest Rates, Marriage, Medical Bills, Peace Of Mind

Cash Out an Old Life Insurance Policy with a Life Settlement

You’ve probably heard the term “life settlement” countless times on the news or from friends. But what exactly is a life settlement and how does it work? Here’s the lowdown on these increasingly popular transactions:

Are life settlements just for the terminally ill?

No—anyone with a life insurance policy can enter into a life settlement.

It’s important to distinguish between life settlements and what are called viatical settlements. In a viatical settlement, a person who is terminally ill can sell their life insurance policy to an investor. As a result, they get to “cash out” a portion of the policy’s face value, which may help them cover medical bills or other costs.

On the other hand, you do not need a life-threatening illness to sell your life insurance policy in a life settlement. These contracts are most appealing to seniors with shorter life expectancies and whose beneficiaries no longer need financial support. That’s why life settlements are sometimes referred to as “senior settlements.”

How does it work?

In a nutshell, when you take part in a life settlement you sell your existing life insurance policy to an investor. In exchange you receive cash equal to a share of the current policy’s face value.

Once the investor or life settlement company buys your life insurance policy, they become the beneficiary of the policy. The investor continues to make premium payments on the policy, and when you pass away, they receive the full amount of your policy’s death benefit.

Is a life settlement right for me?

If you are considering selling your life insurance policy, you should keep a few things in mind. First of all, do you have beneficiaries who would need your life insurance money if you passed away? For example, if you have minor children or an ailing spouse, a life settlement may not be a good option. That’s because these beneficiaries may rely on the death benefit from your policy if you were to die. If this is the case with you and your family, you may consider taking out a loan instead of taking part in a life settlement.

However, if your children are now grown adults and all of your beneficiaries can care for themselves financially, a life settlement may be the right choice for you. Of course, you may want to let your family know that you are considering selling your life insurance policy—that way, they won’t have any false expectations.

What’s the difference between settling and surrendering?

A life settlement is not the same as surrendering your life insurance policy. When you surrender your insurance policy, you are simply giving it back to the insurance company for the cash value of the policy. On the other hand, a life settlement allows the investor or life settlement company to take over the policy. In most cases, life settlements offer a higher payout than surrendering your policy.

However, whether you are considering settling or surrendering, you should seek professional guidance first. Consult with your financial advisor or insurance agent. A professional can help you make the right choice and determine which option will be most beneficial to you.

Why are life settlements so controversial?

As life settlements continue to grow in popularity throughout the U.S., a handful of con-artists and scammers have emerged trying to snatch a piece of this booming market. A few of these illegitimate, unethical “investors” have taken advantage of unsuspecting seniors selling their life insurance policy. As a result, the entire life settlement industry has come under a lot of scrutiny by the media.

However, not all life settlement companies are bad apples. There are still countless trustworthy life settlement companies throughout the country.

If you are considering a life settlement, do your research and ask friends and family to help you find a reliable company to handle the transaction. Additionally, your financial advisor can probably recommend a reputable company. When you work with a highly regarded professional on your life settlement contract, you’ll know that your transaction is handled correctly and ethically.

Tags: Beneficiaries, Beneficiary, Contracts, Countless Times, Death Benefit, Face Value, Insurance Life, Investor, Life Expectancies, Life Insurance Money, Life Insurance Policy, Life Settlement Company, Life Settlements, Medical Bills, Nutshell, Senior Settlements, Seniors, Term Life, Terminally Ill, Viatical Settlement