Understanding Life Insurance

Transcription

1 Understanding Life Insurance 10 % Products issued by National Life Insurance Company Life Insurance Company of the Southwest National Life Group is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest, Addison, TX and their affiliates. Each company of National Life Group is solely responsible for its own financial condition and contractual obligations. Life Insurance Company of the Southwest is not an authorized insurer in New York and does not conduct insurance business in New York. TC81495(1014)3 Cat No 63784(1014)

2 What are you doing to financially protect those you love? The purpose of life insurance is to help ensure that those who depend on you will still be able to maintain their standard of living if something should happen to you. Life insurance helps secure your loved ones futures and potentially provide them with enough money to fulfi ll their obligations and pursue their dreams, even if you are no longer with them. 2

3 What is life insurance? As uncomfortable as it is to think about, imagine what standard of living your family would have if you were no longer with them. Life insurance protects your family against the loss of income when you die. It helps secure your family s fi nancial future. If you own permanent insurance, the cash value may be able to help fund your children s education, assist with expenses if you become disabled, or supplement your retirement income. 1 Many life insurance policies have riders that can be added to provide you with benefi ts you may use throughout your lifetime, called living benefi t riders. 2 These riders can accelerate the death benefi t should you become ill or potentially provide a guaranteed 3 source of retirement income if you live too long. 1 Policy loans and withdrawals reduce the policy s cash value and death benefi t and may result in a taxable event. Surrender charges may reduce the policy s cash value in early years. 2 Riders are optional, may require additional premium and may not be available in all states. 3 Guarantees are dependent upon the claims-paying ability of the issuing company. 3

4 How does life insurance work? All life insurance policies operate under the same general structure. You make payments, also known as premiums, to a life insurance company. In return, the company agrees to pay a specifi ed amount to whomever you designate to receive the money from your policy when you pass away. 4

5 Who needs life insurance? Most people need life insurance in one form or another. If you have dependent children, an older family member who depends on your wages, are planning to start a family or currently own a home, you may have a need for life insurance. Regardless of your life stage, life insurance could prove to be one of the most valuable fi nancial decisions you ever make. 5

6 What type of insurance should you have? There are three basic types of insurance that you can choose from: Term Whole Life Universal Life Term Insurance Term insurance, has guaranteed coverage for a set period of time or until a specifi ed age, as long as premiums are paid. Term policies are usually renewable once that time period has expired, although it is likely that premiums will then increase. Term insurance provides a death benefi t if you die within a defi ned period of time and does not accumulate cash value. You can generally purchase a higher death benefi t for your premium dollars with term insurance than you can for permanent insurance. It is frequently the most affordable coverage. 6

7 Whole Life Whole Life insurance is frequently referred to as permanent insurance because it remains in force for life, as long as the premiums are paid as scheduled. These premiums are designed to remain level over the life of the policy. Also, after owning a policy long enough, you build cash value that is tax-deferred and you may be able to access these funds on a tax-advantaged basis. When you pass away, your benefi ciaries will receive the amount of the death benefi t, minus any outstanding loans and loan interest that may be due on your policy. 7

8 Universal Life Considered the most flexible of the three types of life insurance, Universal Life allows you to adjust the amount of your policy, or face amount, as well as the premiums you pay. You can build cash value in your policy without paying current income taxes on the increases and you can potentially access the funds using tax-free loans and withdrawals. 4 Universal Life s flexibility allows you to stop paying premiums if there is enough accumulated value in your policy to cover the cost of insurance each month. 5 If you desire, you can then pay additional premiums to build back up accumulated cash value. You may also be able to increase or decrease your death benefi t depending on your life insurance needs. An increase may require additional underwriting. Two of the most popular types of Universal Life policies are Fixed Universal Life and Indexed Universal Life. One of the main differences between them is in how the policy s interest is credited. With a Traditional Fixed Universal Life policy, the interest rate is declared by the company. Indexed Universal Life credits the interest based on the changes in value of a major market index. Both offer you varying degrees of guarantees and returns, based on your appetite for risk. 8 4 Policy loans and withdrawals reduce the policy s cash value and death benefi t and may result in a taxable event. Policy loans in excess of premiums paid will not be considered taxable income unless the policy lapses. Values withdrawn exceeding the premiums paid into the contract will be treated as taxable income. 5 It is possible that coverage will expire when either no premiums are paid following the initial premium, or subsequent premiums are insufficient to continue coverage.

9 Life Insurance Product Overview FEATURE Death Benefit Premium Cash Value Term Life Fixed Level or Increasing None Whole Life Guaranteed Fixed Fixed rate Guaranteed Possible dividends set by the company Traditional Fixed Universal Life Indexed Universal Life Very Flexible Flexible Current interest rate Guaranteed minimum interest rate set by the company Very Flexible Flexible Interest credits based on the positive change in a major market index Guaranteed minimum interest rate set by the company 9

10 Want to make today s dreams come true? Life insurance is a unique fi nancial tool that can be structured to accomplish many objectives, and it can be customized to fi t very specifi c needs. Find out how life insurance can provide you with the security, protection and opportunities that can help you make what may be today s dreams, tomorrow s reality. 10

11 National Life Group s Story National Life Insurance Company was chartered by the Vermont Legislature in 1848; with the first policy being sold in Since then, the company evolved into National Life Group, offering a full range of fi nancial services with the formation of Equity Services, Inc. and the purchase of Sentinel Investments. In 1996, National Life purchased Life Insurance Company of the Southwest, which was chartered in Dallas, TX in The company has primary offices in Montpelier, VT and Addison, TX. Throughout our history, National Life Group has been dedicated to keeping our promises and to our vision of bringing peace of mind to everyone we touch. 11

12 Equity Services, Inc., Member FINRA/SIPC, is a Broker/Dealer and Registered Investment Adviser. Sentinel Investments is the unifying brand name for Sentinel Financial Services Company, Sentinel Asset Management, Inc., and Sentinel Administrative Services, Inc. All companies, unless otherwise noted, are affiliated and are located in Montpelier, VT. Payment of Accelerated Benefi ts will reduce the Cash Value and Death Benefi t otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event and may affect your eligibility for public assistance programs. Please consult your personal tax advisor to determine the tax status of any benefi ts paid under this rider and with social service agencies concerning how receipt of such a payment will affect you. Life Insurance income riders typically have limitations and restrictions to exercising them, including but not limited to, minimum and maximum age requirements, years policy has been inforce and minimum policy values. Receipt of other policy benefi ts that reduce policy values may also reduce the ability to exercise the income rider. Receipt of income benefi ts will reduce the policy s cash value and death benefi t, may reduce or eliminate the availability of other policy and rider benefi ts, and may be taxable. Riders are supplemental benefi ts that can be added to a life insurance policy and are not suitable unless you also have a need for life insurance. This is not a solicitation of any specifi c insurance policy Centralized Mailing Address: One National Life Drive, Montpelier, VT 05604