Insurance

Common insurance needs are life insurance, disability, health, long-term care, and property and casualty insurance. Given the complexities of insurance, it is highly recommended that you meet with an insurance representative to explain the benefits and options. Click Here to go to ClaroConnect which allows you to search for exactly the right insurance representative for you.

Some insurance representatives may also do general financial planning on their own or they may work as part of a team of investment advisors, accountants and lawyers. Some insurance reps can provide most types of insurance coverage, while some specialize in an area such as insurance contracts for estate planning.

Common terms for insurance:

Life Insurance – A contract with an insurance company in which the company agrees to pay out a death benefit to your beneficiaries upon your death. A term insurance policy usually has the cheapest initial premiums (or cost to you), but the insurance ends at the end of the term and, because of increasing age and health issues, you may be left with no insurance or extremely high premiums. A permanent life insurance policy usually has higher initial premiums, but guarantees coverage for as long as you pay the premiums and the amount of the premiums doesn’t usually increase.

Health Insurance – A contract with an insurance company to pay for medical expenses. Health insurance policies differ greatly in costs and benefits.

Disability Insurance – A contract with an insurance company to replace a portion of your current income should you become disabled and not able to work. Disability insurance can be particularly valuable for younger and higher-income individuals since their future earnings power may be their greatest asset.

Annuity – In general terms, an annuity is a payment received annually. As a product, it is a contract with an insurance company in which money is invested, either in stocks or in a fixed-rate contract, and grows tax-deferred, before being withdrawn or converted to an income. With an immediate annuity, you pay upfront and immediately start receiving income. Your income from an annuity can be taken after age 59 ½ without IRS penalties, and can be in the form of a lump sum, a specified period, or over your lifetime. In the lifetime option, the insurance company guarantees to pay the specified amount each year, no matter how long you live. The lifetime annuity is valuable in retirement planning since fewer people are retiring with pension plans.

Cash Surrender Value – The amount you receive when you cash in or cancel a permanent life insurance policy. The cash surrender value accumulates tax-deferred in your policy from the payment of your premiums minus the policy’s expenses.

Deferred Annuity – A contract with a life insurance company, which is invested in either stocks or fixed-income investments, that accumulates tax-deferred earnings. The annuity can be converted to an income, ranging from a lump-sum payment to a lifetime income guaranteed by the insurance company. Since there may be penalties from withdrawing money from annuities before age 59 ½, they are appropriate for retirement planning.

Chartered Financial Consultant (ChFC) – The Chartered Financial Consultant, or ChFC, is a designation for the life insurance industry from the American College. ChFC’s must have 3 years of experience and pass an exam covering personal financial planning topics.

Chartered Life Underwriter (CLU) – The Chartered Life Underwriter, or CLU, is a designation for the life insurance industry from the American College. CLU’s must have completed courses in several personal financial planning topics.