Redeeming cash can be accomplished through a simple phone call to the policyholder service department of your company. It can be done as soon as cash has accumulated, but must be done in full recognition of the impact the loss of cash will have on both the cash account and the Survivor benefit.
Steve Kobrin www.stevenkobrin.com
There is no requirement to 'read the will.' The claim against the life insurance policy can be made any time after the death. In many cases it will not be a part of the estate.
if the owner of a life insurance policy dies and the policy is on her son. What happens to the ppolicy and is it part of the estate.
Universal life insurance is a modified, flexible form of whole life insurance. Part of your premium goes toward insurance coverage, while the rest is invested to increase the policy's cash value.Benefits of Universal Life Insurance:Universal life insurance is the most flexible of all life insurance plans:* It lets you choose the amount of protection you want, increasing or decreasing your coverage as your needs change.* It lets you control the amount and frequency of your payments. If you have extra cash, you can pay more and the extra money grows tax-deferred. If you're short on cash, you can pay less and let the policy's accumulated cash value pay the remainder of the monthly charges.If you do decide to invest in a universal life insurance policy, be sure you plan to keep the policy for at least 15 years. It will usually take that long before you are eligible for any return on the policy.
Without seeing the policy, it is hard to say. However, there are at least a couple of possibilities: 1. It is a "decreasing term" policy. This is a variety of life insurance that has a high face value at the beginning of the policy, but that decreases over the life of the policy. This kind of policy is often sold to a fairly young head of household, whose life insurance needs are high. The need arises, for example, because in the event of premature death, funds are required to raise children. As the policy ages, and therefore the theoretical need for life insurance protection decreases, the amount of life benefits decrease. 2. It is a whole life policy. This is otherwise called "permanent insurance". It builds cash value, which is a kind of savings account built into the policy. A part of the monthly premium is applied to the cost of insurance, and a part is applied to the cash value. Although cash value accumulates slowly at first, over the life of the policy, it can build substantially. Additionally, some policies allow the policyholder to divert what would otherwise be held by the insurer and applied to cash value, to mutual funds or other investments. While there is a risk to doing this, such as the stock market declining, there is also the potential of the market rising and the cash value increasing more quickly. Over a period of time that cash value has accumulated, the policyholder may have decided, or neglected, to pay premiums. For at least some of the time that premiums were not paid by the policyholder, the insurance company may have deducted premiums from the cash value, thereby keeping the policy in force. All of that said, it is conceivable, but unlikely, that a policy could have survived on its cash value for 25 years
That depends on the life insurance policy. The policy must be one that builds cash value before a loan can be taken. Simply, if the policy is a 'term life policy' it lasts for a defined period - 10 years, 20 years, etc. - and charges a low premium. It doesn't build cash value you can borrow against. 'Whole life policies', on the other hand, have a part of the premium paid set aside for cash value. For this reason, the amount of premium charged for a whole life policy will be higher than the premium charged for a term life policy with the same face value. NOTE: A loan is taken against the cash value of a policy, not the face value ( death benefit ). So if the face value is $10,000 and the cash value is $3,000, the loan would be taken against the $3,000.
Cash value is a feature of whole life insurance, sometimes called permanent life insurance. You might consider it as the :savings" element of the policy, but do not confuse it with a savings account or an investment. Each premium payment made toward a whole life policy consists of an amount that pays for the pure insurance element (the "indemnity" benefit) and some goes toward cash value. Cash value accumulates very slowly at first, but after the policy has been in force for some time, it speeds up. When the policy is purchased, part of the illustration of it will be projected cash value increases, although these are not guarantees. Whole life policies permit cash value to be borrowed once it has reached a specified amount, and the policy will state an interest rate that accrues on the policy loan. The loan can, and probably should, be repaid, but if it is not, it and the accrued interest will reduce the payment to the beneficiaries when the insured dies. The mechanics of getting a policy loan will be specified in the policy and are usually simple. It usually involves ensuring that the policy is in force, specifing the amount that you want to take from the cash value, and that that amount does not exceed the percentage of the cash value that the insurer allows as a policy loan. Generally, you can handle this yourself, but your insurance agent can also facilitate it.
Term life is a kind of life insurance that remains in force for the amount of time (the "term") stated in the policy. At the end of the term, coverage of the policy ends. In its usual form, term insurance does not accumulate cash value, like whole life insurance. Cash value can be likened to a "savings account" within the policy into which a small part of every premium dollar is deposited. Unlike this, the premium for a term policy is tied more directly to the actual cost of providing the death protection. Therefore, term insurance is generally less costly than whole life insurance. purchased for a certain time period with a specific premium cost a+ ^
The policy proceeds will become part of the decedent's estate.
Yes, if the policy is a whole life insurance policy. This is a type of life insurance policy that has an element of "savings" to it. That is, a part of each premium is applied to pay for the death benefit, and a part goes into the "cash value" which is roughly similar to a savings account. In the early years of the policy, the cash value accumulates very slowly, but as the policy is in force, it accumulates more rapidly. Whole life insurance policies generally contain provisions that allow the owner to borrow the cash value. Usually, there is a percentage limit to the amount that may be borrowed, such that the entire cash value cannot be taken. The policy will also specify a rate of interest to be charged against the money taken. While it does not have to be repaid (because it is essentially your money), the interest will continue to accrue against the loan and add to the balance payable. The risk therefore exists that the policy loan plus the accrued interest will, over time, cannibalize the death benefit such there will be a much smaller death benefit payable when the insured dies. Term life insurance does not accumulate cash value. Therefore, a loan as described above, is not possible.
Term is strictly protection. Whole life is protection plus cash value. Cash value is similar a to a savings account within the policy. Part of the periodic premium goes to pay for the insurance protection, and part is applied to the accumulation of cash value.Term insurance can be purchased for a specified period to coincide with your needs (such as raising children), such as, 5, 10, 20 or 30 years. Whole life also can be purchased for a specified time, but when done so, the specified time will me stated in terms of how long it will take to pay the policy in full such than no further premiums are due. When that occurs, the policy remains in force, whereas if premiums stop with term insurance, the coverage lapses.AnswerWhole life insurance is for life, or up to the age of 100! You do not need to renew it and the premiums are fixed for life. They are usually high when compared to term life insurance. This is because whole life insurance has cash value benefits as well which you can dip into. This comes in handy when you may have need of money.
yes, we can surrender a life insurance policy. If we surrender the policy means we can surrender by its cashvalue. If we surrender for the entire cashvalue then it is called full surrender. If we surrender for a part of its cash value then it is called partial surrender. Any way the cash value gets reduced. It effects the face amount. so the face amount also gets reduced. Hence no of units gets reduced.
Variable universal life insurance combines the flexibility of a universal life insurance with the investment account features of a variable life insurance.Like variable life insurance, variable universal is considered a security. It can only be sold by agents who have passed the National Association of Securities Dealers (NASD) exam.AnswerVariable life insurance allows you to control your portfolio of investments that is part of the cash value component of a whole life insurance policy. This could include stocks, bonds, or funds. As a result of this freedom, this is the most expensive type of insurance available in the market. Opt for such a policy only if you are completely confident about investing in the markets. While the risks may obviously be higher as there is no guarantee on your savings, the value benefits are also much more than any other insurance policy available.AnswerVariable Universal Life insurance is permanent life insurance that has a cash value feature in it. The cash value is invested in a small selection of portfolios. Since it is invested, there is no guarantee interest and it may lose value. When you pay your premiums, you are paying for three things: The insurance, the cash value, and investment fees. If you know anything about mutual funds, mutual funds have their own annual operating expenses. Since these mutual funds are invested in a life insurance policy, you are paying more than 5% of annual expenses. Therefore, you will get a low rate of return on your cash value.Every year, the cost of the insurance goes up. The insurance part of the policy is annual renewable term. That means more of your premiums is going to the insurance and less toward the cash value. Eventually, you will have to pay higher premiums in the future. If you don't, the policy will eventually lapse as the cash value is depleted.
The benefits from a life insurance policy are treated as part of the estate and subject to the estate tax. They are not subject to income tax.
It will state on the life insurance policy the name of the person or persons who are to receive the death benefit. Since a life insurance contract is a legal document, the insurance company is required to carry it out exactly as stated in the policy. The money may be argued over from that point, but the will cannot dictate where the money from a life insurance policy goes.
Most term life insurance policies do not have cash value unless the are "return of premium" type policies. Cash value is generally a part of whole life and some universal life policies. The latter policies are designed to accumulate cash for use as the policy matures. Generally, whole life endows at age 100 when the cash equals the death benefit. Cash value policies should be examined by your financial adviser (CPA) to make sure they will accomplish their goal.
Life insurance is insurance on a human life. In its most basic form, the insurer agreed to pay a stated sum, specified in the policy, upon the death of the person whose life is insured. There are a variety of permutations of life insurance, but the main types are term insurance and whole life insurance. Term insurance might be characterized as "pure insurance". That is, the beneficiary collects the proceeds if the insured dies during the term of the policy. It does not have a savings component, and expires and is rendered of no monetary value if the insured does not die while it is in force. Whole life differs somewhat from term. Incorporated in it is a term policy and a savings plan. Part of every premium payment is applied to pay the term insurance cost, and another part goes into the savings element of the plan (called "cash value). When the policy is fairly new, most of the premium goes toward the cost of the insurance, and very little goes into the savings element.
It depends on the policy wording but most do NOT form part of the estate. You will need to ask the insurance company.
If the insured has died the proceeds from the insurance will be paid AS STATED IN THE POLICY. The proceeds of the claim are not part of the assets of the deceased's estate.
Life insurance may more properly be called "death insurance". That is, since everyone will at some point die, it is intended to pay a sum of money to the decedent's heirs, survivors, or other listed beneficiaries, upon death. Life insurance is considered to be a "valued" policy, as there is no objective measure as to what one's life is worth. Therefore, although there are factors that should be taken into account as to how much life insurance is advisable (such as minor children that must be supported and educated), one is fairly free to buy as much life insurance as they can afford. Life insurance companies do sometimes impose limits on how much a person may buy based upon health and financial considerations. Term insurance, one form of life insurance, is considered to be "pure protection" in the sense that it does not accumulate cash value. Instead, it pays the face value of the policy to the designated beneficiary when the decedent (insured) dies, according to the terms of the contract. Of course, all premiums must have been paid and the policy in force as of the time of death. Whole life insurance (often called "permanent insurance") does accumulate cash value. Cash value may be likened to sort of a savings account within the policy. Part of the periodic premium is applies to the "protection" element of the coverage, and part goes toward the accumulation of cash value. In the early years of the policy, cash value accumulates slowly. However, depending upon the structure of the policy, it can accumulate more quickly. That is, in some policies, the "savings" portion is invested in mutual funds that the insured designates, and therefore the growth of the cash value fluctuates with the performance of the funds. In no event should this be considered to be a savings account or investment; insurance is protection, and the cash value element is just a tangential feature. There may come a point in a whole life policy when the policy is "fully paid up" meaning that no further premiums need to be paid. Depending upon the structure of the policy, this can be 10-15-20 years. Naturally, the amount of premium payable over that time will be greater or less depending upon how long it takes to pay up the policy. In contrast, premiums on term policies are lower (because there is no savings element), and must be paid for the full term of the policy (which also can be 20 years or so).
Life Insurance and EstatesNO, not if the named beneficiary is not deceased. The proceeds of a life insurance policy belong to the named beneficiary not to the deceased. It should not under any circumstances be included in the estate of a deceased or the probate process. If no beneficiary is named or if all beneficiaries are deceased then their is no alternative. When their is no named beneficiary then the value of the life insurance policy reverts to the insured and must then be included as part of the deceased estate
Term life insurance is your basic life insurance policy in which you'll get the face amount in the event of the policyholder's death. The 'term' part of the name comes from the fact that the policy lasts for a particular number of years. While the policy is active, you'll be covered, but after it expires, you're left with no protection and no payout will be given if you then die. Term life insurance only lasts for a specific number of years, but whole life insurance will cover you for the rest of your life as long as you've paid the full amount of premiums. It is radically different from term life insurance, because some of your monthly premiums are invested into shares, bonds and other investment vehicles. This acts as a 'cash value' savings asset that you can claim if you live longer than the length of your policy or borrow against the amount, but it makes whole life insurance policies more expensive than term life insurance policies.
If the life insurance is part of a group life insurance policy, you will lose the benefits when employment stops. That's why it is recommended to get your personal life insurance policy, which you can take with you when you change jobs or in case of unemployment. It is never too late to get a new policy on your own. Talk to an experienced independent agent that can offer multiple options.
what the insurance company includes as part of the insurance policy.
If life insurance is payable to a beneficiary other than "the estate of ...[the decedent]", proceeds are payable directly to the named beneficiary and do not normally become part of the estate. However, if the designation of beneficiary of the life insurance policy is the estate of the decedent, proceeds do usually become part of the estate.