Annuities - Life Insurance - Final Expense (800) 884-1160
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Business Background
Joe Zimmerman started his career in the Insurance and Financial Services industry in 1992. His experience includes sales training, recruiting and management, with more than 25 years in the Fixed Product distribution sector, working with Financial Professionals. Prior to entering the Financial Services Industry, Joe was active in the computer industry as an independent consultant with experience in accounting software development, account support, and training for accounting professionals.
Business Activities
In addition to a private practice, Joe Zimmerman is an experienced Product Analyst, Wealth Management Platform Business Consultant, and Distributor of Annuity, Life, and Long-Term Care products. Duties include the education, training, and support for Industry Professionals in the use of various products, with respect to their place In a structured portfolio.
About Annuities
Annuities
What Is an Annuity ?
An annuity is a contract with an insurance company that is funded by the purchaser and designed to generate an income stream in retirement. It is a flexible financial vehicle that can help protect against the risk of living a long time because it provides an option for a lifetime income.
Two advantages of annuities are that the funds accumulate tax deferred and they can be distributed in a variety of ways to the contract owner.
There are many different types of annuities. Immediate annuities are designed to provide income right away, whereas deferred annuities are designed for long-term accumulation. Some annuities offer a guaranteed rate of interest, whereas others
do not.
Some annuities have fees and expenses, and carry a certain level of risk. Any guarantees are contingent on the claims-paying ability of the issuing insurance company. Most annuities have surrender charges that are assessed during the early years of the contract if the owner surrenders the annuity. Typically, these surrender charges work on a sliding scale, with higher charges during the first several years of the contract and lower charges in the years before the surrender charges expire.
If the contract is surrendered before age 59½, the owner may also be subject to a 10% federal income tax penalty. The earnings portion of annuity withdrawals is subject to ordinary income taxes.
FIXED ANNUITY
A fixed annuity is an insurance-based contract that be funded either with a lump sum or through regular payments over time. In exchange, the insurance company will pay an income that can last for a specific period of time or for life.
Fixed annuity contracts are issued with guaranteed minimum interest rates. Although the rate may be adjusted, it will never fall below a guaranteed minimum rate specified in the contract. This guaranteed rate acts as a “floor” to protect a contract owner from periods of low interest rates.
Fixed annuities provide an option for an income stream that can last a lifetime. The guarantees of fixed annuity contracts are contingent on the claims-paying ability of the issuing insurance company.
Immediate Fixed Annuity
Typically, an immediate annuity is funded with a lump-sum premium to the insurance company, and payments begin within 30 days or can be deferred up to 12 months. Payments can be paid monthly, quarterly, annually, or semi-annually for a guaranteed period of time or for life, whichever is specified in the contract. Only the interest portion of each payment is considered taxable income. The rest is considered a return of principal and is free of income taxes.
Deferred Fixed Annuity
With a deferred annuity, you make regular premiums to an insurance company over a period of time and allow the funds to build and earn interest during the accumulation phase. By postponing taxes while your funds accumulate, you keep more of your money working and growing for you instead of paying current taxes. This means an annuity may help you accumulate more over the long term than a taxable investment. Any earnings are not taxed until they are withdrawn, at which time they are considered ordinary income.
Fixed-Indexed Annuities?
Fixed Indexed annuities are a special class of annuities that have the potential to earn higher yields than fixed annuities because their performance is tied to a market index, such as the S&P 500.* A Fixed indexed annuity (FIA) is not a security but rather is classified as a single-premium traditional annuity. It must meet the strict insurance department requirements for interest guarantees as well as guarantees against loss of principal, and it provides traditional annuity benefits.
No-Loss Provision
The first and possibly most-attractive provision of fixed-indexed annuities is the no-loss provision. This provision guarantees that once a premium payment has been made or interest has been credited to the account, the value of the account cannot decrease below that level. This provides safety from the volatility of the market index to which the annuity is linked. Of course, any guarantees are contingent on the claims-paying ability of the issuing company.
FIA Interest Guarantees
The interest guarantees also appeal to many people. Most contracts have a cap (the maximum interest rate that can be credited to an annuity in a contract year) and a floor (the minimum interest rate that can be credited in a contract year). The cap rate can vary from no cap to a fixed percentage, but the floor is generally zero. This allows the contract holder to benefit from potentially high returns and, at the same time, be guaranteed that no money will be lost.
FIA Traditional Annuity Benefits
Fixed-indexed annuities offer many of the same benefits as traditional annuities, including tax-deferred accumulation. Remember that most annuities have surrender charges that are assessed in the early years of the contract if the owner surrenders the annuity before the company has had the opportunity to recover its costs. The earnings portion of withdrawals is taxable as ordinary income, and withdrawals made prior to age 59½ are also subject to a 10% federal income tax penalty. Fixed -indexed annuities typically offer other benefits that are not generally included in traditional policies. FIA values fluctuate with changes in market conditions. Of course, FIAs are not appropriate for every investor. Participation rates are set and limited by the insurance company. So an 80% participation rate means that only 80% (Example) of the gain experienced by the index for that year would be credited to the contract holder.
Also, like most annuity contracts, fixed-indexed annuities have certain rules, restrictions, and expenses. Some insurance companies reserve the right to change participation rates, cap rates, the spread/asset/margin fees, and other fees either annually or at the start of each contract term. These types of changes could affect the investment return. It is prudent to review how the contract handles these issues before deciding whether to invest in a FIA.
*The S&P 500 is an unmanaged index that is considered representative of U.S. stocks. The performance of an unmanaged index is not indicative of the performance of any particular investment. Individuals cannot invest directly in an index. Past performance is no guarantee of future results.
VARIABLE ANNUITY - A Securities Product and not available hereA variable annuity is a contract that provides fluctuating (variable) rather than fixed returns.
The key feature of a variable annuity is that you can control how your premiums are invested by the insurance company. Thus, you decide how much risk you want to take; however, you also bear the investment risk. Most variable annuity contracts offer a variety of professionally managed portfolios called “subaccounts” that invest in stocks, bonds, and money market instruments, as well as balanced investments. Some of your contributions can be placed in an account that offers a fixed rate of return. Your premiums will be allocated among the subaccounts that you select. Unlike a fixed annuity, which pays a fixed rate of return, the value of a variable annuity contract is based on the performance of the investment subaccounts that you select. These subaccounts will fluctuate in value and the principal may be worth more or less than the original cost when redeemed. Variable annuities provide the dual advantages of investment flexibility and the potential for tax deferral. The taxes on all interest, dividends, and capital gains are deferred until withdrawals are made.When you decide to receive income from your annuity, you can choose a lump sum, a fixed payout, or a variable payout. The earnings portion of the annuity will be subject to ordinary income taxes when you begin receiving income. Annuity withdrawals are taxed as ordinary income and may be subject to surrender charges plus a 10% federal income tax penalty if made prior to age 59½. Surrender charges may also apply during the contract’s early years. Variable annuity subaccounts fluctuate with changes in market conditions and, when surrendered, the principal may be worth more or less than the original amount invested.Variable annuities are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
About Life Insurance
What Are the Basic Types of Life Insurance?
Seventy-five percent of U.S. households agree that life insurance is the best way to protect against the financial consequences of a primary wage earner’s premature death.1 However, choosing from the many types of life insurance policies that are available can be a difficult process. A few main categories are described below to help you search for a life insurance policy that is appropriate for you.
Term Life Insurance
Term life insurance is the most basic and usually the most affordable. Policies can be purchased for a specified period of time. If you die within the time period defined in your policy, the insurance company will pay your beneficiaries the face value of your policy.
Policies can usually be bought for one- to 30-year time spans. Annual renewable term insurance usually can be renewed every year without proof of insurability, but the premium may increase with each renewal. Term insurance is useful if you can afford only a low-cost option or you need life insurance only for a certain amount of time (such as until your children graduate from college).
Permanent Life Insurance
The other major category is permanent life insurance. You pay a premium for as long as you live, and a death benefit will be paid to your beneficiaries upon your death. Permanent life insurance typically comes with a “cash value” savings element. There are three main types of permanent life insurance: whole, universal, and variable.
Whole life insurance.This type of permanent life insurance has a premium that stays the same throughout the life of the policy. Although the premiums may seem higher than the risk of death in the early years, these “overpayments” can accumulate cash value and are invested in the company’s general investment portfolio. You may be able to borrow funds from the cash value or surrender your policy for its face value if necessary. Of course, loans and withdrawals will reduce the policy’s death benefit.
Universal life insurance. Universal life coverage goes one step further. You have the same type of coverage and cash value as you would with whole life, but with greater flexibility. Once money has accumulated in your cash-value account, you may be able to vary the frequency, as well as the amount, of your premiums. In fact, it may be possible to structure the policy so that the invested cash value eventually covers your premium costs completely. Of course, it’s important to remember that altering your premiums may decrease the value of the death benefit.
Variable life insurance.(A SECURITIES PRODUCT and not offered here) With variable life insurance, you receive the same death protection as with other types of permanent life insurance, but you are given control over how your cash value is invested. You have the option of investing your cash value in stocks, bonds, or money market funds. The value of your policy has the potential to grow more quickly, but there is also more risk. If your investments do not perform well, your cash value and the death benefit may decrease. However, some policies provide a guarantee that your death benefit will not fall below a certain level. The premiums for this type of insurance are fixed and you cannot change them in relation to the size of your cash-value account. Any guarantees are contingent on the claims-paying ability of the issuing company.
Variable universal life (A SECURITIES PRODUCT and not offered here) is another type of variable life insurance. It combines the features of variable and universal life insurance, giving you the investment options as well as the ability to adjust your premiums and death benefit. As with most financial decisions, there are expenses associated with life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications. The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased.
When selecting a life insurance policy, make sure to examine all your options, as well as the positives and negatives of each type, in order to choose a policy that suits your needs. If you are considering purchasing life insurance, consult a professional to explore all your options.
Final Expense / Burial Insurance
Final expense insurance is a type of whole life policy. For most traditional whole life policies, the death benefit and the insurance premium remain the same for the life of the policy. Most whole life policies last for the life of the policyholder and some accumulate cash value. Whole life insurance is often called “permanent life” because the term of the policy isn’t limited to a specific time frame like term insurance. It’s more affordable than many other insurance policies. Because it’s typically used to cover funeral costs, the coverage amount is usually much smaller than traditional policies. On average, people insure themselves for $10,000 – $20,000, making the premiums for a final expense policy more affordable than larger policies. Easy qualification. Because the coverage amount is lower than other types of life insurance, some final expense policies don’t require a medical exam to qualify. Most policies can be issued based on answers to health questions on the life insurance application. One of the main drawbacks of final expense is its face amount is much lower than other types of life insurance like term insurance. And keep in mind the beneficiary can use the death benefit for anything – even if you took out the policy to help cover your funeral costs.
About Final Expense / Burial Plans
Final expense insurance is a whole life policy that pays medical bills and funeral expenses when you die. It’s also known as burial or funeral insurance. It’s a popular choice among seniors.
Most final expense plans have these features:
- Whole life insurance – no expiration if premiums are paid
- Cash value – insured may be able to take out a policy loan
- Fixed premiums as long as they’re paid
- Simplified issue – usually no medical exam (also called a life insurance exam) is required, just health questions on the application
- Easy application process
- Fast approvals – coverage can often be issued in days
- Affordable rates
Final Expense Life Insurance For Seniors
Final expense life insurance is popular with seniors because of its affordable price, smaller benefit amounts, and emphasis on covering funeral costs.
Traditional life insurance policies such as term insurance are primarily intended to replace any income lost when a loved one dies. These policies are most important to families during the earlier years when we’re working, paying a mortgage, making car payments, and raising our kids.
Once we’ve retired, paid off the mortgage, and the kids are out of the house, traditional life insurance policies aren’t needed as much. What we do need is a way to pay for any expenses we leave behind when we pass.
According to the National Funeral Directors Association, the median cost of a funeral can be over $9,000 dollars. With no way to pay for these expenses, surviving loved ones often experience a financial burden during a time of intense grief.
Many of us have experienced the death of a loved one and remember how stressful it was to juggle our grief, the funeral planning, and the financial obligations we had. The thought of our spouse or children going through the same experience is unbearable.
So how can final expense life insurance help? What can we do to protect our families from this financial burden? How can we make sure they aren’t left with a pile of bills when we pass?
Burial insurance for seniors is a smart and compassionate insurance solution for seniors looking to protect their loved ones from rising funeral costs. It’s typically easy to qualify because it’s issued based on answers to health questions. In many cases, you don’t need to take a medical exam.
How Much Does Final Expense Insurance Cost?
The average final expense policy costs between $30-$70 a month and depends on your age, sex, health, coverage amount, and life insurance company you choose. If you have significant health conditions or are over the age of 70, your premium will probably be higher and may cost between $70-$120 a month (though it may be less). Younger applicants who are in good health may qualify for rates in the $20-$50 range. Remember, a cheaper rate usually means fewer features and benefits for surviving loved ones. A few extra dollars a month could make a big difference in the support your family receives when you’re gone. Cost is often the #1 factor people focus on…but it’s not the most important factor! Instead of focusing on how much the policy is going to cost, look at how many expenses will be left behind and how much they’ll cost your family. Common expenses include medical bills, credit card debt, and funeral costs.
What Questions Do Seniors Have About Final Expense Insurance?
Qualifying for a final expense policy is often easier than qualifying for other types of life insurance (such as term insurance). But there are still important questions to ask, such as:
- Does the policy expire?
- Do I have to take a medical exam?
- What features are included in the policy?
- How can the death benefit be used?
Does the policy expire?
Final expense policies don’t expire like term policies because they are a type of whole life insurance Your coverage won’t expire as long as you pay your premiums.
Do I have to take a medical exam?
In most cases, a medical exam isn’t required to qualify because the face amount is typically under $50,000. Coverage is usually issued based on the applicant’s answers to health questions on the application.
What features are included in the policy?
Depending on the life insurance company, your final expense policy may have added features such as child riders, accidental death and dismemberment, or support benefits for surviving loved ones such as funeral price shopping. Not all policies are the same, so make sure you review the policy’s benefits carefully.
How can the death benefit be used?
The hardest thing we must ever face is the death of a loved one. On top of this, surviving loved ones are often left to handle any end-of-life medical expenses and funeral costs. These expenses can add to the sense of grief and stress surviving friends and family members feel. Final expense life insurance was created to prevent this added pressure.
Even though final expense insurance focuses on covering funeral costs, the death benefit can be used for anything: medical bills, credit card debt, mortgage payments, etc. How the death benefit is spent is ultimately up to the beneficiary of the life insurance policy.
Recommended Final Expense Plan
Funeral Advantage from Lincoln Heritage Life Insurance
Funeral Advantage is a Final Expense Life Insurance Cash Benefit that offers easy qualification and a streamlined application process. Commonly known as burial insurance or funeral insurance, final expense insurance is designed to help cover end-of-life expenses. No health examinations are necessary — only a few health questions on a one-page application. Most people get coverage, even with health issues.
Family Support Services are provided at no additional cost to every policyholder through the Funeral Consumer Guardian Society® (FCGS). Upon the death of a Funeral Advantage policyholder, a live representative from the FCGS is ready to go into action on your family's behalf to help surviving loved ones cope with the many details that immediately arise
Funeral Consumer Guardian Society® (FCGS)
When a policyholder passes away — we want to make sure things go smoothly and easily for the loved ones taking care of the funeral arrangements. On your behalf, the Funeral Consumer Guardian Society (FCGS) immediately goes into action to help surviving loved ones in charge of funeral arrangements cope with the many details that immediately arise. When you enroll for Funeral Advantage insurance coverage, you can also decide the style of funeral you want... a 2-page final wishes form makes it fast and simple. FCGS keeps your wishes safe and secure on file. Your loved ones get a 24-hour toll-free service number to call in time of need. FCGS immediately goes into action — comparing up to 3 different funeral homes to find the best price available. Families save an average of $1,850 on traditional funerals and up to $1,100 on cremation. The FCGS is not affiliated with any religion, funeral home, cemetery, or any particular funeral approach. There is never any obligation or pressure to buy anything from anyone.
Call 800-884-1160 for a personalized quote today!
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