David De Anda, Life Insurance Agent

Answer: In most cases there are no Federal income taxes on life insurance. There are some exceptions and you should consult with your life insurance agent.

Answer: Buying online without going over your needs with a insurance advisor. Everybody's needs are different and addressed personally.

Answer: The medical exam, not the questionnaire, usually includes a blood test, urine analysis, three blood pressure checks and weight. Sometimes it may require an EKG. The blood draw usually checks for nicotine in the system, HIV and illicit drugs. It also will check your basics like liver enzymes, cholesterol and A1C. I believe every company sets what their standard test are.

Answer: It is always important to buy from a financially strong insurance company to reduce this risk. If a life insurance company goes into bankruptcy or our of business, the State that you live in Insurance Department will take over the company. You will still have coverage, it may be limited. The State will try to sell the policies to another company or take over the policies.

Answer: Not a quick answer to this question. When you have an actual Whole Life policy it is a value that the policy is at on any given year if you were to surrender the policy. It starts at zero and grows to equal the death benefit at age 100. Whole life policy has three guarantees which are the death benefit, premiums and cash value. If a policy does not have these guarantees then they are basically a term policy.

A whole life policy from a good Mutual company will most likely earn dividends every year. Dividends are not guaranteed so you have to look at the company's dividend history and financial strenght. A dividend, in many cases, are used to purchase additional death benefits and that death benefit is paid in full and added to the base policy's death benefit. If the death benefit is growing, it also means the cash value has to grow to equal the death benefit at age 100. This cash value accumulation grows tax deferred and if needed, can be taken out in a policy loan or partial surrender tax free. You should consult with your insurance professional to make sure you do not create a taxable event.

Answer: Yes, whole life insurance is the same as permanent life insurance. It has three guarantees which are the premiums, death benefit and cash accumulation.

Answer: Depends on what you mean by borrowing against a life policy.

If you have a life policy you can use it as collateral with a bank for a business loan. They will make sure that you do not let it lapse and if it were to, they would most likely call in the loan. If you were to die the loan gets paid first and the balance would go to your beneficiaries.

If you have a policy that has cash value built up you can get a policy loan. This is a loan from the company and you will pay interest on the loan. Same as above, if you were to die the loan gets paid first with the balance going to the beneficiares. Nice thing about this is there is no credit check or loan committie to go thru.

Answer: Think about it, if you are old and unhealthy it will be difficult to find good coverage and if you do find it, it will be pricey. Always best to buy when you are young and you can lock in your insurability. I find it sad when I get calls from people who didn't "need" insurance and now want to buy it when they find out they are gravely ill.

Answer: Once the term period is over, and you have outlived the policy, it is over. The policy has no value and ends. Term insurance is for a certain period of time and that is it. Most people, 98%, will outlive term insurance.

Answer: Yes, you can name multiple beneficiaries and designate amounts or percentages to each of them. You can also do the same with contigent beneficiaries.

Answer: The grace period allows you time to get your premium paid before the policy lapses. On a term policy it will lapse at the end of the grace period and you may have an option to reinstate it within the next 6 months as long as you pay all of the late premiums and pass underwriting.

On a permanent policy that has cash values, it may take an automatic premium loan to prevent it from lapsing. If there is no cash value built up or once it is gone the policy will also lapse. You also will have an option to reinstate as long as all the premiums are paid and your pass underwriting.

Answer: I would have to explain that it depends if it is with a traditional whole life policy or if it is with a universal life policy. A whole life policy has three guarantees which are the premiums will not change, the death benefit will not change and the cash value will grow to equal the death benefit at age 100. This is because whole life policies were designed to reach age 100 and if you lived to be that long the policy would end and endow the insured the death benefit. If the whole life policy is with a participating company, one that can pay dividends, the death benefit could actually grow over time. The rule stays in place. Whatever the death benefit is at age 100 so will be the cash accumulation. New policies go to age 121 but the rule stays the same.

Universal policies, fixed, variable or index, do not guarantee the premiums or the cash value. Some may have a rider that will guarantee the death benefit but there are stipulations that any change to the policy could void that guarantee. Think of a universal policy as a term with a cash reserve. It is the hope that the reserve will grow over time as the policy and insured ages. The premiums will go up with age and the difference in the premium paid is taken from the cash reservie. So the reserve usually grows and then shrinks over time. Once the reserve is close to zero you will either need to increase the premium, reduce the coverage or surrender the coverage.

In a universal policy the insured assumes all of the risk whereas in a whole life policy the insurance company assumes all of the risks (the guarantees).