Edward Smith, ChFC, CRPS, AIF, Life Insurance Broker

Answer: Always through an agent. It is totally fine to do your research online but then reach out to an agent to put the policy in place. The price should be the same due to the fact that the insurance company has to pay licensed agents on their staff to take care of their clients. So, if the price is the same, why wouldn't you want local representation for your service needs like, changing beneficiaries, updating banking information, professional education, unbiased advice (independent agent) etc.

Answer: How long have you been in business and are you an independent agent. As well as how many carriers do you represent?

Answer: You will get older and your health could change very rapidly. You can buy a smaller policy with a rider that gives you the ability to purchase more later without having to go through underwriting.

Answer: That is a personal decision but make sure you specify whether you want all children to receive proceeds equally or per bloodline.

Answer: Absolutely you can have multiple policies from different companies. When you are applying the carriers will normally ask if you have current policies. They will usually limit the amount of insurance in total you can have based on age income, needs, who has insurable interest, etc. The limits are usually something like the following;

Under 40: up to 25–30× annual earned income

41–50: up to 20× annual earned income

51–60: up to 10–15× annual earned income

61–65: up to 10× annual earned income

66–70: up to 5× annual earned income

Over 70: evaluated individually

Answer: Yes, but you need to make sure that your policy has that provision and allows it, not all do. When purchasing a new policy, ask if you are allowed to purchase more insurance in the future without going through underwriting and whether or not the policy has a conversion option.

Answer: It can be but it depends on who owns the policy, who is paying for the policy and what is the policy for.

Answer: You can and you can also with a new policy have your trust apply for, pay for and be the beneficiary of your policy. Depending on the type of trust that could make sure there are no incidents of ownership for estate tax purposes. If you are not worried about estate tax and simply want an orderly way to control who gets the proceeds and when, a trust could be a great way to do that. Keep in mind Trust are taxed at a higher rate normally than individuals. Life insurance proceeds are normally tax free but once the money is in the trust and grows through investment gains or what have you, then they will be taxed at a higher rate than an individual would. This has been my experience. However, I am not a CPA or tax attorney, and this information is not to be construed as legal or tax advice.

Answer: They should work with an independent broker like me. I would get some questionnaires answered and send them through multiple companies to get the best offer. Different companies have different experiences and expertise with various conditions and situations. It is important to find the carrier that has experience with your personal situation an knows how to underwrite it fairly.

Answer: It depends on whether or not you are financially stable enough to take care of all your responsibilities after your death without it. If you do, then the options are cash it in, sell it to a viatical settlement company, see if your carrier will offer you a reduced paid-up option (this means you pay no more premiums, but a certain death benefit remains in-force until your death), etc.

Answer: The time period in which, if the insured dies, the company can come back and contest the death benefit payment until research determines there were no misrepresentations were made on the original insurance policy application.

Answer: It is a feature of certain life insurance policies where if you survive there is the option to receive the premiums paid for the policy back. There is normally a vesting period for you to receive the full amount. Whether it is a good deal or not depends on what the internal rate of return is. The alternative would be to buy a lower cost term policy and invest the difference. The question is, "Will you invest the difference"? The other thing to consider is if you take the return of premium, your insurance is cancelled and now you have no life insurance. There are companies that I have used that give you an alternative to receiving your premium back which I do like, and that is the option of having a reduced amount of insurance that is "paid up". meaning no more premiums are due.

Answer: Yes, there are carriers that will insure people up to 80 and even 90 years old. They would have to go through underwriting unless it is a guaranteed issue policy. I would be happy to help.

Answer: A cash value life insurance policy is a policy that allows for extra premiums to be paid over what the actual mortality and administrative costs are. The excess premiums then earn interest set by the insurance company unless it is a variable policy which allows the excess cash to be invested into unitized shares of equity or bond investments. As long as the premium guidelines (which are set by law) are followed, all interest or return on investments are compounded tax-deferred until withdrawn. When the money is withdrawn it will be considered FIFO (First in First out) for tax purposes. Which means the original premiums paid, will be considered the first monies to be withdrawn and therefore no taxes are due. At cost basis all monies received as gain will then be taxed. Another way to get money out of a life insurance policy without paying taxes, is to take the money out by borrowing the money through a policy loan. After a certain number of years some policies allow you to borrow money from your policy interest free. This however will reduce the death benefit and also if the policy lapses while the loan is outstanding the amount outstanding with be considered a distribution and subject to applicable tax laws.

Answer: Look for high BBB ratings, high rating from the other rating agencies like AM Best, Weiss, S&P, etc. As far as the agent is concerned, I would do business with someone with at least 10+ years' experience (In my case 35 years, lol) and someone who is independent and can shop several carriers.

Answer: They can be used to pay estate taxes in order to keep family businesses, etc. intact. One might also deal with and attorney to set up a trust to own the policy to reduce the chance of incidents of ownership, which keeps the value out of the estate for tax purposes.