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Frequently Asked Questions

 

How have interest rate changes since I bought my policy affected my cash values?

If you bought a cash-value policy at any time prior to 2000, you purchased at a higher interest rate than the current rate. As a result, projections probably are higher than your actual return and your policy is in danger of drying up down the road or becoming incredibly expensive.

Truism: Changing interest rates can damage an unattended insurance policy.
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Why not pay the minimum early in a cash-value policy?

The more cash you put into a cash value policy, the less the risk for the insurance company and therefore the lower the cost of insurance risk to you. Life insurance can be a powerful financial tool, and the longer the money is in the policy, the greater the potential return.
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How does increasing life expectancy of the general population affect my policy?

Over the past century as life expectancy has increased, the cost of life insurance has decreased. Because insurance companies benefit from longer lives and the resulting additional premium payments, life insurance has become more inexpensive every year. As a result, a policy purchased years ago might stand to be reworked to your benefit.
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Why has life insurance been largely ignored as an investment tool given its tax benefits and debtor protection?

Until recently, life insurance in this country has been stodgy, archaic, and viewed with less than enthusiasm by many Americans. Fortunately, the industry now is thoroughly in synch with the times. As so often happens, American ingenuity has transformed and improved upon a product created abroad.
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In the event of bankruptcy, is the cash-value of my life insurance policy protected from creditors?

Bankruptcy protection in life insurance varies from state to state, but in Texas your policy is protected against creditors, just as is your pension money.

Truism: Life Insurance can offer tax and creditor protections
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Does the beneficiary pay income tax on the death benefit?

No, the benefit is not subject to income tax, although it may be affected by inheritance and estate tax.
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Can I borrow from my life insurance policy?

Generally, if you have sufficient cash in the policy, you can take out a loan. If you die before paying back the loan and interest, the amount you owed is paid back from the death benefit.
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Is your life insurance policy up to no good?

In other words, is your policy still wearing polyester wide lapels? Time to bring it into the twenty-first century...
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This FAQ and any recommended reading and reference materials mentioned herein are for informational purposes only. You should consult the appropriate professional advisor concerning the suitability of any points discussed to your particular needs as well as any reading and reference materials.