Your New York Wills, Trusts, & Estates Explained Simply: Important Information You Need to Know for New York Residents by Linda C. Ashar

Author:Linda C. Ashar
Language: eng
Format: epub
Tags: New York, wills, trusts, estates, estate planning, beneficiary, probate, trustee, assets executor, life insurance, power of attorney, advance directives, state law
Publisher: Atlantic Publishing Group
Published: 2012-04-02T00:00:00+00:00

Insurance for After You Are Gone

Some insurance agents will tell you that all you need is plenty of life insurance to make sure your loved ones are taken care of. However, insurance is not that simple. As with wills and trusts, there are many variations on this protection theme. The following are different types of life insurance:

• Whole life : Sometimes called cash-value life insurance, this is the kind of policy most people know: After being qualified — smoker/non-smoker, desk jockey/bungee jumper, age 25/age 75 — the insured person pays a monthly premium on a policy that will, upon his or her death, pay a predetermined, fixed amount of money to his or her beneficiaries. A portion of the fixed (it will never go up or down) premium is invested, another portion is placed into an account — like a savings account — and that cash value is accessible to the policy owner. It can be borrowed against as a loan, or the cash can be taken as the proceeds of the policy instead of the death benefit payout.

-Universal life : A kind of whole life policy that guarantees a minimum return, but the value of the policy can go up or down. If the policy makes more money, the return might be high enough to cover your premium payments.

-Joint first-to-die or second-to-die : Just like it sounds, this is a policy held by two people, and the beneficiary is paid after the first person or second person dies. You decide the payout when you set the terms of the policy.

• Term life insurance : Carries an annual premium and pays a specified death benefit to the beneficiary, but it does not have a cash value, so you cannot borrow money from it. The only payment made is to the beneficiary. The premium is based on the amount of insurance you purchase — what will be paid out after your death — and how old you are: Younger people pay less and, as they get older, their premiums rise accordingly. If you stop paying premiums, the death benefit is not paid. There are a number of different kinds of term policies available:

-Annual renewable : A policy that has an annual premium and can be renewed from year to year. Be sure you understand the renewal rights before signing.

-Decreasing : Premiums remain the same, but the benefit decreases over time. For example, if you purchase this kind of insurance to pay off your debts after you die — also known as mortgage or credit term insurance — the mortgage you want to insure is $250,000 at the time you purchase the insurance, but the mortgage value when you die is $150,000; the policy pays $150,000. This kind of insurance is recommended only for those who cannot get any other kind of insurance.

-Level : Coverage is guaranteed for a specific period of time, or term, such as five, ten, or 20 years at a specific premium. The premium will remain for the

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