Life Insurance & Financial Services

Do You Need Life Insurance? Mentally check all that apply to you.

□   I am married.

□   I have children.

□   Our family recently welcomed a new baby.

□   I am single, but I have dependents (a child or an elderly relative) who I support.

□   I am the sole breadwinner in my household.

□   I recently changed jobs.

□   My income has changed.

□   I recently bought a house.

□   I will pay for my children’s college education.

□   I own a business.

□   I am in debt.

□   My family has a history of illness, such as diabetes or heart disease.

□   I have trouble saving/investing money.

Types of Life Insurance (rollover for definition)

• {tooltip}Term Life{end-link}Term Life provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and/or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis. {end-tooltip}
• {tooltip}Universal Life{end-link}Universal Life is a type of permanent life insurance based on a cash value. That is, the policy is established with the insurer where premium payments above the cost of insurance are credited to the cash value. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance (COI) charge, and any other policy charges and fees which are drawn from the cash value if no premium payment is made that month. The interest credited to the account is determined by the insurer; sometimes it is pegged to a financial index such as a bond or other interest rate index.{end-tooltip}
• {tooltip}Whole Life{end-link}Whole Life is a life insurance policy that remains in force for the insured’s whole life and requires (in most cases) premiums to be paid every year into the policy.Cash values are considered liquid enough to be used for investment capital, but only if the owner is financially healthy enough to continue making premium payments. Single premium whole life policies avoid the risk of the insured failing to make premium payments and are liquid enough to be used as collateral. {end-tooltip}
• {tooltip} Variable Universal Life{end-link}Variable Universal Life is a type of life insurance that builds a cash value. In a VUL, the cash value can be invested in a wide variety of separate accounts, similar to mutual funds, and the choice of which of the available separate accounts to use is entirely up to the contract owner. The ‘variable’ component in the name refers to this ability to invest in separate accounts whose values vary—they vary because they are invested in stock and/or bond markets. The ‘universal’ component in the name refers to the flexibility the owner has in making premium payments. The premiums can vary from nothing in a given month up to maximums defined by the Internal Revenue Code for life insurance. This flexibility is in contrast to whole life insurance that has fixed premium payments that typically cannot be missed without lapsing the policy (although one may exercise an Automatic Premium Loan feature, or surrender dividends to pay a Whole Life premium).{end-tooltip}

Types of Financial Products (rollover for definition)

• {tooltip}Traditional IRA{end-link}This is a tax favored account that allows anyone under the age of 70 and a half who has earned income from employment to contribute up to $3,000/year, and is subject to certain income conditions. These contributions are tax deductible, though earnings are tax-deferred. Withdrawals are taxable and are required to begin at the age of 70 and a half. If you withdraw from the account prior to age 59 and a half  a tax penalty may apply and there are federal restrictions.* {end-tooltip}
• {tooltip}IRA Rollover{end-link} This is a tax favored account which savings are transferred from an existing, qualified retirement plan (i.e. 401 (k) plan) to a Traditional IRA. Though contributions and withdrawals follow the guidelines as a Traditional IRA.* {end-tooltip}
• {tooltip}Roth IRA{end-link}This is a tax favored account that allows anyone, regardless of age, with earned income from employment to contribute up to $3,000/year, and is subject to certain income conditions. Contributions are not tax deductible. Earnings are tax deferred. Withdrawals are tax-free under certain conditions, but if you withdraw from the account prior to age 59 1/2 a tax penalty may apply and there are federal restrictions.* {end-tooltip}
• {tooltip}Education IRA{end-link}A tax favored account that allows anyone, regardless of age to contribute on behalf of a child. These contributions cannot exceed $2000/child per year. Limitations do exist on the contribution of any one person.*{end-tooltip}
• {tooltip}529 College Savings Plan{end-link}This is a national college savings program authorized and created under Section 529 of the IRS code that enables individuals to save and invest on a tax deferred basis at a variable rate of return to fund college or graduate school expenses. Parents, grandparents and others are able to contribute up to $10,000/year per beneficiary.*{end-tooltip}
• {tooltip}Annuity{end-link}This is a contract with an insurance company that you agree to deposit a specific amount of money with that insurance company. The insurance company agrees to pay a fixed rate of interest on your funds, as long as the contract exists. The interest you earn accumulates as tax deferred. Also available are variable annuities which pay a variable rate of return. Withdrawals are taxable and if you withdraw from the account prior to age 59 1/2 a tax penalty may apply and there are federal restrictions.* {end-tooltip}
• {tooltip}Mutual Funds{end-link}This is an open-end management investment company that combines the money of many investors and hires an investment manager to invest that money
  in an attempt to gain one or more financial objectives. These financial objectives can be classified as current income, capital growth and capital preservation.*{end-tooltip}
• {tooltip}Employer Retirement Plans 401(K){end-link}The money you contribute to your 401 (K) is deducted from your salary before taxes are applied, so you pay less income tax. Your employer may match a portion of your contribution. You decide the mix of investments and the plan administrator invests on your behalf.  There is usually a list of investment vehicles you can choose from such as mutual funds, bonds, money market accounts as well as some guidelines for the level of risk you are willing to take. The 401(K) is an incentive for retirement savings, so there is one condition: if you withdraw the money before you are 59 and a half years old, you will have to pay tax as well as a 10% penalty fine to the IRS.{end-tooltip}
• {tooltip}Buy Sell Protection{end-link}If you have a partner in business, in the event of death or disability, you can buy out your partner’s interest without having to take out a loan or liquidate company assets.{end-tooltip}

*Ocala Insurance does not provide legal or tax advice. For specific legal or tax advice based on your situation, please contact your attorney of tax advisor.