Frequently Asked Questions

Risk exposure to the untimely perils of injury, illness, disease, disability, and death affect our ability to earn income and influence our need to contribute to savings and investments while living. This is specifically due to the significant costs to cover mobility, morbidity, mortality, and longevity risks. Income coverage is the guaranteed replacement, restoration, or recovery of earned and expected income coupled with fixed supplemental income from savings and investments. Income coverage is primarily provided by a temporary or permanent guaranteed living and death benefit paid out by a mutual life insurance company to an insured, policyowner, or annuitant while living and to a beneficiary upon or a period certain after death of the insured. Income coverage further ensures a life of less financial pain and more financial peace by conserving retirement and preserving legacy with supplemental income. Income coverage establishes a source of emergency funding available to pay off any outstanding expenses and liabilities upon death and to help maintain a standard of living for the insured as well as their survivors and financial dependents.

A life insurance or annuity policy is based on a contract of guarantee (a “base” policy) and may carry an endorsement (a “rider” policy). A guarantee is a written contractual promise and pledge by a stock or mutual insurance company to honor firm commitments (the promise to pay policy claims) on the financial strength and credit quality of the insurance company. An endorsement is a standard or optional living or death benefit attached to the base policy which modifies the coverage of the base policy. An endorsement may come with no additional premium or increase the premium of the base policy. A life insurance or annuity policy contains specific types of endorsements such as an indemnity and reimbursement. An indemnity (waiver of liability) is a written contractual promise and pledge by a stock or mutual insurance company to accept total liability for the financial loss of an insured individual. The policyowner or beneficiary is paid out a single, double, or triple payout of the death benefit. A reimbursement is a written contractual promise and pledge by a stock or mutual insurance company to accept limited liability for the financial loss of an insured individual. The policyowner is paid out a living benefit to cover the actual cost of the financial loss.

There is no optimal age to purchase income coverage. The timing of purchase depends on the affordability and suitability of the life insurance or annuity benefit to an individual. An individual typically purchases income coverage in advance of a common life event like going to college, getting married, purchasing a home, having a baby, starting a business, or planning the burial and funeral of a loved one. The goal of a living and death benefit provided by income coverage is to conserve retirement and preserve legacy. These life events establish suitability due to their significant costs which creates financial dependency on the individual to continue earning an income and contributing to savings and investments. We recommend a younger and healthier individual purchase life insurance as early as possible to realize a lower long-term cost whereas we recommend an individual approaching retirement age to purchase an annuity to realize a higher long-term benefit. An annuity is most suitable if you have maxed out your retirement plan contributions and need an additional source of guaranteed income in retirement.

Income coverage is calculated using a discounted cash flow model that applies the time value of money finance concept to estimate future earned income assuming income growth, inflation, and taxation. The resulting calculation provides an economic value of human life and maximum needed death benefit. We recommend assumptions when estimating income coverage needs to ensure the premium is affordable. Periodic reviews of existing income coverage are also recommended to analyze how recent or planned life events affect future income, savings, and investment needs before considering an adjustment.

Income coverage is designed with convertible term life insurance, participating whole life insurance, and an immediate or deferred fixed annuity. While young and healthy and earning income from a wage or salary, an individual purchases a convertible term life insurance policy to guarantee a pure death benefit. This temporary death benefit will be partially or fully surrendered for a permanent death benefit upon conversion to a participating whole life insurance policy. A participating whole life insurance policy guarantees a death benefit as well as the living benefit of supplemental interest income and the participation in returns of premium from supplemental dividend income. Any term life insurance that is not converted will automatically renew or lapse if below the minimum required death benefit per the guidelines of the insurance company. Upon retirement, an individual purchases an immediate or deferred fixed annuity to increase living benefits with guaranteed supplemental interest income. We recommend implementing the ladder strategy in life insurance and annuity policy design to decrease long-term costs and increase long-term benefits respectively and significantly.

Please click the call-to-action button in the “Policies” section of our website homepage to begin the process of quoting and applying for a term or whole life insurance policy. At this present time, an annuity must be specially requested. If an applicant is considering the purchase of a life insurance or annuity policy, a producer will discuss the implementation of a ladder strategy. Customers and clients must determine affordability and suitability for a life insurance or annuity policy before applying but may begin quoting as soon as possible to estimate future premium costs. An appointment must be booked to allow a producer to recommend the most suitable and affordable life insurance or annuity policy upon review of the DIES form submitted by an applicant.

Our best practice is to determine affordability and suitability for a life insurance or annuity policy before applying. Affordability is the estimation of future premium costs relative to the current gross annual income of the proposed policyowner. Suitability is the analysis of financial objectives and investment risk tolerance. We conduct our business with ethical practices to provide a standard of care expected by a fiduciary. A fiduciary puts the best interests of a customer or client before their own. A fiduciary ensures a customer or client clearly understands a proposed insurance product before purchasing. Our fiduciary standards show our commitment to fostering long-lasting personal and professional relationships while providing the ultimate customer and client experience. Our income coverage policy design is our strategic competitive advantage. As a broker to an esteemed mutual insurance company backed by the highest credit rating, our customers and clients are guaranteed pure financial protection from living and death benefits to last a lifetime or period certain.