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Life insurance can serve a variety of purposes. In its most basic sense, this important financial vehicle provides proceeds to loved ones and survivors for the payoff of debt, the continuation of ongoing living expenses, and/or for other personal and business needs.
But life insurance can also play a major role when it comes to estate planning. This is because life insurance can provide both funding and flexibility. This is particularly the case when it comes to the use of life insurance inside of trusts.
One of the primary reasons that people put life insurance inside of trusts is to help with the payment of estate taxes – which can sometimes be as high as 55% of the decedent’s estate value. These taxes are due from the state, typically within nine months of the individual’s death.
Oftentimes, family members will have to sell assets – which could include precious family heirlooms – in order to raise the money for paying estate taxes. However, provided that it is structured properly, not only can life insurance proceeds pay this bill, but the amount of the life insurance policy itself will not be included in the value of the decedent’s estate.
How Trusts are an Important Estate Planning Tool
Trusts are an important tool in the estate planning process. One reason for this is because a trust can help to remove taxable assets from your estate, in turn, lessening your potential estate tax liability.
Typically, when used in this manner, the trust will be the owner of the insurance policy (thus removing the proceeds from the overall estate value). This, in turn, helps to reduce the value of the estate, which is what the amount of estate tax is based upon.
One of the most commonly used types of life insurance-related trust is the ILIT or Irrevocable Life Insurance Trust. This type of trust can protect the cash value in life insurance policies from creditors during your lifetime, and then it can further protect the proceeds of the life insurance policy upon death.
When using an ILIT for estate planning purposes, the trustee will purchase the insurance policy, naming the trust as the owner, as well as the beneficiary. Once the insured has passed away, and the life insurance proceeds have been paid out, the trustee will collect the funds and make them available for paying the estate taxes that are due, as well as other costs, which may include income taxes due, legal fees, probate costs, and other related expenses. The trustee will then also distribute funds to trust beneficiaries as previously instructed by the insured.
Any person or entity may be a beneficiary of the trust. In many cases, an individual will name their loved ones, such as children and/or grandchildren. But they could also name a favorite charity or other organization, depending on their goals.
It is important to note that there is a “look back” period, typically of three years. This means that if the insured dies within three years of the date that assets were transferred into the trust, then the IRS (Internal Revenue Service) will consider the transfer to be invalid, and the amount of the insurance proceeds will be included in the insured’s estate for estate taxation purposes.
Also, as an ILIT is irrevocable, changes typically cannot be made once the trust has been set up and funded. Therefore, it is important to be sure of how the insured wants his or her money to be transferred. In this case, it is also important to seek the assistance of a professional who is familiar with life insurance trusts and estate planning.
Because everyone’s wishes are different, there are other types of trusts that can also be set up using life insurance, depending upon your particular needs. These may include the following:
Why Consider Life Insurance Inside of Trusts?
Life insurance is a common financial tool that is used inside of trusts. One of the key reasons for this is because life insurance can provide the funding that is needed – often for pennies on the dollar. In other words, the premium that is paid into a life insurance policy is typically much less than the actual amount of benefits that are received.
There can also be a considerable amount of tax-related advantages when using life insurance as a funding mechanism – both when paying the premium, as well as when receiving the policy’s proceeds.
Some of the other benefits that are inherent by using a life insurance trust include the following:
What Type of Life Insurance Should Be Included in a Trust?
It is typically recommended that permanent life insurance be used with a trust. This is because, unlike term life insurance, there is no time limit, or term, on the policy period. Therefore, provided that the premium is paid, a permanent life insurance policy will remain in force and will be there when it is needed.
Who Should Consider a Trust Using Life Insurance?
While the use of trusts in financial or estate planning may not be right for everyone, if you are considering setting up an estate plan, you could benefit from having life insurance included with your trust(s).
This is because life insurance can provide benefits not only for your immediate survivors but also for many generations to come. And, the proceeds from a life insurance policy are received free of income tax by the beneficiaries. With that in mind, 100% of the proceeds will typically be available for your survivors’ financial needs.
Where to Learn More About Incorporating Life Insurance Inside of a Trust
If you would like to know more about incorporating life insurance inside of a trust, we can help. Our experts will walk you through the various scenarios that may best fit your specific planning needs.
Please feel free to reach out to us! We understand that using life insurance and trusts in estate planning can be somewhat confusing. But working with an expert can help you in determining what tools will be right for you. So, contact us today – we’re here to help.
Budget your finances easier on the go
What’s the one thing that every person knows about their finances?
There’s never enough money.
Beyond that, Laura Cole, University of Tennessee Masters Investment Learning Center director, said most people don’t know the specifics of how their paycheck is spent. And even if they do have their finances perfectly organized, Cole said many times folks miss the boat when it comes to one of the easiest ways to save — and make — money. Investing.
But in a technologically driven world, there’s always an app ready and waiting to help.
Here are four personal finance apps that will make your life easier, no matter what financial stage of life you’re in.
Screenshot of Wally personal finance app.
Best for: Organizing and budgeting money with a small amount of accounts open.
How it works: After each purchase, the user enters the purchase information into the app. This can be done manually, or by taking a photo of a receipt.
Pros: Wally is good for users who are new to the personal finance world, Cole said. That means people with a few credit cards, no car loan, no mortgage, etc. Wally helps these users get into the habit of inputting their purchases, so money spent is actively on their minds. The breakdown of spending is strong, as well, Cole said. It’s easy to tell where the paycheck is going down to the dollar.
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Cons: Purchases have to be done manually or through a receipt photo, which is still not the most convenient process. Cole also noted that this is only available on a phone, and there is no bill pay option.
Screenshot of Mint personal finance app
Best for: Organizing and budgeting money with a high number of accounts open.
How it works: The user links all accounts to Mint, including credit cards, banks accounts, loans, investments, property owned, etc. The app tracks purchases automatically and tracks spending trends.
Pros: With this app, the user works hard on the front end for minimal work beyond that and a strong cash flow analysis. The average consumer has between seven and 10 cards plus multiple bank accounts (double that if the user has a spouse), Cole said. Mint combines all these into one overview of spending, with breakdowns of personalized budgets. Mint also has a bill pay feature and is available on a desktop.
Cons: The effort setting up Mint on the front end could be seen as a con, even if it’s worth it.
Screenshot of Acorns personal finance app
Cost: $1 per month for accounts under $5,000; 0.25 percent of the balance per year for accounts over $5,000
Best for: Saving enough money to start investing; Introduction to investing
How it works: The user selects ways to save money, either through a recurring weekly input, a round-up feature (a purchase is $1.45, Acorns rounds up to $2 and saves the $0.55 for the user), or both. Acorns will also ask a few questions to determine the type of investor the user is – high-risk, low-risk, long-term, short-term, etc. – and invests money saved into a mix of Vanguard mutual funds to help the user meet their goals.
Pros: Acorns is a great introduction to investing, Cole said. It automates the process of selecting investment funds that best match the goals of each user. The app also provides a projected value based on the current investment settings in the app. “You don’t have to be a genius. You just have to be consistent and patient” to use Acorns, Cole said.
Cons: For users who have a general idea of how investing works, Acorns can be a little too controlling since the user relies on the app to select investment funds.
Screenshot of Stash personal finance app
Cost: $1 per month for accounts under $5,000; 0.25 percent of the balance per year for accounts over $5,000
Best for: Investing
How it works: This app is best utilized when started with at least $1,000, Cole said. Stash has 30 investment portfolios made up of various blends of ETFs and stocks for the user to put money into
Pros: The user has more power to select where money is being invested. The user can align investments with their own knowledge of each theme’s current performance.
Cons: Stash doesn’t provide projections of how much money is expected to be earned over time.
Copyright 2017 USATODAY.com
Life insurance is an important part of most any financial plan. This is because the proceeds from a life insurance policy may be used by loved ones and survivors for a number of different needs, such as paying off large debts, continuing to pay ongoing living expenses, and/or for the payment of the insured’s funeral and other final expenses.
While many people can easily qualify for the life insurance coverage that they need, there are others who, due to health-related conditions, may not be so fortunate. This is where a no exam life insurance policy could help.
What is No Exam Life Insurance?
In many cases, qualifying for a life insurance policy will require that the applicant fully complete an application for coverage, as well as undergo a medical examination. During the medical exam, a paramedical professional will take the applicant’s heart rate and blood pressure, and will also collect a blood and a urine sample.
The health information that is determined about the applicant will then be relayed to the insurance company, which will, in turn, decide as to whether or not the individual will qualify for a policy.
As an alternative to a “fully underwritten” plan, there is no exam life insurance. This is a type of policy where, as its name implies, there is no requirement for the applicant to take a medical examination. In some instances, there may also be very few health-related questions to answer – although this is not necessarily always the case.
Often, those who apply for no medical exam life insurance are considered to be higher risk, due to particular health issues and/or because they work in a “risky” or dangerous occupation. Because the insurance company must compensate for this higher risk of having to pay out a policy claim, no exam life insurance coverage is typically more expensive. Also, the coverage amount may be low.
How No Exam Life Insurance Works
In many ways, no exam life insurance works the same way that fully underwritten coverage works – the insured pays a premium in return for death benefit coverage should death occur while the plan is in force.
In some cases, however, if the insured passes away during the first year or two of the policy, the full amount of the death benefit may not be paid out to the beneficiary. Here, for instance, the beneficiary may instead just receive back the amount of the premium that was paid in or just a percentage of the stated death benefit. If, however, the insured lives past the stated time period, the full amount of the death benefit would be paid to the policy’s beneficiary.
Term versus Permanent No Exam Life Insurance Policies
A no exam life insurance policy may be either term or permanent. With a term plan, there is only death benefit protection, and there is no cash value, or savings build up in the policy. Because of that, term insurance can frequently be obtained for a lower amount of premium – all other factors being equal.
Term life insurance is purchased for only a set time period, such as ten years, fifteen years, twenty years, or even for thirty years. There are also many life insurance companies that offer one-year renewable term life insurance coverage.
Permanent life insurance offers both death benefit protection and cash value. Here, there is no set time limit on the coverage, but rather, as long as the premium is paid, the plan will remain in force.
The cash that is in the cash value component of the policy is allowed to grow tax-deferred, meaning that there is no tax due on the gain unless or until the money is withdrawn. The funds that are within a permanent life insurance policy may be either borrowed or withdrawn by the policyholder for any reason.
Typically, permanent no exam life insurance policies are whole life. With a whole life insurance policy, the amount of the death benefit remains fixed, as does the amount of the premium – even as the insured ages, and regardless of whether his or her health condition worsens.
Types of No Exam Life Insurance Available
There are several different types of no exam life insurance that are available. These include:
With a simplified issue plan, while there is no medical examination required, the applicant for coverage will still need to go through the underwriting process. This means that typically, the individual will still need to be in good health in order to qualify.
On the other hand, a guaranteed issue policy will be issued to an applicant, regardless of his or her health condition – as long as they are within a certain age bracket. Guaranteed issue policies are frequently considered to be policies of last resort if an individual is unable to obtain life insurance via any other method.
With a graded death benefit no exam life insurance policy, the full death benefit will not be paid out if the insured dies right away. Rather, the amount of death benefit will increase each year that the insured remains alive.
Level final expense life insurance policies are usually used for paying the costs of one’s funeral and other related final expenses, such as a burial plot, headstone, and memorial service. Typically, there will be some health questions for the applicant to answer. However, there is no medical exam needed.
How Much Does No Exam Life Insurance Coverage Cost
There are a number of different criteria that will determine the premium cost of a no exam life insurance policy. These include the age and gender of the insured at the time of application. The type and the amount of life insurance coverage will also be considered. For example, in most cases, permanent life insurance will cost more than term. And, a higher death benefit will usually equate to a higher premium price.
An applicant’s health condition can still also play a part in the price that is charged for no exam life insurance coverage. This, however, will depend on the type of policy that is being purchased.
As with many other products and services that you purchase, the company from which you buy a life insurance policy can be another factor in the price that you pay. Even for the same type and amount of protection, two insurers could charge very different premiums. With that in mind, it can be extremely beneficial to shop and compare several different no exam plans before making a purchase. Doing so could end up saving you quite a bit of money in premium – especially if you keep the policy for many years.
Is No Exam Life Insurance Coverage Right for You?
Although it isn’t for everyone, a no exam life insurance policy could be right for you if:
How to Get the Best Premium Rates on No Medical Exam Life Insurance Protection
If you have been looking for the best premium rates on no medical exam life insurance protection, it can be beneficial if you work with an independent life insurance professional who can show you different policies, carriers, and premium quotes. That way, you can pick and choose which of these will work the best for you, and for your budget.
When you are ready to move forward with the purchase of a no exam policy, we can help. We are an independent life insurance brokerage, and we work with many of the top life insurance carriers in the marketplace today. We can provide you with all of the key information that you need – and we can do this for you very quickly and easily – all from your computer, and without you having to meet in person with a life insurance agent. If you’re ready to begin the process, then all you need to do is just simply fill in the quote form on this page.
If you find that you still have any additional questions about getting a no exam life insurance policy, please feel free to reach out to us directly. Our experts are happy to assist you.
Getting life insurance coverage may be difficult for those who have certain health conditions. But the good news is that a no exam life insurance policy could open more doors for you, and provide you with the protection that you need. So, contact us today – we’re here to help.
Spending plan your funds less complicated on the move
What’s the something that everyone finds out about their financial resources?
There’s never ever sufficient money.Beyond that, Laura
Cole, University of Tennessee Masters Financial investment Understanding Facility supervisor, claimed most individuals don’t recognize the specifics of just how their income is spent. And even if they do have their financial resources completely arranged, Cole said many times folks miss the boat when it comes to one of the most convenient ways to conserve– as well as make– cash. Investing.But in a highly driven world, there’s always an application all set and waiting to help.Here are four individual finance applications that will certainly make your life easier, no matter what monetary phase of life you remain in.< a href =https://www.usatoday.com/story/tech/columnist/2018/03/08/micro-investing-apps-have-been-popular-during-stock-markets-rise-do-they-work-when-dives/390787002/ > Micro spending apps have been preferred throughout the securities market’s rise. Do they function when it dives?Wally Screenshot of Wally personal finance app.Submitted Price: Free Best for: Organizing and budgeting money with
a small amount of accounts open.
Just how it functions: After each acquisition, the user goes into the acquisition info right into the application. This can be done by hand, or by taking a picture of a receipt.Pros: Wally is good for
individuals that are brand-new to the personal financing world, Cole stated. That implies people with a few credit cards, no car loan, no mortgage, etc. Wally helps these customers enter the practiceof inputting their purchases, so cash spent is proactively on their minds. The malfunction of costs is solid, too, Cole said. It’s easy to inform where the income is going down to the dollar.Sign Up: Get company headlines in your inbox every weekday.Cons: Acquisitions need to be done manually or through a receipt picture, which is still not the most practical procedure. Cole likewise kept in mind that this is just available on a phone,
as well as there is no bill pay option.Mint Screenshot of Mint personal money app Sent
Expense: Free Best for: Organizing and budgeting cash with a high number of accounts open.How it works: The individual web links all accounts to Mint, including bank card, banks accounts, fundings, financial investments, residential property had, etc.
The application tracks acquisitions immediately and tracks costs
trends.Pros: With this
app, the individual works hard
on the front end for minimal job past that as well as a solid capital analysis.
The typical consumer has between seven as well as 10 cards plus several checking account( dual that if the customer has a spouse), Cole claimed. Mint combines all these into one summary of investing, with break downs of personalizedbudget plans. Mint also has a bill pay attribute as well as is offered on a desktop.Cons: The effort establishing Mint on the front end could be viewed as a con, also if it’s worth it.Acorns Screenshot of Acorns personal financing app Sent Expense: $1 per month for accounts under$5,000; 0.25 percent of the balance per year for accounts over$5,000 Best for: Conserving enough cash to start investing; Intro to spending How it works: The customer chooses methodsto conserve cash, either through a repeating regular input, a round-up attribute( an acquisition is$1.45, Acorns rounds up to$
2 and saves the$0.55 for the individual), or both. Acorns will certainly additionally ask a couple of concerns toidentify the sort of financier the individual is-risky, low-risk, long-lasting, short-term, and so on -and invests cash saved right into a mix of
Vanguard shared funds to help the user meet their goals.Pros: Acorns is a fantastic intro to spending
, Cole said. It automates the process of picking investment funds that ideal match the objectives of each individual. The app also gives a projected worth based on the existing financial investment settings in the application.” You do not have to be a genius. You simply need to be consistent and patient “to make use of Acorns, Cole said.Cons: For individuals who have a general suggestion of exactly how spending jobs, Acorns can be a little also managing since the customer relies on the app to select financial investment funds.Stash Screenshot of Stock individual finance app Sent Cost:$
1 monthly for accounts under $ 5,000; 0.25 percent of the balance each year for accounts over $5,000 Best for: Spending Just how it functions: This app is ideal made use of when begun with a minimum of$1,000, Cole stated. Stash has 30 investment profiles made up of various blends of ETFs and also supplies for the user to put loan into Pros: The individual has more power to pick where cash is being invested.
The customer can align financial investments with their very own knowledge of each style’s present efficiency. Cons: Stock does not provide forecasts of how much cash is anticipated to be made in time.
Copyright 2017 USATODAY.com
Spending plan your financial resources less complicated on the move
What’s the one thing that every person understands about their finances?
There’s never ever sufficient money.Beyond that, Laura
Cole, College of Tennessee Masters Investment Discovering Facility supervisor, stated many people don’t recognize the specifics of exactly how their paycheck is invested. And also if they do have their financial resources perfectly arranged, Cole said often times individuals fail when it comes to one of the easiest methods to conserve– and also make– cash. Investing.But in a technologically driven globe, there’s constantly an application ready as well as waiting to help.Here are 4 individual finance applications that will make your life simpler, whatever monetary phase of life you remain in.< a href =https://www.usatoday.com/story/tech/columnist/2018/03/08/micro-investing-apps-have-been-popular-during-stock-markets-rise-do-they-work-when-dives/390787002/ > Micro investing applications have actually been prominent during the stock exchange’s surge. Do they work when it dives?Wally Screenshot of Wally personal money app.Submitted Expense: Free Best for: Organizing and also budgeting loan with
a small amount of accounts open.
How it works: After each acquisition, the customer gets in the purchase information right into the app. This can be done manually, or by taking a photo of a receipt.Pros: Wally benefits
customers that are brand-new to the individual money globe, Cole stated. That implies individuals with a couple of bank card, no vehicle loan, no home mortgage, etc. Wally assists these individuals get into the habitof inputting their acquisitions, so cash spent is proactively on their minds. The breakdown of investing is solid, also, Cole stated. It’s very easy to inform where the income is decreasing to the dollar.Sign Up: Obtain service headlines in your inbox every weekday.Cons: Purchases have to be done manually or via an invoice image, which is still not the most hassle-free process. Cole also noted that this is just offered on a phone,
as well as there is no costs pay option.Mint Screenshot of Mint personal money application Sent
Cost: Free Best for: Organizing and also budgeting loan with a high variety of accounts open.How it works: The individual links all accounts to Mint, including credit cards, savings accounts, financings, investments, property had, etc.
The application tracks purchases automatically and also tracks spending
trends.Pros: With this
app, the user strives
on the front end for minimal work beyond that and also a solid cash flow evaluation.
The typical consumer has between seven and also 10 cards plus numerous checking account( double that if the user has a partner), Cole said. Mint combines all these right into one summary of costs, with break downs of personalizedbudgets. Mint likewise has a bill pay function and is available on a desktop.Cons: The initiative setting up Mint on the front end can be seen as a disadvantage, even if it’s worth it.Acorns Screenshot of Acorns personal financing app Sent Price: $1 per month for accounts under$5,000; 0.25 percent of the equilibrium per year for accounts over$5,000 Best for: Saving enough loan to begin investing; Intro to spending Just how it works: The user picks meansto save money, either via a repeating weekly input, a round-up attribute( a purchase is$1.45, Acorns rounds up to$