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New Jersey Life Insurance FAQs
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Life Insurance FAQs

1. How much life insurance should I have?
  Your income should determine the amount of life insurance you have. If you make $50,000 per year and you wanted your income to continue to your family for 20 years and you assumed a 6% return you would need $607,905. If you wanted to rely on Social security survivor benefits you could reduce this amount. If you wanted to have it last for 30 years you would need to increase this amount.

2. What is human Life value?
  Human life value is a function of your income and or your profession (potential income). Typically this is 20 to 30 times your income mainly because it uses lower interest rates and will generally have the income paid to retirement age or life. This is also used in determining the amounts that should be paid to the beneficiaries of a wrongful death suit.

3. What are the differences between permanent insurance and term insurance?
  Permanent life insurance (also called Universal life or Whole life) is designed to last until you die. Term insurance is usually set up to last a specific amount of time (e.g. 10, 20, 30 years).

4. What are the differences between universal life and variable life?
  Universal life uses an interest rate determined by the insurance company whereas Variable life's rate of return is determined by the underlying investment performance.

5. What are the differences between universal life / variable life and whole life?
  Universal life is actually term insurance with a savings/investment element. As the insured grows older the term insurance rates will increase and if the interest rate or investments do not remain what was assumed at time of purchased the policy can lapse or require you to pay more premiums. In general you retain the risk. Whole life guarantees certain cash values and the premium and death benefit. The insurance company retains most of the risk.

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6. How long do you want your life insurance to last?
  Most people will answer "for my life" but as you can see from the answers above the type you buy will determine how long it will last.

7. Can you save for retirement and or college and still protect your family?
  Yes, the above mentioned permanent policies also have cash that can be accessed while the insured is alive. The cash also grows tax deferred.

8. Who should be your beneficiary and what settlement option should I have?
  Your beneficiary, in general, should be your spouse first (if married) or any adult that is of sound mind to handle money. The contingent beneficiary should be the trustee of your will for benefit of your children. Most people choose a lump sum as a settlement option but in some cases it may be better to sprinkle the benefit over a period of time or for life.

9. What is a viatical and how is it used?
  A viatical is a way to access your death benefit before you die. If you are determined to be terminally ill and want or need money you can simply sell your policy to a third party and they will pay you a discounted amount of the death benefit. Some companies are also doing Life settlements. This is the same concept except you do not have to be terminally ill.

10. What is waiver of premium and how does it work?
  Waiver of premium is a rider added to a life policy that will pay the insured's premium if he/she should become disabled for a length of time typically 6 months or more.

11. How do I know which Life insurance plan is best for my family and I?
  In order to get the best advice on what your options are when it comes to life insurance it is strongly recommended you consult a licensed New Jersey life insurance professional. This way you can be sure you are getting the best possible expert advice tailored to your individual or business needs.

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