Life Insurance

Individual life insurance is primarily designed to protect against the financial loss that the death of a loved one can create. Life insurance provides a death benefit that can provide much needed income to support your family, your business, or to send your children to college. Additionally, life insurance may offer many tax advantages.
 


There are two types of individual life insurance: term life insurance and permanent life insurance. Both term and permanent policies offer an income tax-free death benefit to the policy beneficiary(ies). There are, however, several key differences to keep in mind.

Term Life Insurance
Term life insurance provides life insurance coverage for a specific term, or period of time.

• A term policy pays a death benefit to the insured's beneficiary(ies) only if they die during the specified term that the policy is in force, providing the premiums are paid. Once the term (coverage period) of the policy is over, the insurance coverage lapses, meaning that it no longer provides any insurance coverage.
  
• To continue coverage after the policy term has lapsed, the policyholder needs to reapply for a new insurance policy. At that time, the insurance company must reconsider that individual's health, age, and insurance rates when determining whether or not to grant them a new policy and insurance coverage.
  
• Premiums are set at a certain rate and must be paid according to a set schedule. Term insurance premiums are generally less expensive than permanent life insurance when considered over a short time span. The cumulative costs of renewing term insurance, however, can eventually cost much more than the cumulative cost of purchasing permanent life insurance only one time.

Permanent Life Insurance:
Permanent life insurance provides life insurance coverage for the entire lifetime of the insured.

• Permanent policies pay a death benefit to the beneficiary(ies), provided the premiums are paid.
  
• Premiums are generally more expensive than for term life insurance because a portion of the premiums are applied toward the build up of cash value within the policy. However, the cost of renewing term insurance can eventually cost more than the cost of purchasing a single permanent life insurance policy.
  
• Some permanent life insurance policies accumulate a pool of money called a cash value. Depending on the policy and provider company, this cash value can be used to provide a number of living benefits such as tax-free loans and tax-favored withdrawals. In addition, it can sometimes be used to increase the policy death benefit or pay policy premiums. The usage of a policy's cash value is, of course, subject to the restrictions, limitations and potential penalties associated with that particular policy.

There are several different types of permanent insurance. Listed below are the four most common policies and the features of each:

Whole Life, also called ordinary life, is traditional life insurance that will cover the insured for his/her entire (whole) life. In general, whole life is the most basic form of permanent life insurance and premium payments typically remain constant for the life of the insured.

Universal Life, sometimes called adjustable life, offers more flexibility than traditional whole life insurance. Universal life insurance allows the policy owner to pay their premiums on a flexible basis. Though premium payments are not required on a rigid schedule, the policy owner must pay premiums into the policy to cover the costs associated with the insurance coverage?if the policy owner fails to do this, the insurance policy may lapse. Universal Life policies also feature a flexible interest rate on the policy's cash value that, at times, may be higher than the policy's guaranteed interest rate.

Variable Life is a permanent life insurance policy that offers a fixed premium payment schedule (like whole life), but accumulates a cash value that can be invested in portfolios of securities in an account separate from the general assets of the insurance company. The policyholder has the discretion to choose the subaccounts offered by the policy in which they wish to invest. Variable life policies provide the upside opportunity for the investor to grow the cash value of the policy by investing in securities. With this, however, comes the risk of negative portfolio or market performance and the possibility of losing the money in those investments. The insurance company does not guarantee investment returns and the cash value will fluctuate depending on the performance of the underlying portfolio investments.

Variable Universal Life is a life insurance policy that blends the premium payment flexibility benefits of universal life insurance with the invested portfolio and upside market potential of variable life. Many VUL policies feature tax deferred earnings, policy loans, and the ability to make withdrawals and loans from the policy cash value. It is important to understand, however, that policy loans & withdrawals will reduce the cash value and death benefit and loans are subject to interest charges. Like variable life insurance, VUL policies rely primarily on securities investments to grow the policy's cash value, with this growth potential comes the risk of negative portfolio or market performance and the possibility of losing the money in those investments.

Purchasing the right life insurance is one of the most important decisions that you can make.
 
If you would like information about any of the products Lokman Financial Group has to offer contact us at: contact@LokmanFinancialGroup.com or call: (209) 943-6561.

Lokman Financial Group has a great final expense program to meet the needs of your clients. The Final Expense market is described as middle to low income, death benefit needs under $25,000, and those individuals between the ages of 45-85.  We have two final expense products; Protector Whole Life and Protector Graded Benefit.



Here are some product specifics for our Final Expense products:

Protector Whole Life

The PWL is a non-participating whole life policy with a level death benefit. Level premiums are payable until death or age 100, whichever is first. The PWL is a simplified issue plan. This means there are no medical exams or tests. A competitive quick issue whole life, you finally found it!

• Issue ages: 0-85 (based on last birthday)
• Minimum Face - $1,000
• Maximum Face - $25,000 through ages 65 - $15,000 ages 66-85
• Policy Fee - $30
• Premium modes available are Annual, Semi-annual, Monthly pre-authorized check.
• Tobacco/non-tobacco rates
• Riders available: Accelerated Benefit Rider (where approved), Family Term Rider, and Child's Term Rider

Protector Graded Benefit

The PGB has a graded death benefit that pays 30% of face amount if the insured dies in the first year, and 70% if the insured dies within the second year. The full face amount will be paid if death occurs after the second year. Accidental death within the first two years will constitute a death benefit equal to the full face amount. The PGB has a level premium that is payable till 100 years of age or death. There are no medical exams or tests.The PGB has a more liberal underwriting criteria than the PWL. Keep in mind that the PGB is not a guaranteed issue product. It is a great product for those individuals who need a relatively small face amount combined with those who may have had some adverse medical history which may prevent them from qualifying for our PWL product.

• Issue ages: 0-85 (based on last birthday)
• Minimum Face - $1,000
• Maximum Face - $10,000
• Policy Fee - $30
• Minimum Annual Premium** is $150 ($13/month)
• Premium** modes available are Annual, Semi-annual, Monthly pre-authorized check.
• Smoker and non-smoker rates are the same
• Riders available: Accelerated Benefit Rider (where approved), Family Term Rider, and Child's Term Rider

If you would like information about any of the products Lokman Financial Group has to offer contact us at: contact@LokmanFinancialGroup.com or call: (209) 943-6561.

Annuities 

An annuity is a retirement planning tool designed to protect against the risk of outliving one's financial resources. Annuities are one of the few investment vehicles that allow your money to grow tax deferred.

Prior to discussing the different kinds of annuities available today, it is important to understand the basic mechanics of how an annuity works. An annuity has two distinct parts called the Accumulation Period and the Annuitization Period.

• The Accumulation Period is the period of time where the policyholder invests money into the annuity policy. This period can last one day (as in an immediate annuity) or can last up to several decades. The objective of the accumulation period is to accumulate a pool of money from which the policyholder will later draw regular payments. Simply put, the accumulation period is when the policyholder puts money into the annuity.
  
• The Annuitization Period always follows the accumulation period. This is when the policyholder takes distributions or payments from the annuity policy. These payments are commonly used to replace an individual's income after his/her retirement. The annuitization period, therefore, is when the policyholder takes money out of the annuity.

Once a policy is annuitized (the moment where the annuitization period begins), the policyholder usually has a choice of how he/she wishes to receive the policy distributions. All policy guarantees are subject to the claims-paying ability of the insurer. Below are the three most popular annuitization payout options:

• Straight Life: provides income until the annuitant dies. This generally provides the greatest annuity payment, but has the highest level of risk. Once the policy is annuitized and the annuitant dies, annuity payments will stop.
  
• Life with Period Certain: provides income until the annuitant dies. If the annuitant dies before the designated certain period, the insurer will pay the balance to contingent beneficiary pre-selected by the policyholder for the remainder of the certain period. This option's annuity payment is generally less than that of Straight Life, but provides that annuity payments will continue for a fixed period of time regardless of whether or not the annuitant dies.
  
• Joint and Survivor:provides income to two or more individuals until all of the individuals die. The annuity payment for the Joint and Survivor option is generally the smallest of the three options listed here, but provides income for the lives of two or more individuals.

There are three basic types of policies in which most annuities can be categorized: fixed, variable, and equity indexed annuities. These categories specify how the funds in each policy are invested.

In a Fixed Annuity, the policy cash value earns a pre-determined and fixed rate of return throughout the accumulation period. The policyholder is then guaranteed a fixed dollar pay-out when he/she annuitizes the policy and begins to receive the annuity income.

Like variable life insurance, the funds invested in a Variable Annuity are invested in portfolios of securities in an account separate from the general assets of the insurance company. During the accumulation period, the growth of those funds is directly related to performance of the underlying securities. Likewise, during the annuitization period, the value of each annuity payment will also fluctuate based on the performance of the underlying securities.

A variable annuity offers more growth potential and investment choices than a fixed annuity, but also carries more risk. Variable annuity policies provide the upside opportunity for the investor to grow the cash value of the policy by investing in securities. With this, however, comes the risk of negative portfolio or market performance and the possibility of losing the money in those investments. The insurance company does not guarantee investment returns and the cash value will fluctuate depending on the performance of the underlying portfolio investments.

An Equity Indexed Annuity (or “Indexed Annuity”) is a product that's performance is directly tied to a major stock market index (such as the S&P 500). It is a cross between a fixed and variable annuity in that a equity indexed annuity offers the risk-stabilizing features of a fixed policy, yet has the upside market potential of a variable product. An Equity Indexed Annuity should be considered as a long-term investment. In addition, the policyholder carries the risks of required waiting periods and limits on participations in market returns.

If you would like information about any of the annuity products Lokman Financial Group has to offer contact us at: contact@LokmanFinancialGroup.com or call: (209) 943-6561.