O'Connor Insurance Associates

Life insurance is designed to help you deal with the financial impact of some of life's unexpected events. It ensures that when you die your family will have the financial resources it needs to meet its expenses. Many people also purchase life insurance to accumulate funds for future needs, including retirement income, college funding, or simply a fund for future emergencies or opportunities.

Life insurance serves an important role in the financial protection of men and women ... single or dual income households ... and even for children. In addition to replacing the lost income of a wage earner, life insurance can also ensure the availability of child care and household maintenance.

For young people the need for life insurance is not measured by financial obligations but by what the future might hold. Buying life insurance when children are young will offer lower premiums and guarantee insurability.

     The Value of Life Insurance
     Assessing Your Need
     Types of Life Insurance

Life insurance is a crucial step in planning for your future and the future of your loved ones. It can fulfill promises made to your family if you are no longer around by providing a death benefit to your beneficiaries in return for premiums paid to the insurance company. Life insurance can also provide benefits while you are living.

Provides income tax-free money to your named beneficiary(s) that can be used to pay funeral expenses, debt, tuition, estate taxes or virtually any financial need you leave behind.
Can provide business security by enabling partners to buy out the interests of a deceased partner and prevent a forced liquidation.
The cash value growth of a permanent life insurance policy is tax-deferred1, which means you do not pay taxes on the growth of the cash value unless the money is withdrawn.
Loans2 or withdrawals can be taken against the cash value of a permanent life insurance policy to help with expenses, such as college tuition or the down payment on a home.

1Accumulated growth may be taxable upon withdrawal. If the policy is a Modified Endowment Contract (MEC), tax penalties may apply prior to age 59 ½. Consult a tax advisor on your specific situation.
2Policy loans and withdrawals reduce cash value and the death benefit and may be subject to other charges outlined in the contract.

The amount of life insurance you select should be dependent on your personal and financial needs. We can assist you in determining an appropriate coverage amount and help you decide on which type of life insurance is right for you.

Life Changes — So Should Your Policy
As events happen in your life, your life insurance coverage may need to change to adapt to your current needs. Some life changes that may require you to reevaluate your coverage include: marriage, divorce, a new baby, purchase of a new home and retirement.

There are two basic kinds of life insurance, term and permanent. Many variations of these standard forms of life insurance also exist, probably the most popular being universal life.

Term Insurance
Term Insurance does just what the name implies ... provide protection for a specific term of one or more years. Since protection is only provided for a specific time period it is considered temporary protection.

Death benefits are paid only if you die within the term of years for which the policy is written. Term insurance can usually be renewed, often without a medical examination. But premiums will be higher each time you renew because you are older. Term insurance provides you with the greatest amount of coverage per premium dollar. Most policies are "convertible," which means the policy can be traded for permanent life insurance protection. Premiums for the new policy will be higher than those paid for the term policy.

Permanent Insurance
Permanent life insurance provides you with protection for as long as you live. Premium costs are averaged over your lifetime, so the premium does not increase as you get older. The premiums are higher than what you would pay for an equivalent amount of term insurance. However, permanent insurance is considered more economical when compared to continuously renewing term insurance at higher premium rates.

The most basic type of permanent insurance is "whole life." Whole life policies develop cash values on a tax-deferred basis. This cash value can be used for a variety of purposes, including:

Using the policy as collateral and borrowing up to the current cash value. This is useful for funding short-term obligations. If you die before the loan is repaid, the amount owed and interest is deducted from the life insurance proceeds.
Payment of premium to keep your policy in force. You may authorize the insurance company to borrow from your cash value to pay the premium due.
Use the cash value to fund a paid up policy at a reduced level of protection if you wish to stop making premium payments completely.
The cash value of the policy is always available if you elect to cancel the policy. You pay taxes on the cash value only if it exceeds the amount of premiums you paid into the policy.

Universal Life
Universal life insurance combines features of both term and permanent insurance. Universal life not only offers life insurance protection, it also accumulates cash which is credited with interest earnings. The amount you earn depends on current interest rates.

The premiums you pay are added to the cash accumulation portion of your universal life policy. Each month a deduction from the account value is made to provide for life insurance protection and other benefits and riders. An administrative fee is also deducted from the cash accumulation.

Universal life is a type of flexible premium policy, allowing you to vary the timing and amount of your premium payments every year, or even skip a premium payment. Insurance continues as long as there is enough money in the cash accumulation to pay for the insurance charges. You can obtain cash from your universal life policy by borrowing or withdrawing from the account value.

In principle, all life insurance policies are designed to perform a similar function: pay an amount of money if you die. However, as has already been demonstrated, the differences among individual types of insurance policies can be significant. The type of policy you purchase should be based on your unique needs and what you can afford. This is where your O’Connor Insurance Associates, Inc. can help ...

Term Series: ten, twenty, or thirty-year level term insurance.
Permanent Insurance: Whole Life, 20-Pay Life, and Life Paid-Up at 65. All designed to provide guaranteed protection.
Universal Life: Life insurance protection with a savings fund.
Other products include: disability, children's life protection, home mortgage loan protection and annuities.

Life policies contain specific details of coverages, conditions and provisions. Agents may not be qualified to give legal or tax advice. It is recommended that individuals consult with a qualified tax advisor regarding all matters pertaining to taxation.

While contributions to a Roth IRA are not tax deductible, withdrawals are tax free if certain conditions are met.
Withdrawals from a Roth IRA are tax and penalty free if:

Withdrawals from a Roth are also tax and penalty free under these circumstances:

The distribution is due to total disability and the account has been held at least 5 years.
The distribution is for a qualified first-time home purchase and the account has been held at least 5 years.
The distribution is to a beneficiary after the owner’s death and the account has been held at least 5 years.

Unlike the Traditional IRA there is no requirement that withdrawals be started at age 70 ½. Eligibility to open a Roth IRA is based on income.

The likelihood that you will suffer a disabling accident or illness lasting longer than 3 months is frightening. Depending on your age, it can be as high as 40%.

Not only should you be concerned about the likelihood of a disabling accident or illness occurring, but the average duration of a disability is over 4 years for individuals under age 55.

A Disability Income Policy is designed to provide the funds needed to take care of your expenses if you become totally disabled from an accident or illness.