No insurance resource would be complete without a helpful menu of terms and concepts. This information-rich list will help you make sense of the solutions you are considering.
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Accumulation vehicles that grow as tax-deferred earnings. Taxes are due when the contract owner withdraws money or annuitizes. The owner can also surrender the annuity amount in a lump sum.
Also known as Salary Continuation Plan, this is a method of rewarding senior management and key employees of a company with special financial incentives. It is a written agreement between an employer and an employee that allows the employee to defer tax now so the funds can be withdrawn and taxed at a specified point in the future (usually at a lower rate). High cash value life insurance policies (with company as owner and beneficiary) with minimal death benefit are popular in these plans because the cash values grow tax-deferred and the death proceeds are income tax-free if the employee dies before receiving payments.
This is a rider sometimes referred to as Accidental Death Benefit, and may be added to some life insurance contracts. It provides that double or triple the face amount of insurance is payable if the death of the insured is caused by an accident. There is an extra charge for the ADB. However, ADBs can be appealing because of their relatively low premium and the belief most people have that their death will be accident-related. But if double the coverage is actually needed, LLIS recommends doubling the face amount of the insurance since most deaths are not, in reality, accidental.