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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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A rider available with Long Term Care insurance policies. Both partners applying must purchase the rider and be issued identical policies. If one policyholder uses all of his/her pool of money, the Shared Care rider allows him/her access to the other's unused pool of money.
A rider available with Long Term Care insurance policies. Increases the monthly or daily benefit and total pool of money each year on the policy anniversary by 5% of the original amount.
Parents of children with special needs face unique challenges when planning for the future, since their death could leave the children 100% reliant on government benefits. This becomes about not only lifetime care, but quality of life. Creation of a special needs trust (aka supplemental needs trust) allows a trustee to pay for things not covered by Social Security (which covers essentials like food, clothing, shelter, and medication); like education, recreation, counseling, medical attention beyond life's simple necessities, or even spending money, vacations, movies, electronics, and other quality of life enhancing expenses. It allows the disabled beneficiary to receive gifts, lawsuit settlements, or other funds and not lose his/her eligibility for some government programs. Creation of special needs trusts requires special assistance. Some financial advisors offer special expertise in this area. It's also important to involve an attorney who is knowledgeable in state-specific laws, and in The Omnibus Budget Reconciliation Act of 1993 that established the rules for special needs trusts.
A fee charged for early withdrawal of funds from a life insurance policy or annuity, or for cancelling the agreement. This fee reflects the insurance company's expenses for sales, underwriting, issuing, and administering the policy.
A specified amount of time an annuity owner must keep the majority of his/her money in the contract to avoid surrender charges. Most last from five to 10 years, and allow the annuity owner to withdraw 10% of the accumulated value of the account per year, even during the surrender period.
A specified amount of time a policy owner is subject to surrender charges if he/she withdraws money from the policy.
An effective estate distribution and tax planning tool, Survivorship life (also known as second-to-die and last-to-die) is a policy that insures the life of two people (husband and wife, same-sex partners, business partners). Survivorship policies pay death proceeds to the beneficiary(ies) only upon the death of the second (last) insured. They can transfer wealth or assist in paying estate taxes, which are delayed until both individuals die. These types of policies are typically Guaranteed Universal Life, Whole Life, and Universal Life insurance. Premiums are generally lower than purchasing two individual policies.