Insurance FAQs

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> How much life insurance should I buy?

Everyone has different insurance needs. The amount you buy will depend on your personal situation, such as how much money your dependents would need if you were no longer able to provide for them, the amount of debt you have, your current lifestyle, and so on. The best way to find out how much life insurance you need is to consult an insurance representative. A good representative can evaluate your current financial situation and help you work out an insurance plan that will fit your needs. If you do not currently have an insurance representative, you can find one quickly and easily by visiting our Find an Insurance Representative section.

> What's the difference between term and permanent life insurance?

Term life insurance provides protection only for a specific period of time, known as the term. It pays a benefit only if you die during the term. If you are living at the end of the policy term, then the policy expires without value. It is sometimes called temporary life insurance.

Permanent life insurance is another name for whole life insurance. It provides permanent, lifelong protection, as well as cash value that benefits you while you're alive. The added value can be used to plan for retirement, or pay for a child's education. Some whole life insurance policies, such as those from Mutual Trust Life Solutions, are participating, meaning they are eligible to earn dividends. Dividends can be used to pay some or all of your policy premiums, or add value to your overall policy.

> What are "living benefits?"

The term "living benefits" refers to the benefits that you get from an insurance policy while you're still alive, such as the maturing cash value. These cash values can be used for many things, such as supplementing your retirement savings, or financing your child's college education.

> What's the difference between a stock company and a mutual company?

The term "stock company" usually refers to a company that is publicly traded and therefore owned by its stockholders. Because it is owned by stockholders, profits are usually distributed among its stockholders.

The term "mutual company," on the other hand, refers to a company with no capital stock. Mutual companies are instead owned by their policyholders. The profits earned by mutual companies are usually distributed among their policyholders in the form of dividends. Mutual companies are not obligated to pay dividends, and some do not. Furthermore, dividends are never guaranteed. Historically, Mutual Trust has been able to pay dividends to owners of participating products for over 110 consecutive years!

> What types of insurance policies pay dividends?

Typically, insurance policies that are "participating," such as a whole life policy from Mutual Trust Life Solutions, will pay dividends. Term insurance policies usually do not pay dividends. Dividends are never guaranteed. Historically, Mutual Trust has been able to pay dividends to owners of participating products for over 110 consecutive years!

> What are riders?

A rider is an additional set of terms and conditions that are not included in the original policy. You can add value to your base insurance policy by attaching riders. For example, an Applicant Waiver of Premium Benefit Rider from Mutual Trust Life Solutions exempts the policyowner from making premium payments in the event of a disability or death. By attaching a rider, it essentially becomes part of your overall insurance contract. These riders can help you customize your insurance policy so that it fits your individual needs. To learn which riders are right for you, consult your Mutual Trust insurance representative.

> Do I have to take a medical exam to get a life insurance policy?

Some life insurance companies may not require a medical exam in order to receive coverage. However, most do. To find out whether you will need to take a medical exam for a specific policy, consult your insurance representative.

> What's the difference between the face amount and the cash value?

The face value is the amount that is paid to the insured's beneficiaries when he or she dies. The cash value is the cash accumulation in the policy. The policy's cash value can be used for many things, such as financing a college education, or supplementing retirement savings.

> Are my life insurance benefits taxable?

All life insurance policies are different. Usually, death benefits are not subject to income tax. However, death benefits can be included in the value of your estate, thereby being subject to estate taxes. The only way to know for sure whether your life insurance benefits are taxable is to consult an expert, such as your attorney, financial planner, or an accountant.

> Can I change my existing life insurance policy?

Some insurance policies allow you to make modifications to the policy at predetermined intervals, such as the policy anniversary or a life-changing event, such as a marriage or birth of a child. Since all life insurance policies are different, you should consult your insurance agent. Your agent can effectively explain what your options are. If you currently do not have a life insurance agent, you can find one quickly and easily by visiting our Find an Insurance Representative section.

> Can I exchange my existing policy for another policy?

You can exchange your existing life insurance policy for another, but it's something that should be considered very carefully, regardless of whether you are thinking of exchanging policies within the same company or exchanging from one company to another. In some cases there may be additional costs involved with exchanging policies, costs that outweigh the benefits of the new policy. If you decide you want to exchange your existing policy, always consult your insurance representative first.

> What is an annuity?

An annuity is an investment contract between you and an insurance company that allows you to deposit a certain amount of money from which the insurer makes payments to you over a period of time spelled out in the contract. Annuities are not life insurance policies—although they can only be underwritten by insurance companies—nor are they savings accounts, because there can be tax penalties for withdrawals before age 59-1/2. Instead, they are unique, long-term financial vehicles that can help you plan for retirement because they offer a guaranteed stream of income. Earnings from annuities are tax-deferred, so you don't pay federal income tax on gains on the funds until you begin to withdraw money. Annuities can also provide retirement income for life. When you purchase them, you can choose payouts that last a lifetime or a time period that you specify. And finally, annuities can provide financial protection to your beneficiary if you die before receiving your complete payouts.


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