Life Insurance FAQs

Life insurance is an important part of financial planning and plays a valuable role during various stages of life. Some examples are:

• To provide funds to pay off a mortgage and other debts
• To provide funds that survivors can access to replace lost income resulting from the death of the breadwinner
• To provide funds for funeral expenses and other final expenses (any hospital or doctor bills that may not be covered by health insurance)
• To provide an education fund for children or to further the education of the surviving spouse or other adult beneficiary
• To provide funds for special needs children

Life insurance plays a key role in business financial planning. Life insurance may provide funds for businesses to:

• Pay off business loans upon the death of the insured
• Provide funds to recruit and train new management
• Provide funds to hire consultants to replace lost talent
• Purchase the deceased partner's interest from his/her family
• Provide a vehicle for key employees to defer income on a tax-advantaged basis

To help answer this question, you should assemble personal financial information and determine the amount your family will need to support them financially at your death. In addition to these first steps, there are a number of factors to consider when determining how much life insurance you need. These include:

• Any immediate needs at your death (funeral expenses, estate taxes, final illness expenses)
• Family needs
• Daycare costs, college tuition
• Debt cancellation

In most situations, the best way to help you evaluate your situation is through a consultation with a licensed insurance agent.

Recommendations from friends, family, financial institutions you trust, or other sources are methods you can use to select an agent. When selecting an agent, you should ask these questions:

• Is he or she licensed to sell insurance in your state?
• If you are interested in variable life products, is he or she also registered with the Financial Industry Regulatory Authority, Inc. and licensed with your state's securities authority
• Does the agent represent the quality companies you deserve?
• Does the agent have professional designations? (e.g. Chartered Life Underwriter (CLU); Life Underwriter Training Council Fellow (LUTCF); Chartered Financial Consultant (ChFC); Certified Financial Planner (CFP))
• Is he or she a member of a professional association? (e.g. National Association of Insurance and Financial Advisors (NAIFA); American Society of CLU & ChFC; Financial Planning Association (FPA))

In addition to these questions, you may have others you would like answered. These guidelines should help you select an agent to help you evaluate your need for insurance.

Your agent should:

• assist you in determining your insurance needs
• explain various types of insurance policies and insurance-related matters
• review your insurance periodically
• recommend new and innovative products when suitable

Tell your agent what you expect. If he/she is not a good listener, you should consider another agent

When you apply for insurance, many factors will determine whether a medical exam is required including the amount of life insurance for which you are applying, your age and the health information you provide on your application. The insurance company is responsible for expenses involved in requiring medical exams or obtaining medical records.

If your spouse contributes to your family's income, it may be important to protect his or her life with insurance. The loss of the second income could result in immediate economic hardship for your family, a change in your standard of living and a change of plans for your future.

Even if the spouse is a homemaker, he or she provides valuable services. If your spouse were to die, you would have to hire someone to do the housework and/or take care of your children. You would have to spend hundreds, perhaps even thousands, of dollars each and every month to replace the services your spouse provides.

After your policy has been issued, and provided you continue to pay your insurance premiums, the insurance company cannot cancel your policy regardless of your health assuming you did not misrepresent any information provided on the application. You, however, may voluntarily elect to cancel your policy at any time.

In general, life insurance death proceeds are not included in the beneficiary's gross income for federal income tax purposes. For example: If you were insured for $100,000 and you died, the entire $100,000 would be received income tax-free by the named beneficiary (e.g. your spouse) assuming there were no outstanding loans. (Loans are usually not available on term insurance.)

Unless there is an irrevocable provision that states the beneficiary cannot be changed, the policy owner may change the beneficiary.

Many factors are considered to determine your insurance premium. These may include age, sex, whether or not you use tobacco, medical history, hobbies and occupation. During the underwriting process, any of the information provided could affect the premium required for the policy.

First Horizon Advisors Insurance Services, Inc., employs licensed insurance agents who represent several highly-rated insurance companies. Since First Horizon Advisors Insurance Services, Inc. is an independent agent representing a selected group of insurance companies, it can approach your insurance needs from a consultative standpoint providing sound advice focused on your best interests. Our staff will evaluate your needs and give you flexible options and choices from a broad array of insurance products.