james m
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First, life insurance proceeds at death are not taxable to the beneficiary, unless the death benefit amount would put the insured's estate value over a certain amount, after a marital deduction. When I retired from the insurance business in 2006, the amount was $2,000,000. If the insured dies in 2009, the elimination amount will be $3,500,000. The federal death tax is totally eliminated in 2010, but in 2011 the law reverts back to 2001 rules.
It's true that you can have as many life insurance policies as you want, but only if the total amount of insurance fits your particular need. In other words, insurance companies want to know if other insurance exists, and the amount inforce, when applying for large amounts of coverage..
The reason for this is to determine if the applicant would be over-insured based on current need, income, debt, and his/her net worth. Also, they want to know if there are any current or previous health issues which may cause a person to apply. Life insurance companies request health information from the MIB or Medical Information Bureau.
If the additional insurance puts the total amount of coverage over the company's guidelines, they can ask for additional underwriting information, an explanation from the applicant as to why this insurance is needed, or simply decline the risk.
More than likely, if your health history falls within the insurance company's underwriting guidelines, your policy will be issued.
I'm not going to argue at this point which is better, whole life, term or universal life. That would be up to you to decide what's best for you, and your circumstances, after you've been informed of the differences by a professional agent in your area.
Depending on how long you've had your current policy, you might want to combine it and your new policy into one. It could save you money.
What I recommend is that you see a professional agent, and ask him/her to do a Financial Need Analysis to determine your total life insurance need. It would also tell if you need disability insurance, to provide an income if you get sick or injured and can't work. |
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