Options for You.



401K / 403(b) Rollover

401K / 403(b) Rollover

401K / 403(b) Rollover

Disability Insurance

Disability Insurance

Disability Insurance


Whole Life

Whole Life


Final Expense

Final Expense




Disability Insurance

DEFINITION of Disability Insurance

Disability insurance is a type of insurance that will provide income in the event a worker is unable to perform their work and earn money due to a disability. There are many types of organizations that provide different types of disability insurance. Each organization and disability insurance type have specific rules as to what constitutes a disability and how a person might qualify to receive the disability benefit. Short term disability insurance policies offer a worker a portion of their salary if they are unable to work for a short period- typically three to six months. Long term disability insurance offers a worker a portion of their salary if they are unable to work for a longer period- typically a period of over six months. Both short term and long term disability policies have a period that a person must be disabled for before that individual is able to start receiving disability benefits. That period of time is called an elimination period. If a person becomes disabled, they must wait until the elimination period is over before they start receiving benefits.

If they are able to work before the elimination period is over, the person will not receive a benefit. The Social Security Administration also provides disability insurance. Employees who’ve paid the Federal Insurance Contributions Act (FICA) tax for a certain amount of time, are eligible to receive the Social Security disability income insurance if they meet the strict requirements of disability under the OASDI program.

Disability insurance is also referred to as disability-income insurance.

BREAKING DOWN Disability Insurance

Disability insurance comes in many forms and can be obtained through a wide range of providers for a wide range of prices. The price of a disability insurance policy will be dependent upon the length of the elimination period, the benefit period (how long a person is able to receive the disability benefit), and how strict the definition of disability is under the policy. Each policy can have its own definition of what qualifies as “disabled,” so it is important to understand these rules before buying a policy. The two most common definitions are “own occupation,” where a person is considered disabled if they are no longer able to perform the occupation they had prior to becoming disabled, and “any occupation,” where a person is considered disabled if they are unable to perform any job at all. Obviously, the “any occupation” definition is more strict. All else equal, the policy with the more strict definition of disability will be the cheaper policy because there is less of a chance of an insurer having to pay benefits under a stricter policy.

The U.S. Social Security System has a very strict definition of disability and it can be difficult to qualify for disability payments under the program. Employees who have become disabled can receive this income insurance for at least one year. Income insurance payments begin on the sixth month of disability.

Final Expense Insurance

What Is Final Expense Insurance

Final expense insurance is designed to cover the bills that your loved ones will face after your death. These costs will include medical bills and funeral expenses. Final expense insurance is also known as burial insurance. Unfortunately, even bare-bones funerals can cost thousands of dollars. The ins and outs of insurance policies can get tricky. Here’s what you need to know about final expense insurance.

Final Expense Insurance: The Basics

A final expense life insurance policy isn’t the same as what’s known as “insuring your life.” Insuring your life concerns leaving your family and loved ones with enough support after you pass away. Term and permanent life insurance value your policy as proportionate to your earning power now and for the rest of your life.

With funeral insurance, the value of your policy is proportionate to the expense of your desired funeral. While other forms of life insurance can top a million dollars, it’s rare for final expense insurance policies to get above $20,000.

Do I Need Final Expense Insurance?

The answer to that question will vary from person to person. Do you already have term, whole,  IUL ? If you do, that policy can help your loved ones pay for final expenses. However, if you have term life insurance and you outlive the policy term, it’s a different story. In that case, you may want to consider final expense insurance.

Alternatively, maybe your family will have plenty of assets to work with when you die. In that case, you could use what’s called “self-insurance.” “Self-insurance” is one of those terms that sounds more complicated than it is. To self-insure is just to use your own money rather than use a life insurance payout.

Could your family self-insure for your final expenses? It’s a good idea to assume around $10,000 for funeral expenses. But don’t forget to take into account whether you will want a catered party after the service. Or perhaps a trip abroad to scatter your ashes. Maybe you’ll end up leaving big bills behind. If situations like these sound like your situation, you may want to consider springing for final expense insurance. Additionally, it’s probably best not to count on the lump sum death payment from Social Security to pick up the slack. It’s only $255.

Indexed Universal Life Insurance

What if you could get the flexibility of adjustable life insurance premiums and face value and an opportunity to increase cash value—would you go for it? What if you could get this without the inherent downside risk of investing in the equities market? All of this is possible with an indexed universal life insurance policy. These policies aren’t for everyone, so read on to find out if this combination of flexibility and investment growth is a good fit for you.

What Is Universal Life?

Universal life insurance (UL) comes in a lot of different flavors, from fixed-rate models to variable ones, where you select various equity accounts to invest in. Indexed universal life (IUL) allows the owner to allocate cash value amounts to either a fixed account or an equity index account. Policies offer a variety of well-known indexes such as the S&P 500 or the Nasdaq 100. IUL policies are more volatile than fixed ULs, but less risky than variable universal life policies because no money is actually invested in equity positions.

IUL policies offer tax-deferred cash accumulation for retirement while maintaining a death benefit. People who need permanent life insurance protection but wish to take advantage of possible cash accumulation via an equity index might use IULs as key person insurance for business owners, premium financing plans or estate-planning vehicles. IULs are considered advanced life insurance products in that they can be difficult to adequately explain and understand.

Indexed Universal Life: Flexibility and Safety

How Does It Work?

When a premium is paid, a portion pays for annual renewable term insurance based on the life of the insured. Any fees are paid, and the rest is added to the cash value. The total amount of cash value is credited with interest based on increases in an equity index (but it is not directly invested in the stock market). Some policies allow the policyholder to select multiple indexes. IULs usually offer a guaranteed minimum fixed interest rate and a choice of indexes. Policyholders can decide the percentage allocated to the fixed and indexed accounts.

The value of the selected index is recorded at the beginning of the month and compared to the value at the end of the month. If the index increases during the month, the interest is added to the cash value. The index gains are credited back to the policy either on a monthly or annual basis. For example, if the index gained 6% from the beginning of June to the end of June, the 6% is multiplied by the cash value. The resulting interest is added to the cash value. Some policies calculate the index gains as the sum of the changes for the period. Other policies take an average of the daily gains for a month. If the index goes down instead of up, no interest is credited to the cash account.

The gains from the index are credited to the policy based on a percentage rate, referred to as the participation rate. The rate is set by the insurance company. It can be anywhere from 25% to more than 100%. For example, if the gain is 6%, the participation rate is 50% and the current cash value total is $10,000, $300 is added to the cash value (6% x 50% x $10,000 = $300).

IUL policies typically credit the index interest to cash accumulations either once a year or once every five years.

What’s Good About a IUL Policy?

  • Low price: The policyholder bears the risk, so the premiums are low.

  • Cash value accumulation: Amounts credited to the cash value grow tax-deferred. The cash value can pay the insurance premiums, allowing the policyholder to reduce or stop making out-of-pocket premiums payments.

  • Flexibility: The policyholder controls the amount risked in indexed accounts vs. a fixed account and the death benefit amounts can be adjusted as needed. Most IUL policies offer a host of optional riders, from death benefit guarantees to no-lapse guarantees.

  • Death benefit: This benefit is permanent, is not subject to income or death taxes, and is not required to go through probate.

  • Less risky: The policy is not directly invested in the stock market, thus reducing risk.

  • Easier distribution: The cash value in IUL policies can be accessed at any time without penalty, regardless of a person’s age.

  • Unlimited contribution: IUL policies have no limitations on annual contributions.

What’s Bad About a IUL Policy?

  • Caps on accumulation percentages: Insurance companies sometimes set a maximum participation rate that is less than 100%.

  • Better for larger face amounts: Smaller face values don’t offer much advantage over regular universal life policies.

  • Based on an equity index: If the index goes down, no interest is credited to the cash value. (Some policies offer a low guaranteed rate over a longer period). Investment vehicles use market indexes as a benchmark for performance. Their goal is normally to outperform the index.

2019 IRA Rollover Chart

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Rolling over: It’s not only a trick to teach your dog; it’s also a savvy way to move money between retirement accounts while avoiding taxes and often expanding your range of investment options.

Switching jobs can prompt one of the most common types of rollovers: taking money from an old 401(k) plan and rolling it into an individual retirement account, of either the Roth or traditional variety. But there are a number of other types of rollovers, and because of the associated tax benefits, the IRS is pretty strict about what’s allowed.

This table will guide you through the various types of rollovers and the rules outlined by the IRS. Continue reading below the table for more details on rollovers.

About rollover IRAs

The above shows your options for an old retirement account, but unless you love the 401(k) you have at your new workplace, rolling over into an IRA may be the simplest (and possibly best) choice — provided you meet certain requirements.

The pros of a rollover IRA generally outweigh the cons.

The pros of a rollover IRA generally outweigh the cons. By transferring the balance of an old retirement plan into an IRA, the money will remain tax-deferred. Depending upon the type of account you choose, you may also find a wider range of investment choices — such as individual stocks or a larger list of exchange-traded funds — than what’s offered in many workplace retirement accounts.

» Get the basics: NerdWallet’s guide to the 401(k) rollover

How to do an IRA rollover

Once you’ve learned the basics of IRAs, it’s time to take action. If you don’t already have an IRA, evaluate your choices and open one. NerdWallet’s analysis of the best IRA providers can help you decide.

Once you’ve settled on where the money is headed, the process is pretty straightforward, if you opt for what’s known as a direct rollover. By letting your old and new plan administrator handle the rollover, the money never touches your hands and, therefore, won’t trigger tax liabilities.

» Dive into specifics: How to do a rollover in 4 simple steps

First, contact the administrator of your former retirement plan and request instructions for how to complete a rollover. Then, ask your new IRA account provider what it requires — including how a check should be made out and where or how it should be sent. (Some companies allow wire transfers instead.) Finally, you’ll need to fill out forms formally requesting the rollover.

Rollover rules to know

Rollovers are common, so fear not: You’re treading into familiar territory here. Still, take note of the specific rules outlined by the IRS before you begin the rollover process. That’s especially important if you’re considering something other than the 401(k)-to-IRA rollover.

  1. The 60-day rule

If you can’t do a direct rollover, as described above, you’ll have a limited window of time to complete an indirect rollover. With an indirect rollover, the onus is on you to get the money from your old retirement account into a new one within 60 days.

Not only will you be working on a deadline with an indirect rollover, but taxes from a distribution will also be withheld by the IRS. An IRA distribution paid directly to you can be subject to 10% withholding, while a retirement plan distribution is subject to mandatory 20% withholding. (Read more about these IRS rules.)

  1. The once-a-year rule

The IRS generally doesn’t allow more than one rollover from the same account within a 12-month period. The good news? This rule won’t apply to the most common types of transactions, such as a 401(k)-to-IRA rollover or when you shift money from a traditional IRA into a Roth IRA account in what’s known as a Roth IRA conversion.

Rather, this once-a-year rule applies mostly to rollovers of the same variety, such as from one Roth IRA to another Roth IRA. Be sure to consult the above table and the IRS rules if you’re considering a less-common rollover.

Take note of the specific rules outlined by the IRS before you begin the rollover process. That’s especially important if you’re considering something other than the 401(k)-to-IRA rollover.

  1. The two-year rule for SIMPLE IRAs

If you’re a small-business employee, take note of this special rule for rollovers involving a SIMPLE IRA.

Specifically, be mindful of the two-year mark when your employer first deposited contributions to your SIMPLE IRA plan. Within that two-year period, the only tax-free transaction allowed is from one SIMPLE IRA to another. Past that two-year marker? The range of allowable rollovers expands. Again, consult the IRS rules specifically related to SIMPLE IRAs.

Whole Life Insurance

What is Whole Life Insurance

Whole life insurance provides coverage for the life of the insured. In addition to providing a death benefit, whole life also contains a savings component where cash value may accumulate. These policies are also known as permanent or traditional life insurance.

How Whole Life Insurance Works

BREAKING DOWN Whole Life Insurance

The most common of life insurance products, whole life insurance guarantees payment of a death benefit to beneficiaries in exchange for level, regularly-due premium payments. The policy includes a savings portion, called the cash value, alongside the death benefit. In the savings component, interest may accumulate on a tax-deferred basis. Growing cash value is an essential component of whole life insurance.

Whole Life Cash Value

To build cash value, a policyholder can remit payments more than the scheduled premium.  Additionally, dividends can be reinvested into the cash value and earn interest. The cash value offers a living benefit to the policyholder. In essence, the cash value serves as a source of equity for the policyholder. To access cash reserves, the policyholder requests a withdrawal of funds or a loan. Interest is charged on loans with rates varying per insurer. Also, the owner may withdraw funds up to the value of total premiums paid tax-free. Loans which are unpaid, the loan will reduce the death benefit by the outstanding amount.  Withdrawals reduce the cash value but not the death benefit.

For the insurer, the accumulation of cash value reduces their net amount of risk. For example, ABC Insurance Company issues a $25,000 life insurance policy to S. Smith, the policy owner and the insured. Over time, the cash value accumulates to $10,000. Upon Mr. Smith’s death, the insurance company will pay the full death benefit of $25,000. However, the company will only realize a loss of $15,000, due to the $10,000 accumulated cash value. The net amount of risk at issue was $25,000 but at the death of the insured was $15,000.

Death Benefit of Whole Life Insurance

The death benefit of a whole life insurance policy is typically a set amount of the policy contract. Some policies are eligible for dividend payments. In this case, the policyholder may elect to have the dividends purchase additional death benefits, which will increase the death benefit at the time of death. Alternatively, unpaid outstanding loans taken against the cash value will reduce the death benefit. Many insurers offer riders that protect the death benefit in the event the insured becomes disabled or becomes critically or terminally ill. Typical riders include an accidental death benefit and waiver of premium riders.

The named beneficiaries do not have to add money received from a death benefit to their gross income. However, sometimes the owner may designate the funds from the policy be held in an account and distributed in allotments. Interest earned on the holding account will be taxable and should be reported by the beneficiary. Also, if the insurance policy was sold before the death of the owner, there may be taxes assessed on the proceeds from that sell.

History of Whole Life Insurance

From 1940 to 1970, whole life insurance was the most popular insurance product. Policies secured income for families in the event of the untimely death of the insured and helped subsidize retirement planning. After the passing of the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1981, many banks and insurance companies became more interest sensitive. Individuals weighed the benefits of purchasing whole life insurance against investing in the stock market where return rates were, at the time, between 10 and 12%. The majority of individuals, at that time, began investing in the stock market and term life insurance.


What Is an Annuity?

An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees. Annuities are created and sold by financial institutions, which accept and invest funds from individuals and then, upon annuitization, issue a stream of payments at a later point in time. The period of time when an annuity is being funded and before payouts begin is referred to as the accumulation phase. Once payments commence, the contract is in the annuitization phase.

Understanding Annuity

Annuities were designed to be a reliable means of securing a steady cash flow for an individual during their retirement years and to alleviate fears of longevity risk, or outliving one’s assets.

Annuities can also be created to turn a substantial lump sum into a steady cash flow, such as for winners of large cash settlements from a lawsuit or from winning the lottery.

Defined benefit pensions and Social Security are two examples of lifetime guaranteed annuities that pay retirees a steady cash flow until they pass.

Key Takeaways

  • Annuities are financial products that guarantee a fixed-income stream, primarily for retirees, in exchange of monthly payments made by the investor over a period of time.
  • Annuities can be structured into different kinds of instruments – fixed, variable, immediate, deferred income – that provide investors with flexibility in terms of payouts.

Annuity Types

Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. Annuities can be created so that, upon annuitization, payments will continue so long as either the annuitant or their spouse (if survivorship benefit is elected) is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.

Annuities can also begin immediately upon deposit of a lump sum, or they can be structured as deferred benefits. An example of this type of annuity is the immediate payment annuity in which payments begin immediately after the payment of a lump sum. Deferred income annuities are the opposite of an immediate annuity because they don’t begin paying out after the initial investment. Instead the client specifies an age at which he or she would like to begin receiving payments from the insurance company.

Annuities can be structured generally as either fixed or variable. Fixed annuities provide regular periodic payments to the annuitant. Variable annuities allow the owner to receive greater future cash flows if investments of the annuity fund do well and smaller payments if its investments do poorly. This provides for a less stable cash flow than a fixed annuity, but allows the annuitant to reap the benefits of strong returns from their fund’s investments.

One criticism of annuities is that they are illiquid. Deposits into annuity contracts are typically locked up for a period of time, known as the surrender period, where the annuitant would incur a penalty if all or part of that money were touched. These surrender periods can last anywhere from two to more than 10 years, depending on the particular product. Surrender fees can start out at 10% or more and the penalty typically declines annually over the surrender period.

While variable annuities carry some market risk and the potential to lose principal, riders and features can be added to annuity contracts (usually for some extra cost) which allow them to function as hybrid fixed-variable annuities. Contract owners can benefit from upside portfolio potential while enjoying the protection of a guaranteed lifetime minimum withdrawal benefit if the portfolio drops in value. Other riders may be purchased to add a death benefit to the contract or accelerate payouts if the annuity holder is diagnosed with a terminal illness. Cost of living riders are common to adjust the annual base cash flows for inflation based on changes in the CPI.

Frequently Asked Questions

Living Benefits provide access to cash from a life
insurance policy that can be used while you are alive.
Living Benefits are also known as Accelerated Death
Benefits. Benefits are based on an insured incurring a
chronic, critical, or terminal illness as defined in the policy.

Refer to the policy contract for complete requirements.

Living Benefits and Accelerated Death Benefits are terms used interchangeably on a life insurance policy. Both offer access to funds that can be used for chronic, critical and terminal illnesses. When you choose to use your living benefits, you are accelerating your life insurance policy’s face amount so that you can use the funds while you are alive.

The accelerated death benefits may be available when a person has a terminal, critical or chronic illness.

There are several factors that determine the amount of money you will receive. These factors include:

  • The face amount you choose to accelerate from your policy.
  • Your life expectancy as determined by the Company, which is based on age and overall medical condition (as impacted by the severity of your illness).
  • Accelerated benefit interest rate in effect (used to determine the present value of future benefits and premiums).
  • Any administrative fees assessed.

Here’s an example of an estimated Critical Illness Accelerated Death Benefit:

The benefit amounts shown below are estimates based on a Trendsetter LB 30 policy, with a face amount of $200,000. 90% of the $200,000, which is $180,000, was accelerated for this example. Benefits are based on the severity of illness and the impact on remaining life expectancy.

The longer you are expected to live, the lower the benefit you will receive. The shorter you are expected to live, the higher the benefit you will receive. The remaining amount of the face amount will be $20,000, which is the remaining amount after the maximum of 90% was accelerated from the face amount.