Many people think term life insurance only offers death benefit coverage. They also assume the best policies are the cheapest options. However, term life insurance can be so much more than price.

When looking for a term product, how do you know which one is right for you?

A financial professional can help

A great first step is determining how life insurance fits into your overall financial plan, but you don’t have to do this on your own.

Building a relationship with a financial professional will help you map out your goals and needs for life insurance.

Lock in your legacy

The death benefit from term life insurance can help cover your family in the event of a premature death.

Keep your options open

If you select a convertible term product, it can be turned into permanent life insurance and help you protect against life’s unknowns for the rest of your life, no matter how long that may be.

Converting from “term to perm” has its perks

Permanent insurance opens the door to not only death benefit protection, but also future cash value accumulation that can help supplement income or provide access to cash value for emergencies.

Choices are great but sometimes they can feel overwhelming. Fortunately, you can lean on your financial professional to help dial in the options that are right for you!

Health change? You’re covered.

Should your health change during the term period, this term policy has you covered.

Keep your risk class

When you convert your term policy, the original risk class—based on your overall health status and risk factors at the time your policy was issued—is carried over to the new permanent policy, meaning you won’t lose the ability to protect your loved ones or make progress towards your financial goals, even if your health has changed.

Permanent Protection Plus

If you know that you want to convert to permanent protection, AuguStar^SM has you covered. Our Plus product lets you pick any of our permanent products when you convert. And if you know you’re going to convert to a permanent product in the next five years, our RecapTerm product not only lets you pick any product, it also applies the premium payments you’ve already made to your new product.

FlexTerm: A better alternative

• Death benefit protection now
• Optional riders offer additional flexibility for life’s changes
• Conversion to permanent protection
• Conversion options vary by product to suit your unique needs

Get started today

Permanent products provide death benefit and cash value growth potential. Contact your financial professional and let them help you learn more about these optional benefits, the different products you can choose from and which ones may be right for you.

Many companies offer group life insurance to their employees as part of their benefits package. While group life insurance is a valuable part of a protection strategy, it may not be fully covering you like you thought, and, often at a higher cost.

Group life insurance vs. individual life insurance

Comparison of group life insurance and individual life insurance:

Benefits

Group life insurance can be beneficial because it features:

• Income tax-free death benefit.
• Minimal or no medical underwriting.
• The potential to add additional coverage for dependents.

However, it can be a one-size-fits-all type of policy. Depending on the plan, the amount of coverage may be fixed, you probably can’t choose the insurer and the type of policy is limited. You typically get the same policy as any co-worker in your company. The differences with an individual life insurance policy are that you purchase a policy designed for your needs and budget from a company of your choice.

Working with your financial professional, you can apply for individual life insurance protection that gives you the amount of coverage necessary to help protect your family.

While both types of insurance have their benefits, it is also important to understand the differences.

Portability

With group life insurance, you don’t “own” your policy. If you were to resign or become terminated from the company, the group life insurance policy may not go with you. Once employment is terminated, typically so is the insurance.

With an individual life insurance policy, you are the owner. If you transfer jobs or retire, the life insurance can continue as long as the premium is paid.

Health-based pricing

One of the best benefits of group life insurance is minimal or no medical underwriting. However, this can be a double-edged sword. If not paid by your employer, you can pay the same premium whether you are in great health, not-so-great health or a smoker.

Most individual life insurance policies are medically underwritten. If you are in good health and a non-smoker, you will likely have a lower premium than a person who is not in good health and/or who smokes.

Maximum limit

Group life insurance often has a low set coverage amount, which may not adequately cover your life insurance needs. Depending on the plan, additional coverage may be available up to set plan limits.

Most individual life insurance carriers base their maximum coverage limits on a multiple of one’s income. The amount will often exceed what is obtainable through a group plan.

Guaranteed premiums

Group life insurance premiums are typically based on company experience, and subject to potential increases (which can be passed on to the group participants). If the insurer raises the group premiums and passes the increase to the employees, the participants in the plan can be impacted.

Individual life insurance premiums may be guaranteed or flexible, depending on the plan chosen.

• Term insurance offers a guaranteed premium for a defined time period. Once the period is up, the premium increases.
• Universal life insurance has flexible premiums. You may need to increase premiums, or you may be able to decrease premiums as the underlying assumptions change over time.
• Whole life insurance has a guaranteed level premium that never increases.

Review your coverage

Group life insurance can be beneficial and provides death benefit protection at attractive rates for those who may have health problems. But, understand the limitations of your group insurance plan.

Start the conversation with your financial professional to see how an individual life insurance can supplement your group life insurance coverage and provide the amount of coverage you need to help support your family.

Losing a loved one is never easy. While it can be emotionally draining, here are some tips to help you through the claim process.

Before you file a claim

When filing a claim, it’s important to have the following information:

• Policy number(s)
• Full name of the deceased
• Date and manner of death
• Name and contact information, including mailing address, email for the individual filing or assisting with filing the claim
• If policy number(s) cannot be located, be sure to have the insured’s full date of birth and last four digits of their Social Security number

Start the process

To start the process, you can fill out the request form online. After the information has been received, the claims department will send you a complete set of claims forms to be completed.

Completing the claim

When the death certificate or other acceptable proof of death as defined in the contract has been received, AuguStar Financial will calculate the total death benefit.

In addition, the following paperwork is needed for all claims:

• A claim form completed and signed by each beneficiary
• A certified copy of the death certificate for the insured

Additional documentation or forms may be required if:

• The named primary beneficiary has pre-deceased the insured
• An estate, trust, corporation or other legal entity is the named beneficiary

Questions?

We’re here to help with your claims related questions.

• For assistance with life insurance claims, contact 877.446.3010 or [email protected].
• For assistance with annuity death claims, contact 888.925.6446 or [email protected]

D-465474 9-19

As you work through the planning process of closing out your loved one’s estate, you may struggle with where to begin.

Here are some important documents that you should locate to help you prepare for filing claims or meeting with the estate attorney.

• Certified death certificate
• Last Will and Testament and trust documents
• Social Security card
• Individual and group life insurance policies
• Disability income, annuity, and property insurance policies
• Safety deposit box number, location, and key
• Birth certificates of all surviving children
• Marriage and/or divorce papers
• Name and phone numbers of current employer
• Employer benefit plans, pension plan and 401(k)
• Real estate papers, such as deeds and mortgage documents
• Important tax documents
• Statements for all bank accounts
• Automobile titles/registrations
• Instructions for funeral proceedings
• Deed to cemetery plot
• Military service serial number and dates of entry and discharge
• Veteran’s benefits

Caring for a family member with special needs can be a commitment for a lifetime and beyond. A major concern for most families is what the future looks like for the loved one with special needs. Having a plan in place for your loved one can help bring peace of mind.

While every family’s needs will be unique, here are some basic considerations for any plan.

Last will and testament

A will is the foundation of any estate plan. Without one, your assets will be distributed according to your state’s intestacy laws. Usually this means that, upon your death, some or all your assets may be distributed directly to your children.

This may cause your loved one with special needs to be ineligible for government benefits if he or she is your child. Also, the state will determine guardianship of your minor children and of any adults with special needs who are incapable of making medical or financial decisions for themselves.

With the help of an attorney, a properly written will (in conjunction with other estate planning documents), can help ensure that your loved one with special needs is taken care of properly, and by the guardian of your choice, without jeopardizing any government benefits or assistance they qualify for. This may include discussion of establishing a special needs trust.

General durable power of attorney for financial affairs

Your loved one may not be able to make key legal decisions for their own future. This may require you to establish a durable power of attorney (DPOA).

A DPOA is a written document that gives another person you entrust the power to manage your loved one’s financial affairs and property should you become incapacitated. A general DPOA typically allows the person you designate as your agent or “attorney-in-fact” to do every legal act that you could do.

Durable power of attorney for health care

The durable power of attorney for health care is a limited DPOA created solely for the purpose of making health care decisions. It gives your designated person the power to make medical decisions for you when you have lost the ability to do so. This may be necessary when your loved one with special needs requires help with decisions about their health and medical care.

Now that you have the basics of a plan, planning an estate for a family that includes an individual with special needs requires extra steps like these to provide for the individual’s future:

Drafting a letter of intent

The durable power of attorney for health care is a limited DPOA created solely for the purpose of making health care decisions. It gives your designated person the power to make medical decisions for you when you have lost the ability to do so. This may be necessary when your loved one with special needs requires help with decisions about their health and medical care.

Now that you have the basics of a plan, planning an estate for a family that includes an individual with special needs requires extra steps like these to provide for the individual’s future:

Creating a guardianship

A guardian is a person lawfully given the power and duty of taking care of a person who is considered incapable of administering his or her own affairs. Designating a guardian and successor guardian(s) is a critical aspect of drafting a will.

An individual with special needs may still need a guardian upon reaching the age of majority. Typically, once children reach the age of majority, they become their own legal guardians, regardless of their ability to manage their lives or financial affairs. If yours is incapable of making medical or financial decisions, you will need to file with the court for legal guardianship.

You will want to give special consideration to who you name as guardian, and power of attorney for financial decisions, as they require different skills.

Providing financial security

Individuals with special needs may require higher out-of-pocket medical and/or educational expenses than those without. Many of the available government benefits are need-based.

If there are countable assets and/or income in excess of certain dollar amounts owned by an individual with special needs, their benefits may be jeopardized or payback for benefits received may be required.

Planning for the financial security of an individual with special needs should involve consideration of any impact to qualification for government benefits. A special needs trust funded with life insurance may be the right solution.

Next steps

Planning for the future of your loved one with special needs is a big task, but assistance from a financial professional can make all the difference.

When you lose a loved one, it can be overwhelming on where to start with notifying people and handling the final details.

Groups to notify

In addition to contacting close family and friends, here are some other suggested groups to notify of the loss of your loved one.

Attorney

• Notify the family attorney, the executor and any trustees (if it’s someone other than the widow/widower)
• Locate important documents, including the will
• Review the will and file it with the probate court
• Work with the attorney to change the deed on the house and update any other property ownership information, if applicable

Financial professional: Contact the financial professional to get assistance with filing the death claim with the insurance company and help you navigate important financial decisions.

Bank: Contact the bank about accessing individual accounts or removing the
deceased spouse’s name from any joint accounts.

Creditors: Notify creditors, close credit card accounts and cancel ongoing payments and subscriptions.

Employer: If the deceased spouse was still working, contact the employer.

Social Security office: If the deceased spouse was receiving Social Security benefits, you may not want to spend any payments that arrive after the spouse’s death. It is very likely the government will request that those payments be returned.

Crucial tasks to think about in the near future:

• Obtain 10-20 copies of the death certificate from the funeral director
• Change the title on vehicles
• File tax returns (states have their own deadlines, but federal estate tax returns typically must be filed within nine months of death)
• Take any required minimum distributions from the deceased spouse’s retirement accounts (the penalty for not doing so is 50 percent of the amount that should have been taken but was not)
• Change the number of tax exemptions with your employer
• Stay on top of regular monthly bills (setting up auto-pay online can be helpful, if it isn’t presently in place)
• Remove the deceased’s name from home utility bills
• Review insurance including auto, homeowners, health, disability income (DI) or life insurance policies to see if name changes are needed and pay any insurance premiums
• Re-evaluate day-to-day finances (for example, if your spouse was still working, the loss of income might require altering spending habits)
• Update any beneficiary designations on documents such as wills, insurance policies, mutual funds, stock, and bonds

When you’re the parent or caretaker of an individual with special needs, thinking about how your loved one will be cared for in the future is a concern. This is especially important if you want a level of care that goes above and beyond what may be provided by government benefits. A special needs trust funded with a life insurance policy may be a great option.

About special needs trusts

A special needs trust is designed to help you leave behind assets with the assurance they will be used to support an individual with special needs.

You and other family members can contribute to the trust and it can help take care of any supplementary needs the individual may have that are not covered by government benefits, without jeopardizing his or her eligibility for need-based benefits from Medicaid or Security Supplemental Income (SSI).

This is a big consideration because those benefits programs typically require recipients to have no more than $2,000 in countable assets and place limits on their income (varies by state).

Benefits

• The special needs trust is designed to coordinate with other programs, thereby helping to ensure the individual remains eligible for state and federal government benefits.
• A special needs trust can help assure the caregiver that the financial needs of his or her loved one are met.
• The cash value from the life insurance grows tax deferred and is accessible during the life of the caregiver via loans.¹
• Proper planning provides for the individual’s continued support, quality of life, and dignity.

How it works

• A special needs trust is typically funded with a permanent life insurance policy on the life of the caretaker(s) of the person with special needs.
• The cash value in the life insurance policy accumulates on a tax-deferred basis and can be accessed by the trustee on a tax-favored basis (if the policy remains in force), via policy loans.¹
• At the insured’s death, the death benefit is paid to the trust and the trust coordinates the funds with government benefits to provide financial resources for the care and support of the person with special needs. The death benefit of the life insurance policy passes to the trust on an income-tax free basis.
• The trust can provide additional funds to enhance the quality of life of the person with special needs over the basics of food, shelter, medical care, and education that may be provided by government benefit programs.

Considerations

• The strategy will require the assistance of an attorney who specializes in special needs planning, along with your financial professional.
• The individual with special needs generally should not be a designated beneficiary of any retirement accounts, life insurance, annuity contracts or brokerage accounts. These financial assets could jeopardize eligibility for government benefits.
• When a special needs trust is used, the trust beneficiary cannot have direct access to assets — trust distributions should be at the trustee’s sole discretion.
• Life insurance may be needed on the lives of the primary caregiver AND the primary breadwinner, if not the same person.

Next steps

AuguStar Financial offers support for you in planning for individuals with special needs, including a needs calculator and an informative Special Needs Planning brochure.

Contact your AuguStar financial professional today to start planning for your loved ones with special needs.

Going through a divorce can be one of the most stressful and emotional events a person can experience in their lifetime.

While this change in life can be emotionally draining, it does not necessarily have to be financially draining.

Here are five tips to help make the divorce process less stressful.

1. Start gathering important information

If you are getting a divorce, many — if not all — of your assets may be part of the negotiation.

To help prepare your attorney, gather:

• Personal information including birthdays and social security numbers
• Marriage and separation agreements with your spouse
• Employment information and income for each spouse
• Assets and liabilities for each spouse, including retirement assets
• Insurance policies (life, health, disability, etc.)

2. Review your beneficiary designations

One important task for those going through divorce is to review your beneficiary designations before, during, and after the divorce.

For example, your attorney may advise you to change your beneficiary designations before initiating proceedings to protect your assets should you pass away before the divorce is final. Once the divorce is finalized, the divorce decree may require updates to existing beneficiary ownership designations.

3. Set a new budget

During a divorce, you may find yourself financially overwhelmed, facing new expenses and less income. Work with your financial professional to set a new budget geared toward accomplishing your current financial goals or setting new goals.

4. Talk to a tax professional

Many people underestimate how important tax planning can be during a divorce. Something as simple as the date of a divorce decree can have a huge impact on your tax filing status for the entire tax year. Understanding the different tax treatment for items such as alimony versus child support can put you in a better bargaining position during negotiations.

Your financial professional may be able to connect you with a tax professional who understands the tax rules applicable to divorce planning, which could save you money and give you peace of mind.

5. Review insurance needs

Throughout a divorce, the need for life insurance protection may change, particularly when one spouse will provide income and the other may have primary custody of minor children. Insurance ownership and premium payments may be negotiated as part of the divorce settlement.

Before the divorce is finalized, work with your financial professional to determine the amount of life insurance you will need that best covers your post-divorce financial situation.

Next steps …

Your financial professional can be an essential resource during a divorce and may be able to connect you with a network of professionals including experienced divorce attorneys, counselors and tax advisors who can provide professional assistance throughout the divorce process.

You’ve probably heard of a 529 plan when it comes to saving for your child’s college education. It’s the most recognizable vehicle for college savings because of its favorable tax treatment for qualified education expenses, as well as a state tax deduction in some states. But it’s not the only option available to you.

A permanent life insurance policy can help you accomplish your college savings goals the same way a 529 plan can. But there are differences between the two that might make whole life insurance a more suitable option for you.

Income tax-free loans

The built-up cash value in your policy can be used to take out tax-free loans¹ to help pay for college expenses (or other uses) without having to worry whether they’re qualified education expenses or not.

Guarantees without market volatility

A 529 plan likely has funds tied to market returns. While that can allow your college fund to grow over time, a down market could significantly affect what you can afford when you have a need for the funds.

Timing is everything. Imagine a market downturn occurring right before your student’s freshman year.

Certain permanent life insurance policies offer you protection from market downturns. Whole life insurance provides you with guaranteed premiums, death benefit and cash value that won’t decrease based on financial market performance. Any dividends paid can be used to enhance your policy’s cash values and death benefit if used to additional paid-up insurance (known as paid-up additions).

Certain universal life insurance policies also provide protection against market downturns with a declared interest rate that builds cash value in the policy. Unlike whole life insurance, universal life insurance gives you the opportunity to stay flexible with adjustable premiums.

Options in case of disability

What if you became disabled while trying to build up savings for that college education? In the event of total disability of the insured, the optional Waiver of Premium for Total Disability rider credits a premium to the policy so that your plan for college funding stays on track. 

Financial aid considerations

FAFSA® financial aid guidelines don’t currently count the cash value of life insurance policies as an asset, which means you could qualify for a higher level of aid. A 529 plan is considered an asset by FAFSA®. However, it is important to note that some colleges do view life insurance as an asset in determining financial aid.

Should the unthinkable happen

Unlike a 529 plan, life insurance provides an income tax-free death benefit to your named beneficiary which can be used to fund an education.

Sometimes there are better solutions

There may be situations where permanent life insurance won’t work for you – such as if that first tuition bill is coming up soon. It is best to purchase cash value life insurance as a college savings option when your child is young. This gives your policy time to build enough cash value to help fund college expenses. Adding an optional paid-up additions rider can significantly add to the early build-up of cash values in your policy.  

Talk to your financial professional to see if using permanent life insurance is a college savings is a solution for you.