6 Surprising Facts About Life Insurance

couple meeting with financial advisor

I love my mother-in-law. I really do. But I’ve learned to take her advice with a grain of salt. Recently she grilled me about our (admittedly somewhat limited) life insurance coverage and I hate to admit it, but she was right – we didn’t have enough.

Of course, we’re not planning on dying any time soon here! But that’s the thing – no one is. My mother-in-law told me how crucial it is that parents plan ahead and make sure they’re both sufficiently covered. But, it wasn’t until she started explaining the John Hancock Vitality solution that I really started paying attention. When I learned that you can actually get rewards and savings for healthy living choices, I have to admit, it piqued my interest.

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So much so that I didn’t even cringe when she smiled with a wordless “I told you so!” after I asked her for her financial representative’s number.

When we sat down with our financial professional to discuss our options, I learned a lot that surprised me.

  1. Some policies offer protection, and reward you for living healthy. While I wish I could say that my quest to eat right and exercise comes solely from my own desire to live healthier…sometimes, I’m just not that motivated. That’s why the rewards and savings offered on a life insurance policy with the John Hancock Vitality Program – for doing everyday healthy activities -- are so wonderful. They would really help me stay on track.
     
  2. Even well-off couples need life insurance. And stay-at-home parents should have coverage, too. It goes without saying that we’d take a huge financial hit if something happened to my husband.  And we’re not alone. According to an industry study, over 40 percent of households in America would feel this impact within 6 months.1   And that’s not just people who don’t make a lot of money. Those statistics include nearly 40 percent of households with an annual income of $100,000 or more! 1

    And what if something happens to the (gulp) stay-at-home spouse? He or she should be covered as well, even though there’s no actual “income” to replace. Their job, as we all know, has no price tag, but life insurance can help ease the financial burden of outsourcing childcare and other expenses.
     
  3. Having life insurance has tax advantages. I never realized there were tax advantages to purchasing life insurance! There’s tax-deferred growth, tax-favored loans and withdrawals, and income tax-free death benefits.
     
  4. Many permanent life insurance policies have cash value potential. It may seem like the distant future, but college costs come along a lot faster than we expect. The cash value potential in these policies can help with college savings, or supplement retirement income.
     
  5. The cost isn’t as high as you might think. Many people without life insurance haven’t gotten it because they assume the cost is going to be prohibitive. On average, people estimate the cost to be twice what it actually is!*
     
  6. Life insurance helps protect other investments – like your home. Managing a mortgage is tough with two living spouses – it’s hard to imagine doing it alone!

I’m grateful my mother-in-law gave me the advice she did, even if I didn’t want to admit it at the time. And now I’m happy to say that our family is protected, and I’m living a healthier life with the John Hancock Vitality solution. The peace of mind is truly priceless.

How did you decide what life insurance coverage to get for you and your partner?


Image ©iStock.com/skynesher


*Facts From LIMRA: Life Insurance Awareness Month, 2015

Vitality is the provider of the John Hancock Vitality Program in connection with policies issued by John Hancock.

Insurance policies and/or associated riders and features may not be available in all states.

The John Hancock Vitality Program is available with select John Hancock policies. Please consult your financial representative as to product availability and how premium savings may affect the policy you purchase.

John Hancock Vitality Program rewards and discounts are only available to the person insured under the eligible life insurance policy. Rewards may vary based on the type of insurance policy purchased for the insured (Vitality Program Member), the ownership and inforce status of the insurance policy, and the state where the insurance policy was issued.

Life insurance death benefit proceeds are generally excludable from the beneficiary’s gross income for income tax purposes.  There are few exceptions such as when a life insurance policy has been transferred for valuable consideration. Comments on taxation are based on John Hancock’s understanding of current tax law, which is subject to change. No legal, tax or accounting advice can be given by John Hancock, its agents, employees or registered representatives.  Prospective purchasers should consult their professional tax advisor for details.

Loans and withdrawals will reduce the death benefit and the cash surrender value, and may cause the policy to lapse. Lapse or surrender of a policy with a loan may cause the recognition of taxable income. Withdrawals in excess of the cost basis (premiums paid) will be subject to tax and certain withdrawals within the first 15 years may be subject to recapture tax.  Additionally, policies classified as modified endowment contracts may be subject to tax when a loan or withdrawal is made.  A federal tax penalty of 10% may also apply if the loan or withdrawal is taken prior to age 59 1/2.

Insurance products are issued by John Hancock Life Insurance Company (U.S.A.), Boston, MA 02117 (not licensed in New York) and John Hancock Life Insurance Company of New York, Valhalla, NY 10595.

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