Frequently Asked Questions
Q: Do I need term or whole life insurance?
A term policy is generally best for short-term insurance needs, as it is less expensive than whole life (for example to pay off your home if you have a mortgage). Whole life insurance serves a more long-term purpose. It is generally used to replace income for a surviving spouse, leave a legacy for future generations, aid in estate planning, and help supplement chronic and terminal illness expenses. Whole life insurance can also be used as an alternative to traditional savings since it accrues cash value that is liquid, grows competitively, and can be used if needed.
Q: How can I access the cash inside my policy?
You can access your cash in two ways: through policy loans* to yourself, or withdrawals.
As the policy owner, you could access 85 to 90% of the cash value to use for self-financing immediately after the policy issue. After the first year, up to 93% of the cash value is available to borrow against. The insurance company will use your policy as collateral while loaning you the money from their cash reserves. In doing this, the cash inside your policy continues to compound uninterrupted, allowing you to recoup the opportunity cost of using savings to pay for big-ticket items. When you do borrow against the value of your policy, you never face credit applications, credit checks, or potential rejection. This means that if you do have to skip or reduce some of the loan repayments, you won’t get a black mark on your credit report or any harassment from collectors.
*Interest is charged on policy loans, and the rate is variable. Ask a 100 Year REI Team Member for more information.
Q: I don’t want more complex solutions—does the 100 Year REI Solution add simplicity to my savings?
By putting your savings into a 100 Year REI policy, you gain more than a safe, liquid place to store cash that earns a competitive rate of return. You also gain life insurance benefits including cash to use for chronic, critical, or terminal illness; and tax efficiency. Your savings immediately begin to work harder for you, giving you an opportunity to add simplicity and leverage to your finances on multiple levels.
Q: What are the additional benefits of whole life insurance? Why doesn’t everyone choose one?
Not everyone understands how whole life policies work, or that they can be structured to offer all these benefits. And because they take money away from the brokers and bankers, they aren’t marketed in the same way other financial products are.
Q: How do I buy whole life insurance?
Work with your 100 Year REI Team Member to apply for the policy with the company that best fits your objectives. From there, you will complete underwriting (typically a medical exam) and will be made an offer for the policy you are interested in.
Q: What are the different uses of whole life insurance?
Whole life insurance is used for two overarching purposes:
- As a death benefit paid to the beneficiary in the event of your death.
- And for cash value accumulated over the term of the policy (that can be used as savings or to be borrowed against for any purpose).
Q: How are whole life insurance policies tax-advantaged?
The cash value of your whole life insurance policy will not be taxed while it’s growing. This means it is tax-deferred, or in other words that your money grows faster because it’s not being reduced by taxes each year like your savings accounts. All gains on your policy grow tax-deferred until you withdraw or borrow against them.
Q: Is the death benefit taxable?
The death benefit of your 100 Year REI structured policy is passed to the beneficiary (or beneficiaries) income tax-free, and without going through probate.
Q: What are the underwriting requirements?
Applicants will have to qualify for the policy by completing a medical exam and having the insurance company review their application. Other requirements may be needed depending on the amount of insurance being applied for. In general, the cost of insurance is lower on this savings product, and the underwriting requirements are less stringent, making this policy easier to qualify for and also more affordable.
If you are not able to qualify for the insurance, that does not prevent you from owning a policy on a healthy individual that you might have an insurable interest in—such as your spouse or children.
Q: What happens to a whole life policy when the market tumbles?
Once credited to your account, your guaranteed annual increase along with any dividends you receive are all locked in—they do not vanish when stocks or real estate markets fall.
Q: Are there required withdrawals on whole life insurance after a certain age?
You are in total control of the equity of your plan. You do not have to take withdrawals if you don’t need to access the funds.
Q: What about surrender charges?
There are no surrender charges on 100 Year REI policies—you can cash in part or all of your cash value in your policy whenever you choose, and for any reason.
Q: What are the key factors in choosing a whole life insurance company?
Two of the key factors to look at when choosing an insurance company are that they have both a strong financial history and a strong credit rating. This way, you can be confident in knowing that they will deliver on their promises.