Almost everyone has a life-insurance policy. But not everyone knows the basic life insurance terms like insured and beneficiary.

One who insures his/her life is called the insured, and the beneficiary is the person whom the insured designates to receive the death benefit when the insured dies. The insured should change the beneficiary as personal circumstances warrant.

As an example: You name your spouse as your beneficiary. You divorce and ultimately remarry. You fail to change your beneficiary, so when you die your second spouse will have no claim to the death benefit, which goes to your first spouse.

It’s common sense that if you’re dead the life insurance company (insurer) has no way to determine your intent. The insurer, therefore, must adhere to your intent as stated on the Designation of Beneficiary form you signed when you first took out the policy.

What are the types of life insurance? Primarily there are two kinds: One has a guaranteed death benefit and a savings account (Whole Life), while the other one (Term Life) has just a guaranteed death benefit. Due to its savings feature, Whole Life is about 2.5 times more expensive than Term Life, which guarantees only the death benefit.

A young couple has three kids ages one, three and five. Should this couple buy Whole Life or Term Life? What do you think?

How does disability-income insurance fit into one’s overall retirement-financial plan?

Disability income is an important component to one’s long-term retirement-financial plan. Disability income provided by your retirement system and/or your union should be bolstered with a private disability-income policy. The premium can be reduced by telling the insurance company that you want benefit checks to commence after you have exhausted your Cumulative Absence Reserve (CAR).

Let’s assume you maintain a 30-day CAR balance. Your disability checks will start on the 31st day of disability. During the first 30 days of disability, you will receive your regular pay. Here is yet another reason to use your CAR only when you are sick/disabled—really sick/disabled. Do not abuse your CAR-someday you may really need it.

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by phone at (732) 536-9472, or via email at

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