Life Insurance

1. Questioner: Linda

   Question: While on vacation, someone told us about a company that would buy a life insurance policy on you and give you a percentage up front, then they would collect the full amount of the policy at your death, no strings attached and it would not affect your estate. This person said he and his dad had the policy, but could not remember the name of the company. Is there such a company and how does this work? It seems like some type of scam. If it's not a scam, it seems like a good way to get fast money. View Answer

2. Questioner: Lisa

   Question: Hello, I am permanently disabled and have a question regarding my IRA and my Life Insurance Policy. I have approximately $19,000 in an IRA account and I have a life insurance policy that I no longer have to pay the premiums on because of my disability --- the premiums are paid due to an accident / disability clause in the policy and I received dividends on that policy every year as well. I am in need of cash and know that I can cash in the IRA and not be subject to the 10% early withdrawal fees but an not sure if I should cash that in or cash out the life insurance policy. The life insurance policy will automatically begin making distributions to me when I turn 65 which will last for a minimum of 10 years. Would I be better off to cash in the IRA or the Life Insurance Policy --- both from a standpoint of future income disbursements and in regards to the taxes that would have to be paid? Also, exactly what is required to prove the disability for the IRA. I am currently 48 and on SS Disability and do have the final award letter stating the permanent disability. Any information would be greatly appreciated. Thank You, View Answer

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