Financial & Insurance Terms, In Plain English

An IRS form used to report non-employee income — contractors, freelancers, interest, dividends, etc.

1099-NEC for contractor work over $600. 1099-INT for interest. 1099-DIV for dividends. Multiple types depending on income source. Recipients pay self-employment tax (15.3%) on contractor income.

A common retirement withdrawal rule of thumb: withdraw 4% of your starting nest egg in year one, adjust for inflation each year after.

Originally from the Trinity Study. Generally provides a 30-year retirement with high probability of success. Doesn't account for taxes, sequence-of-returns risk, or healthcare cost shocks. Use as a planning baseline, not a fixed rule.

An employer-sponsored retirement plan where employees can contribute pre-tax or Roth dollars.

2025 employee contribution limit: $23,500 ($31,000 if 50+). Many employers offer matching contributions — get the full match before doing anything else with retirement savings.

Also: ADB

A rider that lets you access part of the death benefit early if diagnosed with a terminal illness.

Usually free on term policies. Provides cash when you need it most — for medical bills, family time, or end-of-life expenses. Reduces the death benefit paid to beneficiaries.

Also: ADLs

The 6 basic self-care activities: eating, bathing, dressing, toileting, continence, and transferring.

LTC policies pay out when you're unable to perform 2+ ADLs OR have severe cognitive impairment (like dementia). Different policies define triggers slightly differently — read carefully.

Also: Annual Election Period

Annual Election Period — October 15 to December 7 every year.

The window when you can switch Medicare Advantage plans, switch Part D drug plans, or move between Original Medicare and Advantage. Changes take effect January 1.

Also: AGI, MAGI

Adjusted Gross Income (AGI) and Modified Adjusted Gross Income (MAGI) — the income figures used for tax calculations.

AGI = gross income minus 'above-the-line' deductions. MAGI = AGI + certain add-backs (depends on the specific tax provision). Most tax thresholds (IRMAA, Roth limits, etc.) use MAGI.

An insurance contract that pays out income — either immediately or starting at some future date.

Types: Fixed (guaranteed rate), FIA (linked to market index with caps/floors), SPIA (Single Premium Immediate Annuity), Variable (invested in sub-accounts). Used for guaranteed retirement income. Often mis-sold — get a fee-only second opinion before buying.

How your investments are divided across asset classes — stocks, bonds, cash, real estate, alternatives.

Drives most of long-term returns. Should shift as you approach retirement (less equity exposure) but not too conservatively (inflation risk). Annual rebalancing keeps allocation on target.

An IRS rule allowing homeowners to rent their personal home for up to 14 days per year tax-free.

Business owners can rent their home to their own business for legitimate business meetings. Income is tax-free to the homeowner; deductible to the business. Worth $10K-$50K/year for typical setups.

Also: AUM

The total value of investments managed by a financial advisor or firm.

Common pricing model for advisors: 1% AUM means you pay 1% of your portfolio value annually for management. Compare to flat-fee planning, hourly, and commission models.

A debt-payoff strategy: list debts by interest rate, pay minimums on all, attack the highest-rate debt with extra.

Mathematically optimal — saves the most interest. Requires patience through the early grind. Best for people who are math-driven and stick with plans.

A strategy for high earners (above Roth IRA income limits) to fund a Roth IRA via Traditional IRA conversion.

Contribute non-deductible to Traditional IRA, then immediately convert to Roth. Pro-rata rule applies if you have other pre-tax IRA balances — calculate carefully.

The person (or entity) you designate to receive policy proceeds when you die.

Beneficiary designations override what your will says. Primary beneficiary gets the proceeds first; contingent beneficiary gets them if the primary is also deceased. Review annually — especially after marriage, divorce, or birth.

How long an LTC policy will pay benefits — typically 3 years, 5 years, or lifetime.

Average LTC need is 3 years, but 14% need 5+ years. Lifetime benefit period is most expensive but covers worst-case dementia scenarios. Decision affects premium significantly.

A defined benefit pension plan that lets high-income business owners shelter $150,000-$280,000+ per year in tax-deferred contributions.

Best for owners 45+ with consistent profits looking to catch up retirement savings. Usually paired with a 401(k). Requires actuary, plan documents, and annual funding commitments. Best for $500K+ profit businesses.

A savings component inside a permanent life insurance policy that grows tax-deferred.

Builds up over years as you pay premiums. You can borrow against it tax-free (loan reduces death benefit if unpaid). Whole life cash value is guaranteed; IUL grows based on market index performance with caps and floors.

Federal law that lets you continue your employer-sponsored health coverage for up to 18 months after leaving a job.

You pay the full premium (no employer subsidy) plus a 2% admin fee. Often more expensive than Marketplace plans with subsidies — compare before electing COBRA.

Your share of costs (usually a percentage) after your deductible is met.

If your plan has 80/20 coinsurance, insurance pays 80% of the bill and you pay 20% until you hit your out-of-pocket max. Most health plans use coinsurance for major services.

Interest earned on both the original principal AND the accumulated interest from previous periods.

Often called the 'eighth wonder of the world.' Drives wealth-building over decades. Also drives debt growth — compound interest works for you on investments and against you on debt.

A term life policy feature that lets you convert to permanent coverage without new underwriting.

Critical if your health changes during the term. Different carriers offer different conversion windows and product options. A convertibility deadline often runs to age 65-70.

A fixed dollar amount you pay for a covered service at the time of care.

Typical for doctor visits ($20-40), specialist visits ($40-60), and prescriptions ($10-50). Copays usually don't count toward your deductible but do count toward your out-of-pocket max.

Also: CSR

A subsidy that reduces deductibles, copays, and out-of-pocket maximums for Silver Marketplace plans.

Only applies to SILVER plans — Bronze/Gold/Platinum don't qualify. Available to enrollees with income 100-250% of FPL. Can dramatically reduce out-of-pocket costs.

Also: Donut Hole

A historical Part D coverage stage where beneficiaries paid more out of pocket for drugs.

The Inflation Reduction Act eliminated the traditional donut hole starting in 2025. Now there's a $2,000 annual out-of-pocket cap on Part D drug spending. Major change for beneficiaries on expensive medications.

Also: Dual Special Needs Plan

Dual Special Needs Plan — Medicare Advantage plans designed for beneficiaries who qualify for both Medicare AND Medicaid.

Often have $0 premiums and additional benefits like dental, vision, transportation, and meal allowances. Specific eligibility requirements based on state Medicaid programs.

The amount paid to beneficiaries when the insured dies.

Generally received income-tax-free by beneficiaries. May be reduced by outstanding policy loans or accelerated benefits taken before death.

The amount you pay out of pocket before insurance starts covering claims.

Lower deductible = higher premium, and vice versa. Health insurance deductibles reset every January 1. Different policies have different deductible structures (per-incident vs. annual).

A formula for sizing life insurance need: Debt + Income replacement + Mortgage + Education.

Add the four numbers, subtract existing coverage and savings — the result is your true coverage need. More accurate than rules of thumb like '10× income'.

Spreading investments across different asset classes, sectors, and geographies to reduce risk.

Reduces the impact of any single investment performing poorly. Total-market index funds provide instant diversification. The cliche 'don't put all your eggs in one basket' holds.

Also: DCA

Investing a fixed amount on a regular schedule regardless of market price.

Reduces the risk of investing everything at a market peak. Reduces emotional decision-making. Most 401(k) contributions are automatic dollar-cost averaging.

Also: DTI

Your total monthly debt payments divided by your gross monthly income.

Used by lenders to determine creditworthiness. Most conventional mortgages cap DTI at 43-50%. Lower is better — under 36% is generally healthy.

The waiting period (typically 30, 60, or 90 days) before LTC policy benefits begin paying.

Acts like a deductible — you self-pay during this window. Longer elimination periods reduce premiums but require more self-funded reserves.

Federal (and some state) tax on the transfer of assets at death above certain exemption thresholds.

2025 federal exemption: $13.99M per person. Scheduled to drop by half on Jan 1, 2026 unless Congress acts. Michigan has no separate state estate tax. Estates over the exemption pay 40% federal tax on the excess.

The person named in your will to administer your estate after death.

Responsibilities: file paperwork, gather assets, pay debts, file final tax returns, distribute assets to beneficiaries. Pick someone organized and trustworthy. Backup executor is essential.

The original death benefit listed on a life insurance policy.

Different from the actual payout if loans, dividends, or accelerated benefits have changed the policy value. Often called the 'face value' of the policy.

A professional legally required to act in your best interest, not their own.

Different standards apply to different financial professionals. Registered Investment Advisors (RIAs) are fiduciaries; broker-dealers historically operated under a 'suitability' standard. Always ask: 'Are you a fiduciary on this specific recommendation?'

Small permanent life insurance policies ($5K-$25K) designed to cover funeral and burial costs.

Typically simplified-issue or guaranteed-issue (no medical exam). Premiums are higher per dollar of coverage than traditional life. Best for seniors who can't qualify for traditional life insurance.

Also: FIA

An annuity with returns linked to a market index, with caps on the upside and a 0% floor on the downside.

Principal protected but growth limited. Used for retirement income with some upside participation. Surrender periods often 5-10 years — illiquid for that window.

Also: FSA

An employer-sponsored account for pre-tax medical or dependent care spending.

Use-it-or-lose-it (with limited carryover or grace period). 2025 health FSA limit: $3,300. Less flexible than HSA but available without HDHP coverage.

Also: FRA

The age at which you can claim 100% of your Social Security benefit.

Born 1955: 66 and 2 months. Born 1960+: 67. Claiming before FRA reduces your benefit permanently. Delaying past FRA increases it by 8% per year up to age 70.

Federal tax on transfers of money or property to others during your lifetime.

Annual exclusion: $19,000 per recipient (2025) — gifts under this don't require a tax return. Larger gifts use up your lifetime exemption (currently $13.99M per person). Few people pay actual gift tax; most use exemptions strategically.

Also: HDHP

A health plan with a higher deductible (2025: $1,650+ single / $3,300+ family) that qualifies you to contribute to an HSA.

Lower premiums in exchange for higher cost-sharing before insurance kicks in. The HSA-eligibility makes HDHPs especially powerful for healthy households.

Also: ACA, Obamacare, Affordable Care Act

Federal or state-run online platform (Healthcare.gov in most states) where you can shop for ACA-compliant health insurance.

Open enrollment runs November 1 - January 15 in most states. Special Enrollment Periods are available for qualifying life events (marriage, birth, job loss, etc.).

A document naming someone to make medical decisions for you if you can't speak for yourself.

Different from a living will (which states your wishes directly). Both are important. Pair with HIPAA release so your agent can access medical records.

Also: HELOC

Home Equity Line of Credit — a revolving credit line secured by your home's equity.

Variable interest rates. Typically 10-year draw period followed by repayment. Some strategies use a HELOC for velocity banking, but it puts your home at risk if rates rise or the bank freezes the line. Whole life cash value provides the same mechanics without those risks.

Also: HDG

A Medicare Supplement option with a lower premium but a $2,800 (2025) annual deductible.

Once you meet the deductible, coverage matches regular Plan G. Best for healthy retirees with savings who want low monthly cost.

Also: HSA, Health Savings Account

A tax-advantaged account that lets you save for medical expenses with a triple tax benefit.

Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical are tax-free. 2025 limits: $4,300 single / $8,550 family. Requires HDHP coverage. After 65, can be withdrawn for anything (taxed as ordinary income — same as Traditional IRA).

A life insurance policy with a long-term care rider — provides both LTC benefits AND a death benefit if LTC isn't used.

Guaranteed premiums (no rate hikes like traditional LTC). Death benefit if you never need care. Lower LTC benefit per dollar of premium than traditional LTC. Growing in popularity.

Also: Initial Enrollment Period

Initial Enrollment Period — the 7-month window around your 65th birthday when you first enroll in Medicare.

Starts 3 months before your birth month, includes your birth month, and ends 3 months after. Missing this window can result in permanent late penalties.

Also: IUL

Permanent life insurance with cash value tied to a market index (often S&P 500) with caps and floors.

Cash value grows when the index goes up (subject to a cap, e.g., 10%) and never loses value (floor of 0%). Sold heavily but often mis-sold. Works for certain tax-advantaged savings goals; doesn't work if loaded with fees or designed for maximum commission.

Also: IBC

A strategy using properly-structured whole life insurance as a personal banking system.

You borrow against your own cash value tax-free, while the underlying cash value keeps earning. Requires high early cash value design and discipline to pay back loans. Not for everyone but powerful when used correctly.

An LTC policy option that increases your daily benefit annually to keep up with rising care costs.

Usually 3% or 5% compound. Without inflation protection, today's $200/day benefit could be worth less than $100 in real value in 25 years. Critical for policies bought before age 70.

A legal requirement that the policy owner has a financial stake in the insured's life.

You can insure yourself, your spouse, and family members. You can insure a business partner. Insurable interest must exist at the time of application, not at the time of death.

Income-Related Monthly Adjustment Amount — extra Medicare Part B and Part D premiums for high-income beneficiaries.

Kicks in when individual income exceeds $106K (2025) or joint income exceeds $212K. Based on tax return from 2 years prior. Can add hundreds per month to Medicare premiums for high earners.

A trust that, once created, generally cannot be changed without beneficiary consent.

Assets are removed from your estate (reducing estate taxes). Provides asset protection from creditors. Common types: ILIT, SLAT, IDGT, charitable remainder trusts.

Specific deductions you can claim instead of the standard deduction — including mortgage interest, state/local taxes, charitable gifts, and large medical expenses.

Worth itemizing only if your specific deductions exceed the standard deduction. SALT (state and local tax) is capped at $10,000 — a major change since 2017.

What happens when a policy's premiums aren't paid past the grace period.

Lapsed policies lose coverage. Permanent policies may have a non-forfeiture option (reduced paid-up or extended term). Some policies can be reinstated within a window if you catch up payments and re-qualify medically.

Permanent monthly surcharge added to Medicare premiums if you don't enroll when first eligible without qualifying coverage.

Part B penalty: 10% added per 12-month delay. Part D penalty: 1% per uncovered month. Both penalties last for LIFE — not just until you make up the gap.

Also: Advance Directive

A document specifying your wishes for end-of-life medical care if you become unable to communicate.

Covers things like ventilator use, feeding tubes, and 'do not resuscitate' orders. Different from a healthcare POA (which names someone to make decisions for you).

A flexible legal entity providing asset protection while allowing pass-through taxation.

By default, single-member LLCs are taxed as sole props; multi-member LLCs as partnerships. LLCs can also elect to be taxed as S-Corp or C-Corp. The entity choice is one of the highest-leverage tax decisions for business owners.

Also: LTC

Insurance that pays for extended care services — nursing home, assisted living, or home health — that traditional health insurance doesn't cover.

Triggered by inability to perform 2+ Activities of Daily Living (ADLs) or cognitive impairment. Premiums depend on age, health, benefit amount, inflation rider, and benefit period.

Also: Medicare Advantage Open Enrollment Period

Medicare Advantage Open Enrollment Period — January 1 to March 31 every year.

A one-time-per-year window to switch from one Advantage plan to another, or drop Advantage entirely and return to Original Medicare. Cannot be used to switch from Original Medicare to Advantage.

The federal income tax rate applied to your last dollar of income.

U.S. uses progressive brackets — different dollar amounts taxed at different rates. Your marginal rate is the bracket your TOP income falls into. Your effective rate (total tax / total income) is lower.

Hospital insurance — covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health.

Most people pay no premium for Part A because they (or a spouse) paid Medicare taxes for 40+ quarters. Has its own deductible per benefit period.

Medical insurance — covers doctor visits, outpatient care, preventive services, and durable medical equipment.

Standard 2025 premium is $185/month, higher for high-income beneficiaries via IRMAA. Has an annual deductible ($257 in 2025), then you pay 20% coinsurance for most services.

Also: Medicare Advantage, MA

Medicare Advantage — private insurance plans that replace Original Medicare and bundle Parts A, B, and usually D.

Often $0 premium, but uses networks (HMO, PPO). Includes extra benefits (dental, vision, hearing, gym membership). Networks and benefits change yearly.

Prescription drug coverage. Available standalone or built into Medicare Advantage plans.

Each plan has its own formulary (list of covered drugs), pharmacy network, and tier structure. Premiums vary widely. Failure to enroll when first eligible can result in a permanent late penalty.

Also: Medigap

Private insurance that fills the gaps in Original Medicare — deductibles, coinsurance, and copays.

Standardized by letter (Plans A, B, C, D, F, G, K, L, M, N, HDG, HDF). Plan with same letter from different carriers covers identically — compare on PRICE.

A strategy using after-tax 401(k) contributions to convert up to $46,500 (2025) extra into a Roth.

Requires a 401(k) plan that allows after-tax contributions AND in-service distributions or in-plan Roth conversions. Most plans don't allow this — but for those that do, it's one of the most powerful tax-advantaged savings tools available.

Also: MEC

A life insurance policy that's been overfunded relative to IRS limits — losing key tax advantages.

MECs lose tax-free loan benefits — loans from a MEC are taxable. Some intentional MECs (like single-premium policies) are used in specific tax strategies. Most cases, you want to avoid MEC status.

The doctors, hospitals, and providers contracted with your insurance plan.

In-network providers cost less (lower copays, deductibles, coinsurance). Out-of-network providers can cost dramatically more — sometimes uncovered entirely. HMOs require in-network; PPOs allow out-of-network at higher cost.

Medicare Parts A and B — the federal government's traditional fee-for-service program.

Works with any provider that accepts Medicare nationwide. Covers about 80% of approved costs. Most beneficiaries pair Original Medicare with a Medigap (Supplement) policy + a standalone Part D drug plan.

The most you'll pay in covered medical costs in a plan year before insurance covers 100%.

Includes deductible + copays + coinsurance. Doesn't include premiums or out-of-network costs. Resets every plan year. 2025 ACA limit: $9,200 individual / $18,400 family.

A defined benefit retirement plan where the employer guarantees a specific monthly benefit at retirement.

Largely replaced by 401(k)s in private sector. Government and union jobs still common. At retirement, often a choice between lump-sum payout and lifetime annuity — run the math both ways before deciding.

The most popular Medicare Supplement plan — covers everything except the Part B deductible.

For most retirees, the right balance of comprehensive coverage and reasonable premium. Premiums vary by carrier but coverage is identical across carriers.

A will that catches any assets not titled in your revocable trust at death and 'pours' them into the trust.

Used alongside a revocable trust — the will provides a safety net for assets you forgot to fund into the trust. Trust then distributes everything privately, avoiding probate.

Also: POA

A document authorizing someone to make decisions on your behalf.

Durable POA covers financial decisions. Healthcare POA covers medical decisions. 'Durable' means it survives your incapacity (without 'durable' language, the POA ends if you become incapacitated).

The amount you pay (monthly, quarterly, or annually) to keep an insurance policy in force.

Premiums vary based on the type of coverage, the amount of coverage, your age, health, and risk factors. Missing premium payments past the grace period can cause your policy to lapse.

Also: PTC, subsidy

A federal subsidy that reduces monthly health insurance premiums for Marketplace plans.

Available based on income — typically 100-400% of Federal Poverty Level (and beyond, due to ARPA/IRA enhancements through 2025). Many qualify for $0 monthly premiums.

The court process of validating a will, paying debts, and distributing assets after death.

Public, slow (typically 12-18 months in Michigan), and expensive (3-7% of estate). Avoidable via trusts, beneficiary designations, joint titling, and other strategies.

Also: QBI

A federal deduction of up to 20% of qualified business income for pass-through entities.

Available to sole proprietors, partnerships, S-Corps, and some LLCs. Phases out at higher incomes for certain professional services (lawyers, doctors, financial advisors). One of the largest deductions in current tax code.

Also: RMD

Mandatory annual withdrawals from Traditional IRAs and 401(k)s starting at age 73.

Calculated using IRS life expectancy tables. Missing an RMD triggers a 25% penalty on the shortfall (reduced from 50% in 2023). Roth IRAs don't have RMDs during the owner's lifetime.

Also: Living Trust

A trust you create during your lifetime that you can change or revoke at any time.

Assets in a revocable trust avoid probate. You maintain control as trustee. Doesn't reduce estate taxes. Best for most homeowners who want privacy and probate avoidance.

An add-on to a base insurance policy that provides extra benefits.

Common riders include Accelerated Death Benefit, Waiver of Premium, Long-Term Care, and Critical Illness. Most add to the premium. Some (like ADB on most term policies) are free.

Moving money from a Traditional IRA or 401(k) into a Roth — paying income tax now in exchange for future tax-free growth.

Best done in low-income years (between retirement and RMD age 73). Once converted, money grows tax-free forever and isn't subject to RMDs. Strategic for high-net-worth retirees managing future tax brackets.

An IRA funded with after-tax dollars; qualified withdrawals (after 59½ AND 5 years) are tax-free.

Contributions can be withdrawn anytime tax- and penalty-free. Income limits apply: 2025 phase-out is $150-165K single / $236-246K joint. Backdoor Roth available for higher earners.

Also: S-Corp

A tax election that lets profitable business owners split income between salary and distributions, reducing self-employment tax.

Requires running payroll for the owner and paying a 'reasonable salary'. Distributions above salary aren't subject to 15.3% SE tax. Saves $8K-$20K+ per year for typical $100K-$200K earners.

The IRS form sole proprietors use to report business profit or loss.

Attached to your personal 1040 return. Profit is subject to both income tax AND self-employment tax. Filing Schedule C means you're a sole proprietor for tax purposes.

Also: Special Enrollment Period

Special Enrollment Period — a window outside the normal enrollment periods triggered by a qualifying life event.

Triggers include moving to a new service area, losing employer coverage, qualifying for Medicaid, or returning to the US after living abroad. Each SEP has its own rules and timing.

A retirement plan for self-employed individuals and small business owners.

Up to 25% of compensation, capped at $70,000 (2025). Simple to set up. If you have employees, you must contribute the SAME percentage for them — can get expensive fast.

The risk that poor investment returns early in retirement permanently damage portfolio longevity.

A 30% market drop in year 1 of retirement is much more damaging than a 30% drop in year 25 — because you're also withdrawing money during the drop. Buffer assets, partial annuitization, and bucket strategies defend against this risk.

A retirement plan designed for small businesses with 1-100 employees.

2025 employee deferral: $16,500 + employer match (typically 3%). Cheaper to administer than a 401(k). Lower contribution limits, less flexibility.

A debt-payoff strategy: list debts smallest to largest balance, pay minimums on all, attack the smallest with extra.

Provides quick psychological wins. Mathematically suboptimal vs. avalanche, but the behavioral momentum often wins for households who've failed at debt payoff before.

Federal program providing monthly income to retirees, disabled workers, and survivors.

Earliest claim age: 62 (25-30% reduction). Full Retirement Age (FRA): 66-67 depending on birth year. Delayed credits add 8% per year up to age 70 (132% benefit). Choosing when to claim is one of the largest financial decisions of retirement.

A 401(k) for solo entrepreneurs and owner-only businesses (and spouse).

2025 limit: up to $70,000 ($77,500 if 50+). Includes both employee deferral and employer profit-sharing. Most flexible self-employed retirement plan — Roth option, loans allowed.

Also: SPIA

An annuity purchased with a lump sum that begins paying income immediately (within 1 year).

Often used as a 'personal pension' to cover essential expenses in retirement. Gives up principal in exchange for guaranteed lifetime income. Best when you're concerned about longevity.

A flat deduction from your taxable income — claimable without itemizing.

2025 amounts: $15,000 single / $30,000 joint. Most households (90%+) take the standard deduction because it exceeds their itemized deductions.

The IRS rule that resets the cost basis of inherited assets to fair market value at the original owner's death.

Heirs can immediately sell appreciated assets with no capital gains tax. One of the largest tax benefits in the code. Doesn't apply to retirement accounts (those retain the original tax structure).

Selling investments at a loss to offset capital gains and reduce taxes.

Up to $3,000 of losses can offset ordinary income annually; excess carries forward. Beware of the wash-sale rule: can't repurchase the same or substantially identical security within 30 days.

Pure death-benefit life insurance for a fixed term (typically 10, 15, 20, or 30 years).

Cheapest per dollar of coverage. Right for most families during income-replacement years. If you outlive the term, coverage ends — though many policies offer conversion to permanent.

An individual retirement account where contributions may be tax-deductible and growth is tax-deferred.

2025 limit: $7,000 ($8,000 if 50+). Deductibility phases out at higher incomes if you (or spouse) have a workplace retirement plan. Withdrawals before 59½ usually trigger a 10% penalty + ordinary income tax.

The person or entity that manages a trust according to its terms.

During your lifetime (revocable trust), you're usually the trustee. After death or incapacity, a successor trustee takes over. Can be an individual or a corporate trustee (bank or trust company).

The process insurers use to evaluate risk and determine whether to offer coverage and at what rate.

Involves medical questionnaires, exams, MIB checks, prescription history, and sometimes labs. Different carriers underwrite differently — same applicant can get very different rates depending on the carrier.

Permanent life insurance with flexible premiums and an interest-credited cash value.

More flexible than whole life but less predictable. The cash value earns a declared interest rate. Premiums can be adjusted within limits, but underfunding can cause the policy to lapse later in life.

Also: VUL

Permanent life insurance where cash value is invested in sub-accounts similar to mutual funds.

Highest growth potential but also highest risk — cash value can drop with the market. Best for sophisticated investors who understand the trade-offs.

A cash-flow strategy using whole life insurance cash value as your primary banking system to accelerate mortgage payoff.

Can cut 10-15 years off a 30-year mortgage. The same Infinite Banking Concept applied to debt elimination — borrow against your policy's cash value, attack mortgage principal, pay the policy back, repeat. Cash value keeps earning the entire time. Requires positive monthly cash flow and policy funding discipline.

A wage statement issued by employers to employees, reporting annual wages and taxes withheld.

Used to file your personal income tax return. W-2 employees have taxes withheld throughout the year; 1099 contractors don't and must make quarterly estimated payments.

A rider that keeps your policy in force without premiums if you become disabled.

Small cost (often 5-10% of premium), big value. Definitions of 'disabled' vary by carrier — some are stricter than others.

Permanent life insurance with guaranteed premiums, guaranteed cash value growth, and a guaranteed death benefit.

Costs significantly more than term. Used for estate planning, business funding, and as a tax-advantaged savings vehicle (cash value growth is tax-deferred).

A legal document that specifies how your assets should be distributed after death and names guardians for minor children.

Goes through probate court before assets are distributed. Doesn't avoid estate taxes. Doesn't help with incapacity planning (you also need a POA for that).