Janney Montgomery Scott offers the following types of insurance products: disability income, long-term care (both traditional and asset based), term life, whole life, fixed index universal life, universal life and variable life.
Selecting the right insurance product can be difficult. You should work with you financial advisor to determine which particular insurance product and its features fits your individual needs and objectives. The information below provides only generalized
information. When deciding which specific insurance policy is right for you, you must carefully read all related product documents such as the product brochure, illustration, prospectus and subaccount prospectus (if applicable). These documents contain
helpful information to assist you with making an informed decision.
What is disability insurance?
Disability insurance pays benefits when you are unable to earn a living because you are sick or injured. Most disability policies pay you a benefit that replaces a percentage of your earned income when
you can’t work.
Once you become disabled and apply for benefits, you have to wait a certain amount of time after the onset of your disability before you receive benefits. If you are applying for benefits under a private insurance policy, this amount of time (known as
the elimination period) ranges from 30 to 365 days, although the most common period is 90 days. Group insurance policies through your employer, if applicable, will generally have a waiting period of no more than 8 days for short-term policies that
pay benefits for up to six months, and 90 days for long-term policies that pay benefits up to age 65. You can purchase private disability income insurance policies that offer lifetime coverage, but they can be very expensive. Most people buy policies
that pay benefits up until age 65; however, two- and five-year benefit periods are also available. Because many injuries or illnesses do not totally disable you, many policies will offer a rider that will pay you a partial benefit if you can work
part time and earn some income.
What is life insurance?
Janney offers a variety of insurance solutions to help meet your individual needs and preferences. It is important to understand the key characteristics of the basic types of life insurance policies in order to understand which options best fit your unique
- Term Insurance: Term insurance provides a death benefit for a specific period ranging from 5, 10, 20, or 30 years. If you die during your policy’s coverage period, your designated beneficiary receives the death benefit. If you live past the
term period, the coverage ends with no death benefit. Unlike other types of insurance, term does not have a cash value associated with it. Typically, with level term, the premium will remain the same throughout the life of the policy. However,
if you choose to renew term, you should expect to see higher premiums as you age. There are generally two types of term life insurance:
- Whole Life: Whole life is a type of life insurance, which lasts throughout your lifetime and generally guarantees financial protection. Whole life insurance can offer fixed premiums, cash value accumulation, and protection until the day you die. Since
whole life is designed to last your lifetime, it has higher premiums than term insurance. The cash value is guaranteed and is held in the insurance company’s general portfolio—you do not select how it is invested. It grows on a tax-deferred
basis, which means that the gain on these funds will not be taxed until or unless they are withdrawn.
- Advantages: Traditional whole life insurance is very clear cut—your premium, interest rate, and death benefit are generally guaranteed for the life of the policy. The cash value grows tax-deferred and usually permits loans or withdrawals.
- Disadvantages Compared to term and universal life policies, whole life is often more expensive due to the guarantees associated with it. Also keep in mind that the policy is less flexible; changing your death benefit or premiums is not an
- Universal Life: Universal life is another type of permanent life insurance. Like whole life, it also provides a death benefit and cash value component. While the cash value is held in the insurance carrier’s general portfolio, universal life
is more flexible because you can choose, within guidelines, how much and when to pay your premiums. Reducing or increasing premiums can potentially impact the cash value and possibly the death benefit.
- Advantages: Universal life provides more flexibility than a term life policy. A universal life policy holds a cash value, so you may have the opportunity to end your premium payments if the cash value will cover the cost of the insurance.
You may also have the option to decrease or increase the death benefit, or borrow against the cash value tax free.
- Disadvantages: Because it provides permanent coverage, it is typically more expensive than term life.
- Variable Life: Variable life is a type of permanent life insurance. Like whole and universal, variable life also has a death benefit and cash value component. However, with variable life, the cash value is invested into subaccounts and you choose
how they are invested. Variable life requires a fixed annual premium for the life of the policy and, in some cases, may provide a minimum death benefit.
- Advantages: The cash value has the potential to grow based on how the sub-accounts perform.
- Disadvantages: Investing the cash value of the policy creates exposure to risk, as the subaccounts may be impacted by the ups and downs of the markets.
- VARIABLE UNIVERSAL LIFE: Variable universal life combines the investment selection associated with variable life and the flexibility associated with universal life into one insurance policy. You decide, within guidelines, how much and how frequently
you pay premiums, as well as how you would like to invest the cash value in subaccounts. As with the other types of permanent insurance, variable universal life has a death benefit and cash value component.
- Advantages: As long as premium payments maintained, the minimum death benefit is guaranteed. The cash value of the policy can be invested through a range of investment options, which has the potential to grow on a tax-deferred basis.
- Disadvantages: Investing the cash value of the policy creates exposure to risk. If the market experiences a decline, for example, causing a drop in the account’s value, additional premiums may be required in order to keep the policy
What is long-term care?
Janney’s long-term care (LTC) solutions can help you meet your specific needs. Determining a solution that best fits your situation depends on a few factors, such as your current health, health history, age, and financial situation. Among the coverage
choices available to you are:
- Traditional LTC: This type of insurance commonly provides the most comprehensive coverage available, and can be designed specifically based on your needs. It requires ongoing premiums with the possibility of rate increases over time. Keep in
mind traditional LTC insurance has no refund feature. That means if you decide to discontinue the policy, there is a chance you will not receive any benefits in the event of a premature death. These plans may work best for those who are less liquid,
have plenty of income to absorb future rate increases, and have no need for additional life insurance. (Inflation options are available to provide the indexing of the LTC benefit both pre- and post-claim.)
- Asset-based LTC: Asset-based products combine life insurance and LTC benefits. If you want to self-insure, asset-based policies can be a good alternative. Benefits and premiums in asset-based products are traditionally guaranteed. There is no possibility
of premiums increasing or benefits being reduced. Plus there’s always a benefits payout, whether it’s through a:
- Death benefit
- Long-term care benefit
- Refund feature
- Life Insurance with LTC Riders or “Hybrid Policies”: Life-insurance policies with LTC riders are a funding source for long-term care expenses, provided your primary need is for life-insurance protection. The LTC benefit is the face amount
of the policy. The annual LTC benefit is a percentage of the death benefit, usually either 2% or 4%. There is always a payout of in the form of LTC, life insurance, or a refund of cash values. Many life insurance policies contain critical-care
riders. While these riders mirror some types of LTC benefits, the benefits are very restricted and limited.
Additional information about insurance is available at:
Understanding How Janney and Your Financial Advisor are Compensated
Janney) Financial Advisors are selling agents for the insurance company associated with the proposed contract. As a selling agent for the insurance company (Carrier), Janney and the associated Financial Advisor(s) receive compensation. The compensation
paid may vary depending on many factors, including the insurance contract, the Carrier, volume of business Janney provides to the Carrier, or the profitability of the contracts Janney provides to the Carrier. You may obtain information about the compensation
that Janney and the Financial Advisor(s) expect to receive based in whole or in part from the sale, and any alternative proposals/quotes presented to you by requesting this information from your Financial Advisor(s).
Promotional and Educational Assistance
Janney, our Financial Advisors and our clients may, from time to time, receive from insurance companies and their marketing representatives (known as wholesalers, general agents or point
of sale specialists) occasional nominal gifts, meals, tickets to sporting events or other comparable entertainment, or payment or reimbursement in connection with conferences or meetings held for the purpose of training or educating clients, prospective
clients or Financial Advisors. From time to time, our Financial Advisors may also be invited to attend conferences or meetings sponsored by insurance companies. These activities are also intended to result in the promotion of the insurance products
marketed by the wholesalers.
Fees and Charges Associated with Insurance
Some insurance policies have significant surrender charges for a specified period. The surrender charge means that you may pay a penalty fee for surrendering your policy during this period. In some cases
the surrender charge may be for up to 20 years. The liquidity of insurance is limited. In the case of a full or partial surrender, you will incur penalties, during the surrender charge period, as described in your insurance policy.
Free Look Period
Free-Look Period: You may cancel your policy within a specific number of days (usually 10 days) after it is delivered to you, entitling you to a refund. Your refund may be less than your initial purchase if the market value of your variable insurance
policy declined during this free-look period.
1035 Exchanges & Replacements
The Internal Revenue Service allows you to exchange an insurance policy that you own for a new life insurance policy insuring the same person without paying tax on the investment gains earned on the original contract. This can be a substantial benefit.
Because this is governed by Section 1035 of the Internal Revenue Code, these are called "1035 Exchanges."
But this benefit comes with some important restrictions.
- The tax code says that the old insurance policy must be exchanged for a new policy—you cannot receive a check and apply the proceeds to the purchase of a new insurance policy.
- The tax code also says that you can make a tax-free exchange from: 1) a life insurance policy to another life insurance policy or 2) a life insurance policy to an annuity. You cannot, however, exchange an annuity contract for a life insurance policy.
A transaction in which a new insurance or annuity contract is to be purchased using all or a portion of the proceeds of an existing life insurance or annuity contract is referred to as a "replacement." A 1035 Exchange is a type of replacement transaction.
Although the term "1035 Exchange" is often used to describe any form of replacement activity, technically not all replacements are Section 1035 Exchanges and as a consequence are not tax-free.
Consider the following prior to any replacement:
- The existing coverage may have more favorable policy provisions, loan interest, or tax treatment
- You should consult a tax advisor with questions about tax consequences of a replacement
- Your present insurance company may be able to modify your existing plan on terms that may be more favorable to you than completely replacing your current policy
- You will be subject to a new surrender schedule
- The information contained in the in-force illustration for your existing policy and for the hypothetical illustration for the proposed policy should be reviewed and compared
- You should continue your existing insurance coverage until the replacement policy is issued, reviewed by you, and the new policy has been placed in active status.
For more information and a list of questions to ask, see FINRA's Investor Alert entitled Should You Exchange Your Life Insurance Policy?
Janney’s Relationship with Penn Mutual:
The Penn Mutual Life Insurance Company (“Penn Mutual”) owns Janney. Janney Financial Advisors can recommend Penn Mutual’s Insurance investments to you, which creates
a conflict. Because Janney is owned by Penn Mutual, Janney has an incentive to recommend its investments based on its affiliation. To mitigate this conflict, Janney does not specifically promote the sales of Penn Mutual investments, including insurance.
Neither Janney, nor our Financial Advisors, receive any special or additional compensation for recommending Penn Mutual investments over those issued by non-affiliated companies. Janney and our Financial Advisors are paid the standard compensation
for the sale of the particular investment for Penn Mutual investments.