Insurance Customized to Your Needs
There is no one-size-fits-all approach to life insurance. The purpose of life insurance is to solve your specific needs. That’s why we use a needs analysis formula to determine the best policy for you. The analysis will tell us what type of insurance and how much is most appropriate. And then we leave the decision-making to you.
You might be wondering how life insurance can help your family. Here are some common situations where life insurance can be a real lifesaver for your family:
Replacing Lost Income
Believe it or not, there are many families in America that do not have any life insurance coverage for the working parent. What would these families do if the breadwinner died prematurely? How will the survivors pay for basic things like funeral costs, housing, car payments, kids’ education, etc.? Sadly, we have all seen GoFundMe notices posted on social media for families who lost a breadwinner and are suddenly in financial disaster and then ask for donations. There is no reason any family should suffer through this dire situation!
Term insurance is usually the best fit for families with young children at home because the low cost fits well within the family budget. For as little as $10/month or $15/month you can get a decent amount of insurance that will help your family take avoid a financial hardship.
Income replacement is about the only situation where term insurance is a good fit. The rising cost in later years makes it a poor fit for needs that are more permanent. For permanent needs you should consider a policy with permanent cash value such as Whole Life, Universal Life, or Variable Life. Here are some situations where a permanent policy would be a much better fit.
Guarantee The Future Insurability of Minors
Children are being diagnosed with serious medical conditions more frequently than ever. Environmental factors can cause cancer and genetics play a role in Type 1 diabetes and heart conditions. One thing is for sure – once a child is diagnosed with these kinds of serious illnesses it is very difficult for them to get insurance on their own once they are adults. One way to make sure they have the ability to get life insurance for their future needs is to buy insurance for them while they are still children. Whole Life insurance is very inexpensive for children because the dollar amount of the coverage is usually kept pretty low ($50,000 or $100,000). The great thing about insuring your children when they are young is when they are adults they can automatically increase the amount of the coverage up to a predetermined amount without having to go through a medical underwriting process. So what is nearly impossible for some people to obtain becomes as easy as flipping on a light switch.
If your family has a history of serious medical illnesses then you should give serious consideration about getting insurance for your children while they are young! Contact us for more details.
Could You Use Some Additional Tax-Free Cash Flow?
When you think of life insurance you probably think of paying into a policy that somebody else will get to enjoy. But what about you? Shouldn’t your policy have a benefit that you get to use while you’re alive? Absolutely!
One of the most important features of a cash value life insurance policy is that the cash value grows over time. The cash value can be accessed using a loan feature that does not require repayment. The advances from the cash value account to you are not subject to income taxes because they are considered a “loan”. You can use these funds for whatever purpose makes you happy.
Wouldn’t It Be Nice To Have An Extra $20,000 – $30,000 Per Year In Tax-Free Cash Flow For Retirement, Travel, Investing, Etc.? Contact Us Today To See How You Can Make This A Reality!
The Best Way To Buy Long-Term Care
Not many years ago you could buy a long-term care policy that was fairly affordable and that would cover your costs if you ever needed a long-term stay in a nursing home. The premiums were fixed and guaranteed to never go up. At the same time, the policy provided a benefit that could increase with the rate of inflation. This was a great deal for the consumer. It was a terrible idea for the insurance company that made such promises!
Nursing home costs skyrocketed over the years and insurance companies found themselves paying out a lot more in claims than they ever imagined.
Most companies eventually stopped offering these kinds of policies altogether. Now the only standalone long-term care policies offered have exorbitant costs for the consumer.
Life insurance companies have found a solution for this problem. The coverage for a nursing home can be added on to a cash value life insurance policy as a “rider”. The dollar value of the coverage is limited to a fixed amount that is estimated to be reasonable for the average person.
Have you always wanted to make a large gift to your favorite charity, educational institution, or other non-profit organization? One way to do that is to purchase a separate life insurance policy that is specifically meant for that organization. We have clients who have provided large gifts to the Make-A-Wish Foundation, children’s hospitals, and other institutions that rely on donations to meet their stated missions. When you give the gift of a life insurance benefit, you actually multiply your donation dollars into a much larger benefit for an organization of your choice. It’s possible you wouldn’t be able to make such a large donation otherwise.
Charitable donations made at death can also help large estates reduce the estate tax liability. With high estate tax rates, this gives the donor an even greater bang for the buck!
Estate Equalization Planning
Many family estates have a difficult time distributing a “fair” amount of the estate to each heir because the estate includes highly valuable, but illiquid, assets like real estate or a successful family business. Without advanced planning, the ownership of a business is not easily divided into equal shares or in a quick manner once the owner dies.
Care must also be taken to make sure that the heirs actually want to receive ownership in the business and actually have the skills and passion to successfully carry on the business. With highly valuable real estate (such as a commercial office building), it can take a long time to sell the property for its true value. Your heirs probably don’t want to wait that long. What’s more, your estate might also have a large estate tax due before such a property is able to be sold. You wouldn’t want your heirs to be in a hurry to sell such a property because they wouldn’t get a fair price upon the sale. Cash value life insurance provides liquidity so your heirs that don’t want to be involved with a family business or owning a large piece of real estate can be cashed quickly and easily. It also gives the family valuable time to make sure the estate is settled properly without pressure to do things speedily.
With large estates there is a nasty estate tax to worry about. At nearly 40%, the estate tax packs a mean punch! Proper estate planning can help reduce the estate tax bite but there is usually no way to perfectly eliminate it. If there is no way around this tax then it makes sense to try to minimize the actual cost of it. This is where a cash value life insurance policy comes in very handy.
Irrevocable Life Insurance Trusts (ILIT) can be created to segregate assets from the estate so they are not subject to estate tax. This is one way to minimize the tax bill. Another way to lower the cost of the tax bill is to pay it with somebody else’s money – the life insurance company! Remember that the value of the death benefit is several times higher than the premiums being paid to the insurance company. You can pay a high tax bill for a fraction of the cost using a life insurance policy!
ARE YOU READY TO CREATE AN INSURANCE PLAN?
Getting started is easy. The first step is to let us know how we can help you. Just fill out the simple contact form below and we will be in touch with you right away – or just call us at 480-699-5540.