Why You Actually Need Life Insurance
Individual Life Insurance
Protect your family from financial stress and dilemma due to breadwinner's sudden demise
Keep your family together in your home with a free and clear mortgage
Finance your children’s college without high interest student loans to pay back
Remain self-sufficient and independent from government assistance and from your children
Supplement and safeguard your retirement income with tax-free retirement distributions (IRA and 401(k) alternatives)
Business Life Insurance
Run your business smoothly without financial hardships to derail your success
Keep employee morale, satisfaction, and loyalty above average
Supplement your work retirement plan with tax-free alternatives
Shield your business against bank loan defaults and bankruptcy
Linked Life Insurance
Enjoy the protection and benefits of life insurance plus long-term care, if needed
Advanced Life Insurance
Creating, conserving and distributing your financial assets
Estate planning for an equitable asset transfer to your beneficiaries without the tax burden
Planning your legacy and charitable contributions
Types of Life Insurance Available
I. INDIVIDUAL LIFE:
1. Term Life (request a quote) - Best Value at $250,000 (used for mortgage/loan pay-offs)
• 10/20/30 Year Term
• 20/30 Year Term with Return of Premium
• Simplified 10/20/30 Year Term (non-medical)
2. Permanent or Cash Value type of insurance – Lifetime coverage (request a quote)
• Traditional Whole Life - Juvenile for college funding (guaranteed cash values)
• Final Expense Whole Life - Seniors for funeral expenses (non-medical)
• Guaranteed Universal Life - New UL no-lapse policies
• Indexed Universal Life - Latest type of life insurance with Investments
• Linked Life Insurance - Life insurance combined with Long Term Care Rider
• Single Premium Life - CD alternative with a higher ROI and higher death benefit
• Joint-and-Survivor (Second to Die) Policy - Used to pay estate taxes
II. BUSINESS LIFE:
1. Keyman Insurance – compensates company in case of death of key person
2. Buy-Sell Agreements – used for Partnerships to have funds available to buy out Partner's share
3. Funding Vehicle for Deferred Compensation – Non-Qualified Retirement Income
Most of the newer life insurance policies include Living Benefits and Riders.
Accelerated Death Benefit Rider (ADBR) gives you the option to claim (if you need the money) while still living, if diagnosed with a terminal illness with a life expectancy of less than twelve (12) months.
The ADBR rider eliminates the need to sell your life insurance for less than your death benefit in the Life Settlement marketplace. Check your old policies if you have this rider before you sell.
Life Insurance and You
By SallyJane Lim, CFP, CLU, LUTCF
Life insurance as you will realize by now is a multi-faceted gem of a product, which, when the time comes, can become an instant solution to all your financial problems.
Unlike a 401(k) which is intended to be used solely for retirement income, which if used for other purposes at pre-retirement age is subject to a penalty, life insurance cash values can be used for anything and everything, at all ages, without restrictions or penalty.
Unlike a 401(k) which is income taxable when you start withdrawing your money at retirement, (which is the reason why many seniors who are averse to taxation delay withdrawing their money until the maximum age of 70 ½, at which time they are mandated by law to begin their Required Minimum Distributions (RMDs), which is reduced by the income taxes they have to pay), life insurance is still the only product today that is completely income tax free and if it is a multi-million dollar policy, can be estate tax free also if purchased and owned by an irrevocable trust.
Protagonists of life insurance are usually the aggrieved beneficiaries whose death claims on their parents or relatives were unfortunately denied by the insurance companies, even if the denial is legal or justified.
In the defense of insurance companies and for the information of future beneficiaries, most common reasons for claim denials are:
1. Because the primary insured lied or concealed material facts on the paper application or during the recorded telephone interview re: their medical history and died too soon thereafter (misrepresentation); or
2. Because the primary insured committed suicide within two years of purchasing the policy (contestable period); or
3. The policy had lapsed without the insured's or the beneficiaries' awareness of its lapse status.
Policies lapse because:
• Most common reason: insured forgot to pay the term policy premium on due date or within the extra 30 days grace period;
• Term (10, 20 or 30 years) has expired and insured did not convert the term policy to life, or did not purchase another term policy to continue coverage;
• The old Universal Life policy usually lapses over time if the insured keeps paying the “minimum” premium. The lapse year is clearly stated on the annual statement sent to the insured.
• Whole life policies can lapse also when the insured stops paying premium prematurely, and the cash values used automatically to pay the premiums are consumed, at which time, the policy lapses, but with non-forfeiture benefits which the insured is usually not aware of.
Again, in the defense of insurance companies, they do send out notices to the insured to the address they have in their system to inform them about the near-lapse status of their policy/ies, so that it can be saved, but because the insured has moved without notification of their new address, or because they do not read what they perceive as junk mail, or the notices are ignored and no action was taken, the policy lapses, and the time allotted for reinstatement also ran out.
So it is important that you keep your policy in force so that it will serve the purpose for which it was intended... when the time comes.
Sometimes, there are changes in your life that necessitate changes in your life insurance program, like, getting married, or ...divorced, the birth of a child, death in the family, opening up a business, etc.
Just like an annual physical is needed to check your health, it is prudent to do a periodic review of your insurance program to check its validity (whether it is still in force or has lapsed without your knowledge) and/or its adequacy (a $100,000 policy purchased ten years ago when you were still single and still renting may not be adequate today to pay off your $300,000 home mortgage).
As you already know, there are only two things that are certain in life: Death and Taxes. In a casino or a lottery, you'd say: “If I win....”. In life insurance, you would say “When I die... or pass on.”
My point is: Unlike your state-mandated auto insurance, or your bank mandatory homeowners insurance, your life insurance policy which you voluntarily purchased ten or twenty years ago or even just yesterday will always have a claim on it by you and/or your loved ones. And usually the proceeds is a very large payout, a windfall, hopefully a nice cool seven-figure multi-million dollar check.
But unlike the elusive lottery, or the one-arm bandit slot machine, and unlike your IRA, the cool million dollars is all yours, one big lump-sum (not monthly installments), undiminished by any tax withholding or tax deduction, that can transform the recipient into an instant millionaire.
Because you or your beneficiaries do not need to report this million dollar insurance money in the IRS Form 1040, it is therefore the best kept secret of wealth creation.
And when you do pass on leaving your family the greatest gift of life insurance, your legacy, they will continue to live their lives to the fullest, they will all go to college, they will fulfill their dreams - your dreams. They will remember you forever, as if you never left them.
Life insurance is about love. If you love someone, you need Life insurance!