Depending on your situation the simple answer is… quite possibly.  In fact, single-premium universal life insurance, SPUL, may be one of the most overlooked, misunderstood life insurance products available today and rarely recommended by traditional life insurance agents. However, expert Tax-Free Retirement Specialists use this product frequently with their clients

Single Premium Universal Life is an immediate issue, universal life policy, which combines a death benefit with a savings account. It’s an easy and efficient way for consumers to purchase coverage and transfer wealth to the heirs — TAX-FREE.  Purchased with one single premium payment, this product is designed for people who value added security, flexibility, and cash value with lifetime coverage.

How do you fund a single premium life insurance policy?

One area where a significant amount of SPUL policies are being used is to consolidate stray life insurance policies with lots of cash value where the owner has no plans for the cash value.  By simply using the funds from those policies as a lump sum into a new single premium universal life insurance policy the new policy is usually larger than the sum of the smaller policies and is now paid in full.

Why use a Single Premium Life Insurance Policy?

The SPUL insurance policy can help clients meet a variety of financial objectives.

• Single-premium life policies require only minimal underwriting and are a good choice for the elderly or those with some health issues.
• Ownership of a life policy by the beneficiary or a trust can “remove” the asset from the estate for estate tax purposes.
• Advanced estate and legacy planning.
• Insuring a key employee or a business continuation plan.
• Policy loans from the cash value TAX-FREE
• Some SPUL’s will accept additional premiums if you believe you might want to deposit additional money later to increase your benefit.
• Provides a simple and efficient way to purchase coverage and transfer wealth tax-free. 
• Immediate issue policy purchased with a single payment. 
• Provides a policy with a death benefit much higher than the payment itself.

Single premium life insurance cash value increases much faster than a policy with monthly or annual premiums because it is funded with the entire lifetime premium at the issue of the policy.  Just like other insurance policies, upon the death of the insured the proceeds of the policy go to the beneficiaries free of federal income or estate taxes.

Can it be used as an alternative to an annuity?

The big advantage of SPUL is that it passes the death benefit to your heirs tax-free (although there may be estate taxes to consider).  In many cases, those benefits also will pass quicker to heirs outside of probate, a real plus for larger estates.

Because the annuity’s $150,000 growth was tax deferred the beneficiary will have to pay tax on $150,000.  Life insurance is always transferred tax-free with zero taxes due to the federal government.

Additional Benefits to the SPUL owner

Since an SPUL premium is paid in full at policy issue the policy is planned to last the owner’s entire life time.  The cost of the insurance of the policy will be paid from the cash value and any interest gain.  The only way that the policy will not last the entire lifetime is if the owner were to take out a tax-free loan from the policy for their use and not pay the loan back.  As long as the loan is repaid back into the policy, the insurance policy will continue to last the owner’s entire lifetime.

SPUL’s are the least understood life insurance product by traditional life insurance agents today.  By talking with an expert Tax-Free Retirement Specialist they can discuss your specific goals you are seeking to accomplish and assist you in determining if this is a the best product choice for you.  Click here to find a local Tax-Free Retirement Specialist in your area.

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So you would think that everything was just fine right?  Well not really.  His girlfriend didn’t know him well enough and wasn’t sure where all the important papers were.  She couldn’t adequately explain my brother’s final wishes nor plan a funeral for him because she didn’t know if he wanted to be cremated or buried.  It was an emotional mess for her and my family as we tried to grieve as well as determine what he would have wanted to have done after he died.

His will and life insurance documents were extremely important, but an accompanying Letter of Instruction would have really helped.  This letter of instruction is not a legal document, yet he could have provided all the details and guidance for both his personal and financial matters necessary to all the questions that we had about his final wishes.

Here are some topics to consider addressing in the letter.

• People to contact such as attorneys, financial professionals, insurance agents, and accountants.
• The location of important documents, including your will, insurance policies, birth certificate, marriage and/or divorce papers, Social Security and Medicare cards, tax returns, vehicle titles, and deeds to real property.
• Your wishes for final arrangements such as a memorial or funeral service and organ donation.
• Information on your bank and retirement accounts, including account numbers, PINs, and passwords.
• A list of creditors and the location of bills.
• A description of any important information to be found on your computer, including login IDs and passwords.

The Letter of Instruction doesn’t have to written in in legal fashion.  It can even be hand written.  You can even write you own obituary for yourself if you want.   Store your letter in a safe, yet accessible place; tell your loved ones where they can find it; and give copies to the executor of your estate and other trusted individuals. Because some information in the letter may change over time updating it regularly.

I have no idea why my brother never wrote a letter of instruction.  Maybe he was like a lot of us, putting off thinking about our own mortality.  But it sure would have been helpful if he had. 

Your Own Family Template

Because of all the long and emotional conversations my family had to conduct about his final wishes, we’ve put together a template that covers the above points as well other discussion points that may help your family in your own letter of instruction.  It may be beneficial to include this template in your own letter of instructions.  Click here to download.

What is Life Insurance?

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Most people are often unclear about this complicated, yet simple question. A Will is a legal document that sets forth your wishes regarding the distribution of your property and the care of your minor children.  Life insurance is a legal contract between you and the life insurance company who issued the policy.  The simple answer to this question is that your beneficiary designation on your life insurance policy is where the life insurance benefit proceeds will be distributed.  It doesn’t matter if you have made different arrangements in your will to split it differently, the will will not be followed for that.  Your life insurance contract is a stronger legal document and under normal circumstances supersedes your Will every time.

Even the beneficiary designation on your 401k, IRA, and annuity contracts you own are not subject to your WILL.  When you die, these policies are going to transfer to whomever you have listed as the legal beneficiary. 

When was the last time you updated your life insurance beneficiaries?  Are they all still alive?  Have you remarried and forgotten to change the beneficiary to your new spouse?  Did you have children from both marriages, if so how are you going to deal with that?  What about the grandchildren. 

By now you can see that it is vital to give adequate thought into who the primary, contingent and even tertiary beneficiaries should be.  By assigning the proper beneficiary designations you will spare your family many complications and frustrations at your death, and also save lots of time and potential taxes and administrative costs if probate is needed.

When deciding about life insurance beneficiaries, it is important to have contingent and tertiary beneficiaries in case your primary beneficiary predeceases you. If you want your life insurance benefits to go directly to children (especially children from a prior marriage) upon death, then you must name them as a primary beneficiary or a Trust for them. 

Speak with a qualified lawyer before naming minor children, without a Trust, as primary beneficiaries.  If not done correctly the court might assume guardianship causing undue costs until your children reach the age of majority in your state.  You may also be able to determine when the life insurance benefits are to be paid out.  They can be paid as one lump sum if you think your children are successfully able to emotionally handle the financial benefit.  Or you can have it spread out over several years on specific birthdays if you believe that will be more beneficial.

Finally, review your beneficiary designations at least annually to make sure your intent is still the same as it was when you created the designations.  Marriages, divorces, births, deaths, and financial situations of your beneficiaries may have changed your considerations.

So you see that selecting your primary, secondary and tertiary beneficiary is critical in the complex area of estate planning.  speaking with a Tax Free Retirement Specialist who can  help you update your beneficiary list and also coordinate the conversations with your tax advisor and estate lawyer is critical to a ensuring that your final expression of love is carried out the way you intended.  Click here to find Tax Free Retirement Specialist in your area.

There are some common ways you can designate all three beneficiaries depending on the specific situation you have.  There are also numerous other ways you can do your beneficiary designations.  You can move anyone from secondary to primary if so desired.  If you have no family you can even make the charity(s) your primary beneficiary.  We’ve included a Table with the specific language critical to beneficiary designation. Most of the secondary beneficiary designation examples on this table use specific secondary beneficiary language allowing the benefits of a predeceased child to be passed to their children so that the insured’s grandchildren are not disinherited.  If you don’t want the grandchildren to inherit your children’s share you would delete the phrase “if living, otherwise, his lineal descendants per stirpes.”   This allows the deceased child’s share to be redistributed to the remaining living children.

Click here for the Beneficiary Table

What is Life Insurance?

Cost of Life Insurance?

So you’ve come to the realization that you need to buy life insurance.  You’ve read and educated yourself at www.lifeinsurancethinktank.com and have some basic ideas of what types to review with your Retirement Life Solutions Specialist.  Before you make that call, there is one more thing you might want to get together before you meet with them.  You’re going to want to have a basic understanding of how much life insurance you need to buy. 

There are many calculators on the web and they all require that you enter a lot of information.  Life Insurance Think Tank has put together a simple and effective Life Worksheet for you to gather that information onto so you can use the best life insurance calculator on the web to come up with a starting point.  More complicated situations such as businesses, land owners, high net-worth clients, estate planning etc… will always need the assistance of Retirement Life Solutions Specialist to help you create and use tax advantaged life insurance products. 

Click here to find a Retirement Life Solutions Specialist who is an expert at working with tax-free retirement products.

Download our Life Insurance Worksheet to begin your planning. 

Remember, your family is depending on you.

What is Life Insurance?

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When you’re considering term life insurance, you need to understand the different types of term life available today.  Term life is the least expensive insurance available today and if used correctly could be the best insurance for you.  In fact many people supplement permanent life insurance (universal, indexed universal or whole life) with term life insurance.

Term life insurance provides coverage for a defined term, i.e. a period of time. It does not accrue cash value like a permanent life insurance policy does. The basic premise is you have a financial risk you want to insure for a period of time in case you die prematurely.  The risk might be your mortgage, a vacation home mortgage, your children until they have moved out, kid’s college education, etc.  Once you determine what the length of time you need to cover the risk, you purchase a term life insurance policy for that period of time.  If your untimely death occurs, the insurance policy will pay your beneficiaries the tax-free insurance benefit.

There are several different types of term life insurance to consider when educating yourself on what is necessary for your specific situation.  Different insurance companies will have one or all of the following available:  Guaranteed Convertible, Annual Renewable, and Level are the common types of term life insurance.

Level Term Insurance

Level Term Insurance requires payment for a fixed period for the duration of the term.  Common terms are usually in 10-year increments because 5-year increments are more expensive than.  Premiums are level during the term of insurance and do not increase.  If you decide to cancel the policy, you just let the insurance company know, any time during the term of the policy, and stop paying the premiums and the will policy lapse. 

Convertible Term Insurance

Most companies offer convertible term insurance.  Here the insured is eligible to convert all or some of the amount of coverage to a permanent universal or indexed universal life insurance policy during the term of the insurance policy.  Most insurance companies allow this during the first 10 years of the term or possibly the first half of the term policy.  If it is converted, the premium will be higher because it is permanent insurance for the rest of your life. 

Annual Renewable Term

Annual Renewable Term is a one-year life insurance policy where the insurance company guarantees to insure the covered person for one year and will issue the same or higher policy at the end of the term without regard to health of the insured.  This is similar to a guaranteed renewable term life policy.  However, the premium will increase because the age of the insured has increased and if the amount of insurance is increased.

Return of Premium Term Life Insurance

This is the newest term life product on the market today and can be quite useful for certain situations.  First thing you need to know is that it will cost more than a standard term life policy for the same amount of insurance benefit.  The unique feature of this policy is that if you pay the premiums through the end of the policy and you are still alive the insurance company will return to you 100% of every single dollar you paid into the policy… TAX-FREE.  There are some very specific advantages for using this type of policy.  Talk with your Retirement Life Solutions Specialist before you decide to buy this type of policy.  If you cancel the policy during the term, the insurance company will not return any of the premiums to you.

Our final Thoughts

Unlike universal life insurance, term life does not provide the tax benefits or cash value buildup of permanent life insurance.  Term life insurance is useful for people who need life insurance at the least expensive price for a specified time frame.  It can also be useful to supplement a universal policy for a defined period of time. 

Besides speaking with a Retirement Solutions Life Specialist, you’ll also want to consider the following factors as a starting point:

• Are you still young and in good health?
• Are you looking for simple, inexpensive insurance to protect your family?
• Is permanent universal life too expensive for you today?

Finally, don’t be misled by a common misconception you may have heard, “buy term, and invest the rest.”  Sometimes this may not be the best choice for you with the uncertain economic times present today.  Who can afford to put their retirement money at the risk of market volatility?  If you can afford a universal or indexed universal life insurance policy, there are some excellent tax-deferred benefits you can maximize no matter what age you are.  If you are able to purchase a universal life policy at a young age, you have the flexibility to increases the cash you add to it (max fund it) and significantly increase your cash value in a safe and guaranteed method to create an additional stream of tax-free income ready for your retirement.

Make sure you speak with a Retirement Life Solutions Specialist to determine what life insurance is best for your specific situation.  Click here to find one in your area.

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Remember… “You do it For Love”

Here are a few short videos that will bring a smile, laughter, and maybe a tear to your eye about some things you may not have thought about this year as you decide what to buy your loved ones for Valentine’s Day.

What would you do for love?

Bad Cupid

A Meaningful Gift

Crazy 4 Love

We’re glad we’re able to share these heartfelt images from The LIFE Foundation’s web site with you about this year’s Valentine’s Day gift.

Thinking of you always,

Your friends at www.lifeinsurancethinktank.com

What is Life Insurance?

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Whole life insurance (WL) is permanent insurance and covers you as long as you live.  You pay the same premium for a specific period (usually the rest of your life) to receive the death benefit.  This type of insurance provides life insurance coverage and a savings feature.  

With whole life your insurance company puts part of your insurance money in a declared interest bearing account. With every premium payment your cash value increases. The savings element of your policy builds up cash value on a tax-deferred basis.  This cash value can be utilized in a few common ways.  You can borrow the cash TAX FREE or surrender it for cash.  If you surrender the policy you will pay tax on the interest gains that the cash value earned over the years.

Whole life can be participating or not.  If it is participating, you get to participate in the surplus of your insurance company’s excess earnings and receive dividends annually.   You have the choice to either receive your dividends in cash or let them accumulate interest.  You may also use your dividends to reduce your policy’s premiums or buy additional insurance coverage.  Talk with a Retirement Life Solutions Specialist before buying a whole life policy from an insurance company because dividends are not always guaranteed.

Universal Life Insurance

Universal life insurance (UL) is also called “flexible premium adjustable life insurance,” because it offers more flexibility compared to whole life insurance. You have the option to reduce or increase your death benefit and also pay your premiums at any time and in any amount (subject to certain limits) after your first premium payment has been made.

With many companies you can purchase an increased death benefit periodically without having to undergo medical underwriting.  This can be advantageous as someone becomes older and begins experiencing medical problems.  

Some companies will allow two options to the death benefit – a fixed amount of death benefit or an increasing death benefit equal to the face value of your policy, plus your cash value amount. Most times however, the death benefit does not increase and the cash value is there and grow to be used by the policy owner (hopefully they know they can use this money since it is their money).

You also have the opportunity to change the amount and frequency of premium payments. So, you can increase your premiums to increase your cash value or may also even add a lump sum according to the specified limit in the policy. As you know, part of your premium is put into an investment account and the interest therein is credited to your account. In this way, the interest grows on a tax-deferred basis, which increases your cash value.

In case of a financial challenge, if there is enough cash value accrued, you can reduce or stop your premiums and use your cash value to pay premiums.  Make sure to discuss the status of your cash value fund with your Retirement Life Solutions Specialist before stopping the premiums. Your policy may lapse if you cease to pay premiums and have insufficient cash value to cover the cost of insurance.

The downside of a universal life insurance can be the interest rate.  If the policy performs well, there are chances of potential growth in the savings fund.  On the other hand, if interest rates are low over a period of years, then the estimated annual returns are not earned.  

A recent addition to universal life market is called Indexed universal life.  In this type of policy instead of a fixed interest rate from year to year; your cash values earned interest is tied to a stock index such as the S&P 500.  The performance works exactly like that of a fixed indexed annuity.  If the index goes up during the period, you will get all of the gains up to a maximum CAP in place that year.  If the stock index falls negative or is flat, you will receive no interest performance that year.  While this may seem risky, your cash is not invested in the stock market.  It is just using the stock market index as a means to credit interest to your cash value.  Reviewing the historical performance of the S&P 500, you could have made more interest performance in 10, 20, or 30 year periods than if you had been in the fixed interest account of a universal life policy. 

Universal life insurance offers all-round protection to your loved ones, thanks to its security, flexibility and variety of index crediting choices options.  In times of low financial liquidity, you can alter your premium payments or may even withdraw from your cash value fund. In addition, you can increase or decrease the face value of your insurance to an extent if needed.

Universal or Whole Life?

When buying any life insurance policy, you need to focus on the needs of your family in the future. Permanent life insurance is designed to give you and your family lifelong security.  Whole life insurance protects your beneficiaries in your absence and acts as an asset-accumulating tool.  Universal life insurance gives you the chance to regulate your insurance premiums to keep current with your financial situations. Universal Life also gives you more control of your earnings because of the crediting strategies that can be changed at any time during the year.  Your Retirement Life Solutions Specialist can provide you the education and knowledge about all life insurance products available today. Take the time to learn from their expertise before you decide what your family needs.

What is Life Insurance?

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But what if that didn’t happen tomorrow?  What if you died tonight and were no longer around to provide all those things that you’ve been doing for your loved ones? What if you were a single parent, now who would be providing for that loved ones left behind?  Without your income and all the other things you provide, would they be able to maintain the comfortable and special family lifestyle and togetherness that you were able to provide for them?

That’s where life insurance helps you help your family.  It can’t put your loved one’s life back the way it was, but it can make sure they have the world they’ve always known.  So if you think you need life insurance (or need more than you have), do something about it today.  Your family is counting on you.

With Valentine’s Day next week, besides bringing home that romantic gift to surprise your loved one.  Do something permanent for them.  Buy them a life insurance policy to protect them in case you aren’t around to.  Talk to your Retirement Life Solutions Specialist today to determine the best insurance for your family.

What is Life Insurance?

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Furthermore, many statistics indicate that 54% of Americans have less than $25,000 in savings and investments.¹   As you can imagine, even with Social Security income, these people will soon outlive their savings and become impoverished. Some advisors recommend that someone who is working to begin saving at least 8-12 times current salary for retirement.  Then make sure they’ve saved at least eight times their final salary in order to retire at 67 years old.²

So how can a permanent life insurance policy help in advanced planning?

The cash value in your life insurance policy is your money.  You can take it out as a TAX-FREE loan. There are some concerns by doing this, but if created correctly in the first place, this can become an additional source of income during your retirement years.

So who do you talk to for more information about setting this up correctly? Retirement Life Solutions Specialists are advisors who can help you plan to use life insurance for other things than just the beneficiary’s life insurance payment.  They can show you how to fund a life insurance policy to help pay for children’s college, large purchases without borrowing from your bank, starting a business, and retiring on your own terms.

How can I help pay for my kids college education?

Most parents would rather their children not have to work their way through college or have large loans to pay off when they graduate.  A permanent life insurance policy correctly set up to build cash value can be used for college expenses.  When the child enters college the policy owner can take a TAX-FREE loan from their insurance policy each year to pay for some or all of the annual expenses. 

During this time, they should continue to pay the monthly premiums as well as the loan back.  By paying the loan back they are paying the principal and interest into their own cash account not the bank or lender who they might have had to take a loan from.  This continues to rebuild and grow the cash value in the insurance policy for future use.

Other mid-life uses

The policy owner can also use their cash value for other large purchases rather than borrowing from a lender and paying interest. Buying a car, down payment on a home, or other large purchases is easily done by borrowing from the insurance policy.  How about starting a business?  The policy owner can borrow from the cash value of their life insurance policy and quickly access startup capital.  Did you know that a few famous entrepreneurs – Walt Disney and Ray Kroc – used this exact method to start up Disneyland and McDonald’s?

Using life insurance in retirement

The use of a permanent life insurance cash value accumulation to add to other retirement savings can make perfect sense.  If a policy owner has done a good job building up their nest egg of cash over many years they have more flexibility to use this as an extra source of funds.  These funds have grown tax-deferred and now can be borrowed as a TAX-FREE loan to supplement monthly income as needed.  More importantly, at this point there is no rule that you have to pay the money back into the insurance policy.  Finally when the policy owner dies, there still is a life insurance benefit paid to the family for protecting their family.

The best time to begin funding a permanent life insurance policy is as young as possible.  However, at just about any age there are numerous ways to buy a permanent life insurance policy and still take advantage of this benefit.  Talk with your Retirement Life Solutions Specialist about your family’s specific situation.  They can educate you on the best choices available today.

¹ Brandon, Emily “Planning to Retire” U.S. News & World Report | Money, 10 February 2011, Accessed February 7, 2013

² CNBC Online, “Think Magic Numbers (Plural!) for Retirement Savings” cnbc.com, 25 October 2012, Accessed February 7, 2013.

What is Life Insurance?

Cost of Life Insurance?

That’s right, Consumer Reports did a thorough investigation in its February issue about the wild amount of life insurance payouts that are NOT claimed.  The results came in at over an astonishing $1 Billion of life insurance benefits that are just sitting there waiting on beneficiaries to claim them.  Our question is how can this possibly happen, especially with the tracking ability and network of databases that is available today?  But I can also see it from the carriers perspective – How much time and money are they really going to spend just to give money away that the beneficiaries should be banging on their door for?  The entire thing seems crazy.

The best part is the Consumer Reports magazine actually calculated the chances that some of this money could be yours from a long, lost relative…1 in 600!  Much better than winning the lottery for sure!

Life Insurance Education