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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Key Point – Tax avoidance does not equate to a reduced need for legacy planning to transfer wealth for non-taxable reasons.

You still need to be educated on issues that could distress the financial security provided by the proceeds of your life insurance policy. Beyond estate taxes, there is the potential for probate, gift taxes, financial mismanagement, and misuse.  Proper legacy planning is necessary to help avoid these threats.

Why and How much life insurance should you own?

If you have any concern that your entire estate will eventually exceed the current exemption limits, either single or married, than you should speak with a Tax Free Retirement Specialist to help with legacy planning to determine how much life insurance you should have.  Your beneficiaries can then pay the federal estate tax from the life insurance benefits without having to sell any of the estate assets.  Without the life insurance proceeds, they might have to sell estate assets most likely triggering capital gains tax on top of the estate tax.  You see, when you pass away, the Federal government is going to try and get as much money as they can.  It’s your responsibility with legacy planning to use the appropriate tax advantaged tools to protect as much of your wealth and pass it along to the next generation or a charity of your choice.

What type of life insurance?

Indexed universal life insurance will appeal to most people because of the ability to provide higher interest crediting strategies in the current low interest rate environment.  The internal rate of return of life insurance at life expectancy is now superior to returns offered by alternative fixed income vehicles – a result of life insurance’s tax advantaged status.  Because of low interest rates and the almost guaranteed fact that taxes will eventually rise, insurance products that offer tax-deferral are more beneficial to consumers today.

Who should own the life insurance policy?

If you don’t own it yourself, there are three practical options for the ownership of your life insurance.  We discuss the owner as being the beneficiary to prevent a taxable event.  Because if the owner, the beneficiary, and insured are all different people it becomes taxable.

• Your spouse as owner and beneficiary:

The concern here is not that they receives the life insurance proceeds, but what happens when they eventually passes away.  The original proceeds of your life insurance policy may be subject to estate taxes and perhaps probate administration when they eventually die. In addition they will be responsible for investing the proceeds of your policy. This can be quite an emotional burden on a spouse not prepared or equipped to handle financial decisions making.

• Your child as owner and beneficiary:

If the child is the owner, then the child is responsible for paying the premiums (unless the policy is a single premium policy).  Make sure they are capable of this responsibility because you do not want the policy to lapse because of an error. Your child also will be the legal owner of the policy proceeds.  Make sure the life insurance policy has enough proceeds to allow them to pay the estate to settle taxes, fees, and other expenses.

• An irrevocable life insurance trust (ILIT):

This may be the better choice for ownership as long as the Trust is not the beneficiary of the life insurance policy.   If the ILIT is the beneficiary of your life insurance, the proceeds may be included in your estate and become taxable.  The ILIT should only be the owner with the beneficiary usually being your children, grandchildren, or a charity.  This way the proceeds of your life insurance pass outside of your estate and are not taxable in most cases.  An ILIT can help avoid threats to your policy’s proceeds.  Because the designated trustee must manage the ILIT for your benefit, it helps ensure the availability of liquid funds when they are most needed.  The use of an irrevocable life insurance Trust can provide an opportunity for families to utilize the benefits of their life insurance to pay estate and other expenses as needed.

A few other points about an ILIT

Once created properly by an attorney, the trust is irrevocable and cannot be changed.  The insured person may not retain the right to revoke, alter, amend, transfer, or terminate the Trust, meaning they can’t even change beneficiaries.  The insured must be totally and completely economically disassociated from the ILIT. 

The best time to create an ILIT is before the life insurance policy is bought, and then when the life insurance application is taken, the owner of the policy is designated as the irrevocable life insurance Trust. Also, make sure you are insurable so you don’t waste the cost of creating an ILIT. 

To find a local Tax Free Retirement Specialist in your click here.

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“Fortunately, the life insurance industry has almost none of the problems of Wall Street… Until recently, permanent life insurance was arguably the financial industry’s most complex instrument. Fortunately, due to its complexity, life insurance is highly regulated to assure there are always sufficient, safe assets to honor its guarantees. This is referred to as statutory accounting. For more than 100 years, every life insurance death benefit has been paid.

All life insurance companies use statutory accounting. In addition, publicly traded insurance companies use GAAP accounting. It allows them to report the expected profitability of products that require reserves to back their contractual liabilities.”

Mr. Jones doesn’t take the point of view that life insurance companies can fail, several have indeed failed.  But for the other 99% of them, they have a proven track record of stability.  In fact, of those few life insurance companies that have failed, the other insurance companies bought up all of the failed companies policies.  Whole life and universal life insurance products are highly regulated for payment stability and have successfully been through good times and bad.

So let’s look at how about 99% of us struggle to make ends meet.  Many of us are in a position where we think that our lifestyle is consuming all of our earnings.  The belief is that every time we achieve a greater level of affluence, we increase the level of spending to account for that new found level of income.  There is an entire school of research called “behavioral economics” that says a human will consume what it earns or all that comes into his or her personal economy.  This is why it makes it difficult to save.  We’ve got to become better savers for our future retirement.

At www.lifeinsurancethinktank.com we educate people how to accomplish retirement savings and at the same time protect their loved ones with a life insurance product.  This can be an entirely new concept for many people who are accustomed to investing their savings in the highly volatile marketplace and losing lots of sleep watching it go up and down.

We hear that people think that insurance costs too much.  In a much published study, people know they need insurance but think they can’t afford it. However once educated on the true cost of insurance, they realize it is significantly less than they thought it was and they really can afford to protect their loved ones.  There are numerous choices of life insurance to choose from to protect and create a retirement plan; such as term life, universal, and indexed universal life insurance.

A universal life insurance policy is a perfect choice to begin a retirement plan.  Besides the obvious life insurance benefit, it force starts a savings plan that is guaranteed safe.  While term life insurance is obviously less expensive, the universal life policy is earning a higher rate of interest than any other safe investment product on the market today.  This savings element is compounded annually and if held for 10, 20, 30 or more years, it can yield a significant sum of money to supplement other retirement income sources.  Additionally, this money is tax deferred, safe from creditors in many states, has cash value you can borrow tax-free, and most likely has a living long-term care benefit.

At this point, would you say this is an expense or a savings? Is it a smart place to put your money? Any place you can save money is a smart place.  So the real question is, “is this a smarter place to put your money?”  Life Insurance Think Tank would suggest to you that buying a permanent life insurance policy that protects your family for the rest of your life is an excellent choice because it provides:

• Living benefits of long-term care should you require it while you are alive
• A death benefits when you pass away
• Tax-free payment of proceeds to your beneficiaries
•  guaranteed safe place to save money
• An excellent place to earn compounded tax-deferred interest
• The option of taking your cash out tax-free to for any purchase
• The option to take your cash tax-free to supplement your income when you retire
• Does not require you to pay it back into the insurance policy!

Permanent life insurance has stood the test of time and proven useful for a very long time.  Life insurance has been a common place for Americans to save money for decades.  But then the financial markets became all the rage to save money.  We’ve been through some difficult times with the markets and no one knows what’s going to happen in the future.  However, even during the previous rough market times, not one person who had their savings in a life insurance policy ever lost money.  Can you say that for anyone you know who was invested in the stock market?  Learn more about life insurance at www.lifeinsurancethinktank.com.  Find a Tax-Free Retirement Specialist here who can help answer your questions about creating a tax advantaged strategy for protecting your family and a retirement plan.

What is Life Insurance?

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How to Use Life Insurance for Estate Planning

As Ben franklin said, “…in this world there is nothing certain but death and taxes.”  Life insurance can help you when both of those situations occur.  Obviously not the aspect of death, but it can definitely manage the tax aspect of his comment.

As humans, one of our primary failings is that we can’t see into the future and we limit ourselves to only thinking in the near term.  Today your family estate, farm, business or net assets may be well under the current threshold of having to pay estate taxes.  But what happens when (not if) the estate tax limits are changed in the future?  What happens 10-20 years or more from now when your net worth has grown so significantly that your heirs will need to pay estate taxes on their inheritance?  Will your current life insurance policy help them pay the federal tax due?

There is significant life insurance advanced planning strategies that a Retirement Life Solutions Specialist can create to protect your hard earned assets from significant taxation loss.  Universal life insurance policies are usually less expensive than whole life policies and can be created to provide enough life insurance benefit to cover any taxes that might be assessed.  But remember our human nature to be short-sighted?  Make sure you buy enough insurance to insure the growth of your estate into the future. 

The life insurance you buy today will be significantly less expensive than what you will pay for the same amount anytime in the future.  You aren’t getting any younger and you might develop health conditions that may increase the cost or prevent you from being insurable.  Seek out your Tax Free Retirement Planner for advanced strategies. They can create the tax-free life insurance plan and coordinate conversations between your legal representative and your tax planner to ensure your estate plan is maximized for your beneficiaries.  Click here to find an expert planner in your area.

What is Life Insurance?

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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.

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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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Because of increased life expectancy, many people will live 20 or more years beyond their normal retirement age. Yet, while they may be living longer, this does not necessarily mean that they will be living healthier. Therefore, from a financial standpoint, it is imperative that people plan ahead not only for basic living expenses in retirement, but also for the high cost of long-term care.

There are three primary methods of insurance yourself for long-term care costs

Self-Insurance as an Option

To do this you must have sufficient income to pay the rising costs of long-term care. Keep in mind that even if you have sufficient resources to afford long-term care now, you may not be able to handle rising future costs without drastically altering your lifestyle.

The Medicaid Option

Medicaid is a joint federal and state program that covers medical bills for the needy. If you qualify, it may help pay for your long-term-care costs. Unfortunately, Medicaid is basically welfare. In order to qualify, you generally have to have few assets or will need to spend down your assets.

Your resident State law determines the allowable income and resource limits. If you have even one dollar of income or assets in excess of these limits, you may not be eligible for Medicaid.

It is critical that you meet with a tax planner and a retirement life solutions specialist to ensure that you follow the specific laws of your state in advance of expecting to file for Medicaid.  Most states will look back 5-7 years on the assets you held and if you sold or transferred them during that time period, then they may elect to include them in your current asset valuation.

Long-Term-Care Insurance

A long-term-care insurance policy may enable you to transfer a portion of your liability of future long-term care costs to a long-term care policy issued by an insurance company in exchange for the regular premiums.

Most long-term-care insurance policies benefits may be used to help pay for skilled nursing home care, assisted care living facilities, continuing care retirement communities, in-home care, and adult day care. The main requirement is that you cannot perform 2 of the 6 Adult Daily Living skills (ADLs). These ADLS are bathing, mobility, dressing, transferring, toileting, eating, and the need for supervision.  Insurance can help protect your family financially from the potentially devastating cost of a long-term disabling medical condition, chronic illness, or cognitive impairment.

A Recent Alternative

Long-Term-Care Riders on Life Insurance

Something new that most universal life insurance policies may now include is a long-term-care rider.  These riders will provide a living benefit — usually a percentage of the face value — to help cover the cost of long-term care. By speaking with a Retirement Life Solutions Specialist, they can provide you with the full coverage of any of the policies you are investigating.

Source:

Life Insurance Think Tank. (2012) The Truth About Long-Term Care [White Paper] Retrieved from eSeries Here

What is Life Insurance?

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