Life Cycle Financial Planners, LLC

Author: Ted Bernstein

  • Wealthy People Own Jumbo Life Insurance Policies – For Good Reason.

    Wealthy People Own Jumbo Life Insurance Policies – For Good Reason.

    Most wealthy people wish to preserve and protect their assets from federal estate taxes when those assets are transferred to their heirs. Perhaps you’re in this situation, and are looking for the best solution?

    High net worth people use large amounts of life insurance to create the lowest possible cost of liquidity for the purpose of minimizing the impact of estate taxes. Without life insurance, federal estate taxes are paid 100% from estate assets.

    Jumbo life insurance coverage, (often financed in a creative way), is a critical element in state-of-the-art succession planning and will help you transfer wealth with ease and much greater certainty.

    High net worth people pay close to 50% in estate tax, on top of paying many other taxes while accumulating their wealth. 

    Minimizing the burden of taxation on transferred wealth is sensible planning.

    For these reasons, properly structured permanent life insurance is a necessary part of sophisticated estate planning strategies. To support and enhance these planning techniques, life insurance guarantees that liquidity is available upon death. This means less pain for your heirs.

    Highly regarded income and estate planning attorneys are leading advocates of life insurance for estate planning purposes because it creates the immediate liquidity that binds their wealth transfer plans. 

    Use your existing assets to secure jumbo life insurance coverage.

    The cost of life insurance is low when structured properly. It is very important to understand how the jumbo life insurance definition affects pricing. 

    The cost of life insurance is a fraction of the return generated from the death benefit. 

    As people become more wealthy, it becomes increasingly more difficult, without insurance, to successfully protect the majority of their assets from estate and gift taxation.

    Once the decision to purchase life insurance coverage is made, the question of how to best pay for the insurance can be considered. These issues are dependent upon many factors and it is why customization is always best. Should the premiums be accelerated? Should the coverage be whole life or indexed universal life?

    Does premium financing make sense?

    Borrow the Premiums to Pay For the Life Insurance Policy.

    Premium Financing:

    • Borrowing the premiums from a bank can be an optimal way to fund permanent life insurance while offering great flexibility in the future.
    • Uses well managed loans to drive down out of pocket costs.
    • Non recourse design requires minimal collateral other than the life insurance policy.
    • Results in fully funded policies with many options to pay off the loan (always dependent on projections).
    • Minimizes out of pocket costs in all years until the anticipated exit strategies pays off the loan.

    Work With Me To Help You Structure The Right Plan.

    For 30+ years, I have been working with individuals, families and businesses facing these very same issues. Typically, my clients work with a team of cutting edge professionals. Whether they are estate planning attorneys, CPAs and wealth managers, my clients are people who appreciate expertise from professionals who bring valuable experience from their respective fields. I have helped my clients acquire more than $1B of permanent life insurance coverage and I have placed individual policies in excess of $50,000,000. I work with my clients to create value in many ways.

    Driving down the commissions in jumbo life insurance policies can have a direct correlation to better policy performance in the early years.

    I will help you get the best underwriting offers possible. It is critical to help the underwriters properly evaluate an applicant’s medical history in order to qualify for the best rate class.

    Testimonial:

    “After spending several years working with top tier estate and tax advisors to put a succession plan in place, our counsel put us in touch with Ted Bernstein for the purpose of getting life insurance. I can’t say it any simpler than by saying, after working with Ted, I became aware that there is a real difference between insurance people. Ted is approachable and good at making insurance relatable.” Jake Garlick, Virginia

    Please contact Ted Bernstein at 561-771-4647 or email him at TB@LifeCyclePlanners.com. He offers a complimentary consultation to discuss anything you wish about premium financing, succession planning and wealth preservation. If you have questions about Private Placement Life Insurance (PPLI), Ted can help make sense of this very complicated vehicle.

  • Why You Should Trade In Your Life Insurance Policy For A Better One.

    Why You Should Trade In Your Life Insurance Policy For A Better One.

    Even though you are older, it can often make sense to buy a new life insurance policy.

    We tend to think that because we are older, we are prohibited from getting a better policy. But that is not the case. If you currently own life insurance and you are healthy, there is better coverage out there. This is intended to help you acquire better coverage and the rationale for doing so.

    First, you have nothing to lose by shopping the market.

    Here is the good news:

    Life insurance is not a “one and done” acquisition. Would you shop a mortgage rate if a better one seemed possible? Would you get a better car for a better price? Most people want the benefits of technological improvements. The same applies to life insurance!

    Of course, it always depends on individual analysis and the details. I am not suggesting life insurance owners run out and blindly replace their life insurance policies. I am suggesting there is no downside to considering better coverage.

    Over the past 30 years, the terms “switching” or “replacing” became “negative terms” within the life insurance industry. They are not, by definition, negative terms.

    There was a time when unscrupulous agents churned business, but those agents are long gone and protective measures are part of the fabric of our industry. The industry does a nice job policing itself.

    I would suggest that the pendulum has swung too far. Some life insurance applications in some states include replacement paperwork with dozens of pages that are nearly impossible to complete. To be clear, I am 100% for consumer awareness and replacement guidelines that protect life insurance buyers.

    Innovation is the force behind better life insurance products.

    People with existing life insurance deserve to know that replacing, changing or switching one policy for another may be a smart thing to consider. Policyowners must become aware of this from insurance companies, agents, associations, industry pundits and advocates. It is imprudent to keep a life insurance policy without knowing if better coverage is available.

    Let me help you choose the best policy for your needs. Let’s get started.

    The process begins with a current discussion of your health. Fortunate consumers are the ones in similar or better health compared to the time they last bought a policy. There are meaningful innovations to consider.For example, accelerated benefits alone make a strong case for trading up. Accelerated benefits give policyowners the ability to take an advance against the policy. The advance comes from the face amount, not the cash value account, and it is not a loan. Many term policies now have accelerated or living benefits too.

    If your current health is similar to the last policy you bought, it is likely that you can upgrade. Buying life insurance today is a much simpler process and depending on the amount of coverage, it can all be done online, without a medical exam.

    There is no downside in taking advantage of better rates, lower premiums, more benefits and more flexibility.

    When does it make sense to keep existing coverage? When there has been a significant change in health or surrender charges apply, it may not be possible to benefit from new life insurance. Until a policy or policies have been properly reviewed, it is impossible to know. Jumbo policies should routinely be reviewed as there are several insurance companies competing for this business.

    Please contact Ted Bernstein at 561-771-4647 or use the form on this page. You can email Ted at TB@LifeCycIePlanners.com. He offers a complimentary consultation to discuss anything you wish about life insurance or annuities. Read what other clients have chosen to say about Ted. Please visit at www.facebook.com/lifecycleplanners

    https://en.wikipedia.org/wiki/Whole_life_insurance https://en.wikipedia.org/wiki/Life_insurance#Permanent_life_insurance

    (For all the uninsured people with families and/or businesses that are unprotected by life insurance, the first several hundred pages of google results offer advice about the benefits of owning life insurance. If you don’t own any life insurance, it may be far less expensive than you think).

  • Should You Convert Your Term Life Insurance Policy? What You Must Know.

    Should You Convert Your Term Life Insurance Policy? What You Must Know.

    If you’re in good health, you have much better options to consider before converting an inforce term insurance policy. For healthy people, converting is usually the option of last resort, but there are exceptions. First, you have to know the actual conversion deadline but more than 90% of term insurance owners do not understand the conversion options, or the deadline.

    For many reasons, most people do not convert their existing term policy to a permanent policy. The most obvious reason is that the majority of life insurance buyers are not good candidates for permanent life insurance. For them, a less expensive option might be a term policy without conversion options. Not many companies offer this option but it can be the perfect solution. However, for the people who need and want permanent coverage, it makes sense to shop for a new policy with other carriers – BEFORE CONVERTING. Most insurance companies do not expect healthy people to convert term policies. They assume only unhealthy policyholders will convert without shopping and based on that fact, converting can be a very expensive proposition.

    In a perfect world, everyone would like a permanent policy for the cost of term insurance. When we are young, term is easy on the budget and reaching age 50 seems a hundred years away. Young insurance buyers are often told:

    • They won’t need life insurance in the future.
    • Their kids will be grown and other assets will make life insurance unnecessary.
    • Their spouses won’t need protection when the kids are grown; and
    • Once they reach retirement, the need for life insurance goes away.

    For some people, those statements might be true. But for many, those statements do not apply and when they don’t, term insurance is the wrong product solution. In reality, our feelings about life insurance change as we get older – ask anyone over 50. Or ask anyone with grandchildren or anyone who has been divorced. Even if you initially opted for temporary term coverage for budget reasons, we recommend replacing it with a permanent policy. The sooner the better and well before the temporary coverage expires.

    There is a small number of life insurance companies with great term insurance products. These companies have low rates, they allow conversion in ALL YEARS and they allow the term policy to be converted to all available products.

    The decision to convert a term policy depends on your health and your current goals and objectives. If you are going to convert term insurance while you are in good health, you hopefully have the right kind of term policy. If not, the options may not be ideal, making conversion a critically important issue when buying a new policy or reviewing inforce policies. Too many term life insurance agents want you to believe that price matters more than anything else when choosing a policy. Nothing could be further from the truth. For example, accelerated benefits are invaluable and add no cost to a policy.

    We hear from people when they are shopping for new coverage or searching for information about conversion options, usually near the end of the guaranteed period. Like many financial planning issues, help from a professional is your best bet. Getting current policy information about the conversion options will provide clarity about the best possible course of action. Life insurance is not one size fits all, there are no simple answers that apply to each individual. The end of a term insurance policy is an important deadline that brings the question of life insurance coverage into focus again.

    When a term insurance policy is expiring, it should be treated just like the purchase of a new one. How much coverage is needed now and how has that changed? How long do you want the coverage to last? The issue of duration is one of the most important considerations as it determines not only the type of policy to consider, but it’s premium too.

    The longer you want coverage, the higher the premium will be and the sooner you lock in a permanent insurance rate, the less it will be over the long run. For people who prefer to control and minimize future costs, permanent insurance has a much lower net cost than term.

    If you purchased a 20 year term policy 10 years ago, in effect you only have a 10 year term policy without living benefits and the conversion deadline may be right around the corner.

    Things are changing. Life insurance buyers today are benefiting from education, innovation, technology and medical science. However, your current policies are not receiving any of these improvements. New policies offer access to accelerated benefits against the face amount of a policy, at no additional cost. Your life insurance policy is now an emergency fund in the event of a chronic illness. A $2,000,000 policy is eligible for a $1,000,000 advance from the face amount, under the illness rider. Even if there is zero cash value in the policy, it remains eligible for an advance because these special advances come from the face value, not the cash value. Ask an experienced agent to compare your existing policies against what is available in today’s market.

    To take advantage of these innovations, please contact us at 561-771-4647 or complete the contact form on this page to schedule a complementary discussion.

  • How Are Investments Different From Annuities?

    How Are Investments Different From Annuities?

    Although annuities and investments are not the same things, there are important differences and similarities between them:

    Other than variable annuities, 100% of the principal and the growth of an annuity is guaranteed, no matter what. Even when the stock market was down 40% in 2007 and 35% in 2020, annuity contracts were protected and no principal was lost. With variable annuities, the policyowner does assume market risk, making them very different tools. What follows is a discussion of some of the pros and cons of annuities versus investments.

    Annuities create GUARANTEED, INCOME FOR LIFE. Using the right annuities can create unbeatable amounts guaranteed, future income that will be greater than any other strategy. For this reason, many people describe annuities as private pension plans.

    Annuities are contracts with some of the strongest guarantors in the world. Investments are typically not contracts with guarantees.

    All the money in an annuity is guaranteed, including all gains it earns from the day it is purchased. Everything in an annuity contract is regulated and spelled out, providing the most transparency. This creates safety, security and predictable outcomes. This is quite different from investments, such as real estate or equities in the stock market, which are good examples of speculation and risk. One is not better or worse than the other. They all have their places in a comprehensive financial plan. Annuities are precise, transparent and dependable. Most of our clients have annuities and investments.

    Guaranteed Interest Annuity

    Tax Deferral: Not paying tax during the annuity’s growth phase can be very meaningful. Taxes will ultimately be paid on distributions. Annuities are not tax shelters but the advantages of tax deferral is significant, especially for retirement purposes.

    Rather than exposing inherited assets to loss, mismanagement and other risks, annuities are often used to create lifetime income for beneficiaries. Grandparents are increasingly using annuities to create sheltered income for children and grandchildren. Structured properly, the income is protected and safe from divorce and probate.

    Unlike investments, some annuity companies offer generous bonuses to new policyholders. They do this by crediting the incoming account value with as much as 10%. Many people consider the bonus as an offset to surrender charges. The bonuses are added to the annuity’s account value and begin earning interest from day one.

    Most annuities have NO FEES and there is NO COMMISSION paid from your assets. The one time commission is paid from the insurance company, NOT YOUR ASSETS. For example, when you pay a single premium of $200,000 into an annuity, the amount earning interest from day one is $200,000 plus the bonus if there is one. In comparison, a 1% fee for the same $200,000 investment is reducing the account value each year, by $2000. At the end of 10 years, it adds up to $20,000. If that fee taken from your account is 1.5%, then you will pay $30,000 over 10 years.

    For people under age 59.5, there is a small penalty for withdrawing money from their annuity. Investments are not subject to these types of penalties.

    Some annuities and some investments have surrender penalties. CDs are examples of investments with surrender penalties. Annuities have small, declining surrender penalties to allow insurance companies to invest your money with longer durations and better returns.

    For a quote, please call us at 561-771-4647 or email Ted Bernstein, about a complimentary phone consultation.

  • Why Do High Net Worth People Own Permanent Life Insurance?

    Why Do High Net Worth People Own Permanent Life Insurance?

    High net worth people tend to appreciate value and typically want life insurance protection for life.

    Permanent life insurance (sometimes referred to as whole life insurance) offers much better value for life insurance buyers than any type of term life insurance. The net cost of permanent life insurance is undeniably better.

    Net cost is the total premiums paid minus the total cash value. For example, if $80,000 of total premium is paid into a permanent policy over 10 years and the cash value of the policy is $80,000, there is a net cost of $0. That is not an error. It is how permanent insurance is designed. Comparatively, if $40,000 of total premiums were paid into a term policy over the same period, the net cost would be $40,000. The cost of term insurance increases as we get closer to life expectancy while a whole life premiums are level or may have been paid up in the early years.

    The longer you own a permanent life insurance policy, the better the net cost will be. A lower net cost number is better. Conversely, the longer you own term insurance, the higher the net cost will be.

    There are two types of life insurance that all policies fall into – permanent insurance and term life insurance. Most jumbo life insurance policies are permanent policies.

    What are the differences between term insurance and permanent life insurance?

    Permanent life insurance provides lifetime coverage, meaning that it can be designed to provide lifetime coverage or coverage to a target age. The target age is selected by the policy owner, not the insurance company. Not everyone needs or wants coverage for life.

    Some permanent life insurance policies build up equity or cash in the policy and some do not. Because term insurance has lower premiums in the early years, people mistakenly believe that term insurance is “better” coverage. Not only does permanent insurance have much lower net cost over time, it has much greater flexibility and it is more easily customizable.

    Permanent life insurance is the best value for lifetime coverage.

    Term insurance is temporary insurance – it expires at the end of a guaranteed period. Permanent insurance will stay inforce as long as the policyowner wants to keep it. Permanent insurance puts the policyowner in control of when coverage ends, not the insurance company.

    What Nobody Tells You About Term Life Insurance.

    “Over the past 25 years, people were sold a complicated marketing gimmick called “buy term and invest the rest”. Individual policyholders were told they could invest better than insurance companies, encouraging them to invest the annual difference between a term premium and the higher premium for a permanent policy. The difference would go into a side investment fund to be invested with hope it would be used to pay for the much higher term premiums later in life.

    Buy term and invest the difference has proved to be a costly mistake for millions.

    Although this sounded reasonable to unsuspecting life insurance consumers, “buy term and invest the rest” proved to be nothing more than slick marketing. It has been primarily promoted through multi-level marketing groups and entry level insurance agents. The projections are often run using unrealistic interest rates to grow the side fund. Someone who bought a 20 year term policy in 2005 may have seen projections using 7% while the actual interest rate over that period was half that amount, or less. The proponents often use average S&P returns to justify using high growth assumptions within the side fund. That is not a fair assumption either because the side fund cannot afford losses, forcing the side fund to invest conservatively.

    Insurance companies invest and manage billions of dollars compared to individuals who usually invest much smaller amounts. Insurance companies employ the best and brightest in their investment departments and insurance companies are able to monitor assets on a 24/7 basis, while policyholders cannot. There are no taxes paid while the insurance company is managing the assets. Person after person will tell you they never invested the annual difference. They bought inexpensive term insurance but never built up a side fund. The few who did invest, did not invest with discipline. If they skipped years or withdrew funds from the side fund account, the whole thing was derailed. The result is a messy trail of people with expiring term policies or compromised health. In worse case situations, some have no side fund and they cannot get new coverage because of health issues.

    Most people do not convert their term policy for good reasons.

    More and more people buy permanent life insurance when it is properly presented to them. “But what about Dave Ramsey and Suze Orman who don’t like permanent life insurance?” They are not insurance professionals and they do not offer advice to individuals because that would require them to be in compliance, carry the proper licences and put their reputations on the line. It is easy for pundits to make unsubstantiated claims. They sell ad space, books or subscriptions.

    Buying life insurance is often a process over a lifetime, not a one-time event. Term insurance can be the right decision for young families. The right time to consider buying permanent insurance is sooner than later. The following triggers lead people to consider permanent insurance:

    When moving from the “paycheck to paycheck” lifestyle, we become potential permanent life insurance buyers. Since ninety seven percent (97%) of all term policies do not pay a claim, then 97 percent of ALL term premium were wasted. High Net Worth (HNW) consumers and high income earners choose  permanent life insurance because it has better value:

    Replacing Your Income:  If your family  or business depends on you and your income to run smoothly, permanent life insurance is the right product for those who can handle the higher premiums.  

    Immediate Liquidity:  Very wealthy people own permanent life insurance. They want the guaranteed liquidity it provides at death. 

    Permanent Life Insurance Is The Best Tool For Mitigating Succession Planning Problems:

    • The value of assets fluctuates significantly and death is always the worst time to sell a business or other assets. 
    • Many people have children working in a family business. Life insurance is the great equalizer for those children who do not work in the business. Without liquidity in these cases, there is great risk to a smooth succession of a family business.
    • More and more grandparents own a life insurance policy for each of their grandchildren. The insurance policy is straightforward, inexpensive and a “feel good” asset knowing how it will impact the grandchildren. 
    • Premium Financing. Wealthy people have the ability to finance life insurance. When it makes sense, it is a very effective tool to create tax free wealth.

    Please contact us at 561-771-4647 or email me at TB@LifeCyclePlanners.com about a free review.

    Visit us at www.facebook.com/lifecycleplanners

    https://en.wikipedia.org/wiki/Whole_life_insurance l https://en.wikipedia.org/wiki/Life_insurance#Permanent_life_insurance

    best life insurance. what is term insurance?

  • What To Expect From Insurance Professionals?

    What To Expect From Insurance Professionals?

    The majority of our new clients have life insurance and annuities when we meet them. People are often surprised to learn they are not paying the lowest premiums and they’re also surprised by how much innovation has occurred since they last bought coverage. The addition of living benefits is a great example of a fundamental change to life insurance coverage that is here to stay. On the annuity front, people may not know that annuities guarantee that principal is never lost and some annuities include Long Term Care riders for small rider fees. In essence, these annuities double or triple the monthly payments for long term care needs.

    Working with insurance professionals brings these four advantages:

    1. Experience.
    2. Guidance through the process.
    3. Automatic reviews.
    4. Inside baseball.

    One of the most difficult industries to successfully navigate on your own is the insurance industry. The products come from the actuarial science world, making them difficult to understand for most people. The rate of change within the industry is what makes it impossible to navigate on your own. There are hundreds of insurance companies fighting for market share by constantly creating unique and innovative products. These companies have some of the brightest and most well educated people improving the products they bring to the markets. Unless you make it your business to get educated and stay educated, you will always be ahead when working with professionals. There is nothing simple about buying life insurance or annuities. Even term insurance appears to be a commodity, but it is not. Every company’s product is different and there are significant differences within the carriers.

    For example, unless you have studied the issue of conversion deadlines and living benefits, it is impossible to compare apples to apples for a specific policy you may be considering. The living benefits from one company may cover chronic and terminal illness, but not critical illnesses. That could mean the difference between a stroke being covered by your policy, or not. The two products might be identical in price but one covers critical illnesses and the other does not. I recently helped a couple in California. When I met them, they were unaware that living benefits could allow them to take advances against the face amount of a policy. They were unaware that accelerated benefits are a part of many life insurance policies at no additional cost. When agents sell only price, these things are overlooked. Part of our value is to help people determine exactly what they need and want, and then work backwards to find the best product to match those needs.

    Inside Baseball – what you really need to know.

    No more medical exam! With apply and buy, get up to $5,000,000 of coverage online, in one virtual meeting. There are no doctor records, blood or urine tests, or medical exams that slow down the process. Meetings with agents can be online or in person. The rates for these policies are priced the same as fully underwritten ones. There is no additional cost to apply and buy. Permanent, whole life, universal life or term to 100 can be applied for and issued in an hour.

    More and more term policies do not allow convertibility in all years even though life insurance buyers want long conversion periods. This could be unnecessary risk for most people. Before accepting a policy that cancels the conversion option before the end of the term period, we recommend comparing the rate to policies with a conversion option in all years. Only you can determine if one or two percent of premium is worth cutting out important riders and applications. Our job is to give you the right information to help you make the best possible decisions. Why do conversions matter in a term life insurance policy?

    A Custom Guide.

    Think of a life insurance policy like a brand new Smartphone right out of the box. The phone will have the ability to make calls and do a few other basic things like take photos and go online. I guarantee that your Smartphone and mine do totally different things in addition to those embedded basics. Your phone probably does not have quote engines for life insurance, a NASA photograph app and Tax Facts. Life insurance policies are customized the same way. Basically, they provide a death benefit and some build up equity. But, like the smart phone, that is where the similarities end. My policy includes living benefits, it builds up guaranteed cash values and it pays the death proceeds in guaranteed, equal installments over time. I have different planning goals and objectives than my clients and my life insurance policies and annuities will reflect them.

    There are endless examples that make these same points. There is great value in working with insurance professionals who are committed to staying on the cutting edge of the industry. Our new clients have previous life insurance and annuity coverage that we improve from our experience and from our “inside baseball” knowledge of the industry. For example, life insurance companies often retire products because something about them is too good in today’s market. That can be really good information to know and share with our clients. Most people are not aware of how rapidly innovation is occurring and how quickly it is out-dating their current policies.

    Jumbo Life Insurance Policies – better pricing matters.

    High net worth consumers and ultra high net worth consumers are more likely to buy permanent life insurance to solve liquidity problems upon death and to generate tax free distributions from privately funded pension plans. By far, permanent life insurance is the most economical way to purchase insurance for long term needs. In addition to the superior net cost, it is versatile and flexible. For people buying jumbo life insurance policies, you benefit by being aware of the advantages that were specially designed for jumbo life insurance policies.

    “I’m all set” is one of the most common beliefs people have about their insurance coverage. Most of the time, they’re not.

    A Regular Review is the Key.

    A good life insurance professional is encouraging their clients to review their policies to learn about worthy suggestions and recommendations. A good agent will bring ideas and concepts that might enhance the coverage for their clients. If you are not getting this service currently, you will with us. Please call at 561-771-4647 or email me at TB@LifeCyclePlanners to get started. We offer a complementary conversation about anything on your mind concerning your insurance coverage, succession plan or retirement plan.

  • Why You Should Have An Income Annuity In Your IRA.

    Why You Should Have An Income Annuity In Your IRA.

    The purpose of an IRA is to create future, guaranteed income in retirement. Investing your IRA assets into an income annuity creates the most guaranteed lifetime income, WITHOUT PRINCIPAL RISK.

    IRA assets are being transferred from risky equities to guaranteed income annuities, in record numbers. These annuities are contracts that guarantee the principal will never be lost in down markets and they guarantee income that is payable for life.

    Most of the people we speak with are more interested in being invested in the right strategy that guarantees maximum future income without risking principal. Billions of dollars every year are being moved out of brokerage firms and into annuity contracts because a diversified portfolio of equities leaves your retirement assets exposed to risk. As a result, these brokerage and wealth management firms respond with aggressive campaigns designed to discredit annuities. One brokerage firm, Ken Fisher, rails against annuities as their main marketing campaign.

    Income Annuities Are Right For IRA Assets.

    You are required to take annual distributions from your IRA at age 72. These income payments are pre-determined by IRS guidelines, known as Required Minimum Distributions, and the IRS does not require that your distributions must be payable for life. That responsibility falls on the IRA owner. Even though most people WANT guaranteed lifetime income from their IRA, most are not invested for that outcome. Most people have their IRA assets invested in a high percentage of equities.

    A simple comparison tells the story.

    Assume that two 65 year olds have identical IRAs, currently worth $500,000. The primary goal at retirement is to provide guaranteed income for life. At 72, they must begin taking income payments (RMDs). The two IRAs are identical except for how the $500,000 is invested in each.

    • Traditional IRA #1 is invested in diversified securities.
    • IRA #2 is invested in a guaranteed, income annuity that will pay income FOR LIFE. It can NEVER LOSE PRINCIPAL and the INCOME is contractually guaranteed. It will share in market gains when the markets are up.
    ANNUITY + IRA = PEANUT BUTTER & CHOCOLATE

    The IRA with the income annuity is better because it provides the HIGHEST GUARANTEED PAYMENTS FOR LIFE, without assuming any risk. The IRA with diversified securities can lose principal at any time. Losses are devastating in retirement considering that there is no future income to offset them.

    If you agree that important goals in retirement are to preserve principal and make sure you don’t outlive your money, then Few things create guaranteed lifetime income like an annuity. Some critics say the tax deferred status of an annuity is wasted inside an IRA but this is not so. It is a classic red-herring argument designed to confuse people. The IRA’s primary objective is to create maximum retirement income for retirement and the indexed annuity does exactly that.

    If you are unfamiliar with how these special annuities strengthen your IRA distributions, I offer a complimentary discussion to help give you a better understanding of these vehicles.

    Economists and professors from Harvard, Wharton, Duke and Stanford all agree about the undisputed advantages and benefits of indexed annuities.

    Says Michael Kitces, investment planning expert: “Given these changes, it is perhaps time to abolish the ‘annuities should never go into an IRA’ rule and recognize that it has become more a myth and remnant of old than proper advice in today’s environment.”

    Please contact me at 561-771-4647. Complete the contact form on this page or anywhere on the site to schedule a complementary discussion. For a list of Tribune articles I have written, click this link.

    income annuities in your ira.

  • Term Life Insurance Risks.

    If you currently own a term life insurance policy or if you are shopping for one, this information will help you get the best possible policy for your needs.

    Without knowing the future, it is impossible for any of us to “predict” when our need for life insurance coverage goes away, if that ever really happens.

    The most important step when buying ANY life insurance policy is thinking through the issue of duration. How long do you need and want the policy to last? Once you know whether that is for life or only for a number of years, the right type of policy begins to become more clear. Duration is the major factor in price and it determines which type of policy suits you best.

    People who buy term insurance in their 30’s or 40’s are told that 20 year term insurance is a great option because the premiums are low and because life insurance isn’t important in your 50’s and 60’s? It’s true, the premiums are low. They are low because the chance of dying is small in our 30’s and 40’s and 97% of all term policies lapse without paying a benefit.

    Buy Term and Invest the Rest – A Failed Theory.

    If you are worried that your current TERM LIFE INSURANCE policy will expire soon without good options for new coverage, perhaps you were sold a sales concept suggesting that you should buy term insurance and build up a side savings account outside the policy. Known as “buy term and invest the rest”, people were led to believe they could create their own permanent life insurance plan to beat insurance companies. Why give an insurance company your money to invest when you can do it yourself? It sounded reasonable to consumers and untrained insurance planners.

    Many people are told they wouldn’t need or want life insurance once they were near retirement or when their kids were independent. For millions of Americans, “buy term and invest the rest” has proven to be nothing more than questionable assumptions with serious consequences. Too many of the victims have been left without life insurance coverage for the future AND no hefty savings account. Now what they need is proper guidance and help to make sure they can get, and afford, a new policy to fit their current objectives.

    What went wrong:

    1. Buy term and invest the rest was marketed to sell term policies. People were advised to invest the annual difference between a term policy and a whole life policy in a side account.
    2. The side account was to be used 20 years later to pay the future premiums of a new and more expensive policy.
    3. For example, if a 20 year term premium was $2000 & the whole life premium was $8000, the difference of $6000 was to be invested each year by the insurance policy owner.
    4. The salespeople often projected the growth account at 7% or more.
    5. The side accounts have not grown anywhere close to 7%, after tax.
    6. A huge percentage of people never “invested any of the difference”.
    7. Savings accounts were used for other things, if there was any savings.
    8. The conversion deadlines passed in most term policies.
    9. Current health issues cause new policies to cost more than anticipated.
    10. In divorce settlements, any savings accounts were often divided.
    11. Second marriages extend the need for life insurance, well past 50.
    12. Coverage lapses occur well before life expectancy.
    What to do now:
    1. Check your existing policy’s conversion language, asap.
    2. Determine your insurability for new coverage.
    3. Seek counsel from an experienced life insurance professional.
    4. Compare policies with different durations of coverage.
    5. Buy a customized, flexible policy for today and tomorrow.

    CALL NOW FOR A COMPLIMENTARY CONSULTATION AT: 561-771-4647

    Life insurance is a lifetime need. Ask anyone over 50 if they feel differently about how long they need life insurance.

    As we get older, people worry about how their current health issues might affect the rates for a new policy. A few extra pounds, high blood pressure or high cholesterol are common issues that may increase the premium for a new policy, but not as much as you might think!

    More than 95% of all term policies are NOT INFORCE at life expectancy. It would be the equivalent of paying for auto insurance only until retirement age and hoping you don’t get into an accident.

    Mitigating Term Insurance Risks, Seven Tips.

    Term insurance can certainly be appropriate coverage for some young families. They may not yet have the financial resources to pay for permanent protection and buying term is better than being uninsured. Or, term insurance may be appropriate for bank loans, key-person business life insurance and and divorce agreements. However, buying a term life insurance policy if you have a permanent need is throwing away money.

    “Buy term and invest the difference” or “buy term and invest the rest” was a marketing gimmick that gained awareness through non-insurance professionals like Dave Ramsey, Suzy Orman and thousands of untrained insurance agents who promoted a sales gimmick instead of a counseling people about a critically important solution built on guaranteed outcomes.

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    Busting the myths about term insurance!

    As a result of not investing the difference, you end up in the worst possible position: without coverage AND without a savings account to pay future premiums.

    “Life insurance protection is a key risk mitigator in a family’s financial plan and it’s something people need for life,” says Deborah Bernstein. “We stress the importance of working with the right professionals who customize their unique circumstances.” Flexible policies can adapt to our natural life cycles with flexible premiums for unforeseen events like Pandemics or recessions. Lowering or skipping premium payments can prove to be very helpful during these times.

    Life insurance is intersectional in a family’s planning as it is part of the income protection plan, the succession plan and the financial plan. Done correctly, you can buy one policy for life.

    7 tips when buying life insurance:

    Don’t Assume Life Insurance Is Too Expensive.
    This is a common reason people don’t own enough coverage or the proper type of coverage.

    Don’t Count on Employer-Provided Coverage as Being Sufficient.
    Group term insurance through work is not adequate for most people. It is too expensive compared to individual coverage and it is never convertible to a competitive policy with all the current riders and options. Look at it this way: the premiums are the same for the unhealthy smokers as they are for healthy non smokers. Is that the rate you want to be paying?

    Use Experienced Agents Who Represent All Companies.
    The rates or prices between insurance companies can be quite different. Try not to limit your search for a life insurance policy to just one company. Let a professional do the comparison shopping for you. We work with all the relevant companies to find the best match for our clients.

    Disclose All Requested Information to the Insurance Company.
    During the underwriting process, it is important to answer all of the questions honestly. Insurers will verify the information you provide through the application. You are granting permission to obtain medical records from your doctors, check prescription drug history and motor vehicle history. Full disclosure is best.

    What is the difference between whole life and term insurance?

    Don’t Assume Health Issues Will Keep You From Getting Insurance.
    Don’t assume that you won’t get life insurance at affordable rates if you have common health issues. Each life insurance company has its own underwriting guidelines. For example, some may be more lenient about diabetes or cardiac conditions. Some give better prices to smokers.

    Buy The Right Amount of Coverage for the Right Duration.
    The more life insurance coverage you buy, the more you’ll pay. That doesn’t mean you should skimp on coverage, though, just to save money. The Insurance Barometer Study by Life Happens and LIMRA found that one in three respondents said they didn’t have enough life insurance coverage.

    Please contact us at 561-771-4647 or complete the contact form on this page to schedule a complementary discussion.

  • Are Low Interest Rates Stopping You From Getting Competitive Interest?

    Are Low Interest Rates Stopping You From Getting Competitive Interest?

    We sell security, not securities.

    Millions of Americans are frustrated by record low interest rates and how they are affecting your savings and your retirement plan. Whether you have money in CDs, money market accounts or government bonds, there are better options. Instead of accepting 0%, we can help you can get at much higher guaranteed interest, without giving up safety or liquidity.

    Get Better Returns During This Prolonged Period of Low Interest Rates.

    Why not consider a 200 year old option where everything is guaranteed and currently offers fixed rate near 2.5%? It is short term, liquid and the income is not taxable until it is withdrawn, unlike other investments which tax the minimal growth each year. This option gives you a real chance of getting tax deferred, compounding interest.

    With the Federal Reserve signaling that benchmark, short term interest rates would likely be held near zero until 2023, many may be reminded of the period following the last recession, which lasted for seven years. The Wall Street Journal, September, 2020

    Zero percent rates are punishing savers. CNBC predicted that rates will not rise until 2025! At this point, we have to believe the Fed about rates. Some banks have announced they will soon be at NEGATIVE RATES.

    We help consumers locate better solutions. For example, indexed annuities are liquid and currently paying GUARANTEED ANNUAL RATE near 2.5%. The advantages are:

    • 100% guaranteed.
    • More than 2.5% is possible by allocating to the indexed funds, without taking any principal risk. The index rates are NEVER less than 0%.
    • All gains are kept and can never be lost.
    • No principal risk; no market risk.
    • Minimal surrender charges; small market value adjustment on early year surrender can be positive, or negative.
    • Tax deferred.
    • Protected by a contract from highly rated insurance companies.

    Financial Engineering: Instead of using indexed annuities with built-in commissions, we utilize fee based alternatives to boost the returns and the early year liquidity. This is state-of-the-art value creation, leading to better returns. Alternatives like these minimize the individual risks and maximize safe, upside potential.

    Annuity AlternativeMoney MarketSavings AccountCDsBonds
    Bond Fund
    ~2.5%Less than .02%Less than .02%Less than .02%Variable
    LiquidLiquidLiquidLess LiquidLess Liquid
    Tax DeferredTaxableTaxableTaxableDepends
    GuaranteedGuaranteedGuaranteedGuaranteedNot Guaranteed
    Up to 5% with no risk.Current rate Less than .02Current rate Less than .02Depends on DurationDepends on Duration

    What makes this annuity alternative so much better?

    Individual investors can not match the investment skill or the investing scale of insurance companies. With the brightest investment people working 24/7 to grow and protect your money, insurance companies are investing billion dollar portfolios. As individual investors with far less to invest, we cannot commit the necessary attention to safeguard our own investments in the same way. It’s win/win money management because you share in the upside when markets are up, without taking any principal risk.

    How Much Interest Can I earn? Many people choose the fixed account rate that is currently paying 2.45%. Others choose one of the indexes linked to the S&P which puts you in position to earn as much as 5%. And others choose a blended approach that creates some guaranteed income plus potential for double the guaranteed rate. Higher interest rates are achieved without any principal risk. Net of fees, the returns are far superior to savings accounts, money markets and fixed income products. Furthermore, taxes are deferred and principal is creditor protected.

    We are facing the real probability of negative savings rates. Imagine paying a bank to hold your money? It doesn’t seem possible but neither did zero percent interest rates seem possible a few years ago.

    If you find better rates in the future, you can liquidate without surrender penalties. However, higher rates elsewhere will likely mean that insurance companies are also increasing their fixed rates in order to remain competitive.

    Let us help you plan for this low yield crisis. Learn about these successful strategies by taking a complimentary phone call or requesting a customized quote. For more information about short term solutions, click here:

    Start the ball rolling by simply filling out the contact form on this page or any page of our website. You can reach us at 561-771-4647 or 561-869-4500.

    How long will interest rates remain low, click here:

  • Get Paid For Selling Your Unwanted Life Insurance Policy – 10 FAQs.

    Get Paid For Selling Your Unwanted Life Insurance Policy – 10 FAQs.

    More and more life insurance owners are taking advantage of life settlements by selling unwanted or un-needed life insurance policies to 3rd party investors. There are still too many owners of life insurance who shy away from or do not know about this option. The industry is regulated and very beneficial to policy owners over age 70. There are exceptions to age 70 and experienced life insurance professionals can help people navigate their way through. The bottom line is that policy owners can let policies lapse, surrender the policy for its internal cash value or sell it for its maximum market value. Each case is unique. What is the market value of 2015 BMWs, 4-door sedans? Without an appraisal, it is impossible to know the price for each one. There is no set price. The exact same rules apply to inforce life insurance policies.

    What is a life insurance settlement? When an un-needed or unwanted life insurance policy is sold to a third party investor, that is known as a life settlement. In exchange for selling the policy, the owner receives a lump-sum payment. Or, some people choose different options allowing them to “partner” with the investor to keep a portion of the death benefit, without ever paying further premiums.

    Who should sell the policy for you? An experienced life insurance professional, especially experience in the life settlement market. By putting buyers in a competitive situation, offers will increase. The U.S. market is robust and you want an agent with knowledge and access to all current buyers. Should you sell your policy? It pays to work with a professional working in your best interest. Before making a decision, I advise my clients to speak with their spouse, other advisors and their heirs. This information about a life settlement transaction may help.

    What is the ideal age to sell a life insurance policy? Typically, buyers of life insurance policies want people who are at least 70 but there are exceptions. Some people under 70 have significant health history and they may qualify. The buyers of policies are more interested in people with shorter life expectancies and a significant health history. Of course, those people with significant health history often want to keep their policies.

    Can term life insurance policies be sold for a lump-sum payment?
    Yes, but not all term life insurance policies are eligible. It depends on the specifics of each policy, including conversion deadlines, which can be determined in a brief phone call. Most buyers are not interested in policies with less than $1,000,000 of face value.

    Can a term insurance policy eligible?
    Most life settlement buyers only want term policies that can be converted to permanent insurance.

    When does the conversion privilege on my term policy expire?
    The conversion deadline varies in each policy, even policies issued by the same company will have different conversion deadlines. Some limit the conversion period to a number of years while others may impose a maximum conversion age, often around age 65.

    When should I begin to convert the policy if a conversion is necessary?
    Selling a policy involves getting recent medical records, in-force illustrations, a life expectancy analysis, an offer and closing documents. Because the entire process can take 3 to 4 months, it’s best to convert no later than 4 to 6 months prior to the expiration of the conversion privilege. Each time you review your existing life insurance portfolio, it is wise to review conversion options.

    What are the alternatives to selling an unwanted policy? If your life insurance policy has market value to an investor, it may also have value to your heirs. Depending on the circumstances, there are methods to help heirs retain portions of a policy, without paying further premiums. These alternatives are often overlooked, especially in rushed situations.

    Can I split my policy and sell part of it?
    It depends on the policy and the company that issued it. Some insurance companies do not permit a policy to be split.

    What happens to the cash value in my policy if I sell it? When there is cash value in a policy going to the settlement market, it is a good idea to discuss the many options to maximize its value before the sale occurs. If there is an outstanding loan, that too should be addressed.

    How is this different than a viatical settlement? Viatical settlements are exclusively for people who are terminally ill.

    What are the income tax ramifications ? There are income tax consideration for some people but each situation is unique. Of course, income taxes will not exceed the lump-sum you receive, if taxes are due.

    To help people with the possible sale of your policy, we offer a complimentary consultation by phone. Please call us or fill out the contact form on this page and we will contact you shortly. You can call us directly at 561-771-4647.

    PERHAPS WOULD YOU LIKE MORE INFORMATION ABOUT GUARANTEED, LIFETIME INCOME FOR RETIREMENT?

    Income annuities create guaranteed, lifetime income without any risk to principal. Everything is guaranteed. To learn more about these special annuities, click this.