Life Cycle Financial Planners, LLC

Category: Estate Planning

  • 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.

  • Plan to Succeed.

    Plan to Succeed.

    As an advisor to families, individuals and businesses for many years, I’ve been inspired by the following tips, all of which have stood the test of time.

    1. Shakespeare said “the world’s a stage”. As such, it pays to have a plan, work from a script. But, things happen and when they do, it is okay to go off script and improvise.

    It is always good to set goals and work a plan for achieving them. In your plan, try to remember that so much is not in our control. Things like prosperity, wealth and poverty are not always correlated to the choices we make. They may be influenced by our choices, but sometimes they’re not. Try not to underestimate the role of chance in life as it applies to you, and others. Realizing it may help you go off script at important times. The ability to handle the unexpected without melting down is a good skill to possess.

    While the rewards of hard work often do lead to success, what about the fact that not all success is a result of hard work? What about the fact that not all poverty and failure is due to laziness or other negative labels we ascribe to ourselves, and others? Be kind.

    I can tell you with great certainty that a career or a job with flexible hours and a short commute never gets old.

    2. A great benefit of having money is gaining the ability to control time and make the most of it.

    The ability to do what you want, when you want and with whom you want, creates a lasting sense of happiness that no amount of “stuff” will ever outweigh. 

    Being able to retire on your schedule is one of life’s great luxuries, for some. We tend to work towards a previous ideal that retirement is a virtue in and of itself. For some, it may be. Is a typical retirement a healthy decision for everyone? Perhaps it is not. Many people love what they do and wouldn’t consider retiring at an arbitrary, predetermined point in life.

    3. It’s easy to spoil our children, easier with grandchildren. Teach them well.

    Working with many families throughout my career, I’ve been blessed to see a few that seem to effortlessly produce children with fantastic values. It’s not all luck and genes, that’s for sure. They’ve taught their children well and they tend to make the tough choices when it’s necessary to make them. For example, it is difficult to fully grasp the value of a dollar without earning your own and experiencing its scarcity.

    Teaching children they can’t have everything seems to be the best way for them to learn and understand the difference between “I need” and “I want“. This, in turn, teaches them about budgeting, saving, and knowing the value of what they have and what they want. Delayed gratification is painful to experience and equally as painful to teach.

    Another wonderful lesson for young children is learning to appreciate frugality — within reason. It is an essential life skill that pays off during life’s inevitable ups and downs.

    4. Financial success doesn’t always come from big moves.

    Managing money successfully is a long game and it requires long term discipline and strategy.  You don’t have to hit home runs all the time to end up ahead – not screwing up too often is just as important in reaching your long term investment goals. Like I tell my clients, “you must avoid losses in retirement because you can’t replenish”. Avoiding catastrophic investment mistakes will keep you on track.

    5. Live within your means.

    The ability to live within your means is powerful financial discipline. You will have less stress when other things go south, like income or investment returns. How much you make doesn’t determine how much you have, and how much you have doesn’t determine how much you need.

    6. A changing and open mind is healthy; be flexible.

    During your lifetime, it’s okay to acknowledge that your beliefs and goals will evolve. Thinking about your first college major is a good example of how our goals change during our lifetime. Allowing yourself to change your mind is a superpower, when you’re young and when you’re older. Ronald Reagan was a democrat when he was young.

    7. Everything has a price.

    The price of a career is time. The time spent to develop a career usually comes from your time with friends, family and other relationships. The price of inactivity is poor health later in life. The price of spoiling kids is setting them up to live a disappointing and sheltered life.

    Everything worthwhile has a price and the payment often comes due much later. Most things we want are worth it, but we should know their price and never ignore their true costs. Once we accept the true cost of things, we begin to view relationships, autonomy and creativity with greater value.

    8. Money is not the greatest measure of success.

    Money doesn’t provide the things you want most. No amount of money can bring your perfect spouse, a good character, contentment and empathy towards others. In fact, in retirement, the amount of guaranteed lifetime income is the true measure of success and security, not the amount of one’s assets. ROI in retirement means Reliability of Income.

    9. Don’t blindly follow advice without considering the source (unless it’s mine).

    Many of life’s lessons are things we look back and say we wish we’d learned earlier in life. Never take anyone’s advice without reflecting upon your own values, goals and life experiences. Try to consider as many sides of an issue as you can.

    10. The Concept of tzedakah, or being charitable.

    The Hebrew word tzedakah means charitable and “righteousness”. Being charitable creates a sense of righteousness from within. When we are acting charitably, we should gain self-esteem. I can not imagine a scenario in which the world does not benefit from acts of tzedakah. Charity is manifested in endless ways. For some, using their wealth is how they wish to be charitable. For others, money has nothing to do with money. Instead, some give their time.

    Please call me at 561-869-4500 or email me, Ted Bernstein, about a complimentary consultation. 

  • New Alternative Creates Customized Payouts of Life Insurance Proceeds to Protect Beneficiaries.

    New Alternative Creates Customized Payouts of Life Insurance Proceeds to Protect Beneficiaries.

    For the past 200 years, life insurance companies have only offered a lump-sum payout of policy proceeds to beneficiaries. For many, this is not ideal considering these income tax proceeds are squandered in less than 5 years. Ask any life insurance buyer if they intend for the proceeds to be spent in less than 5 years.
    Life insurance buyers want choices. In fact, a high percentage of life insurance owners do not want a lump-sum payout. Instead, they want a policy that gives them the option to create a customized and guaranteed income stream for their beneficiaries that cannot be mismanaged. The Installment Option instructs the insurance company to make guaranteed, pre-determined income payments over time. These payments are selected when the policy is issued by the policy owner. The best life insurance policies today give policy owners flexibility and options; the more, the better.


    The Installment Payout Option allows policy owners to create a customized schedule to fit their family needs and guarantee a protected income stream for their beneficiaries, up to 10, 20 or even 30 years.
     Premiums payments – up to 50% less for guaranteed results or the
    total benefit is increased as much as 50% for the same premium.
     The annual payments are pre-determined and guaranteed,
    regardless of economic conditions or other variables.
     Ability to customize the death benefit payments to meet individual
    planning objectives.

    Proceeds are paid according to a pre-determined schedule, selected by the policy owner at the time of purchase. In the past, a lump-sum payment was the only option available. The Installment Option eases concerns about lump-sum payments being mismanaged.

    Protect Proceeds For Beneficiaries

    What is the Installment Life Payout Option?
    Rather than your beneficiary receiving a lump-sum payment at the time of
    death, the Installment Payout Option gives you the power and control to choose guaranteed, pre-determined installment payments when the policy is purchased.
    Is the Installment Option Less Expensive ? Can I Buy More Life Insurance With the Same Premium Payments?
    Yes, this option is less expensive. The longer the deferral period, the lower the premium payments will be. Premiums can be as much as 40% less on an annual basis.

    Is the Installment Option Better Than a Lump-Sum Option?
    Neither option is “better” than the other. An increasing number of life
    insurance buyers are concerned about the risks of leaving a lump-sum death benefit to their beneficiaries. For them, the Installment Option may be best. Life insurance owned for estate tax planning is a good example of when a lump-sum option may be a more appropriate alternative.
    How is the Deferral Schedule Determined?
    We encourage every life insurance buyer to meet with a life insurance professional to consider these options, and others. Your income, debt levels,
    other assets, fixed and variable expenses, education, retirement assets and inflation are some of the elements in the calculation.
    Can I Change the Payout Option from Installment to Lump-Sum?
    Some insurance companies allow for this. Unlike the lump-sum option that is very limited from a planning perspective, the Installment Payout Option allows for customization by each policyholder.
    Can I choose a Blend of Lump-Sum and the Installment Option?
    Yes. Most people appreciate the ability to customize their life insurance
    policy by combining a lump-sum payment with installment payments over time.
    Can I Upgrade My Existing Insurance to the Installment Option?
    Yes. By doing so, you may be able to lower the premium payments or
    increase the death benefit for the same premium you pay now.
    Can a Beneficiary Make Changes to the Installment Schedule?
    No. However, the installment payments are an asset that can be sold at a
    discount. We recommend a trust be considered as the policy owner, with an
    informed trustee to ensure the insured’s intent is honored.
    What if My Health Has Changed Since Last Purchasing Life Insurance?
    If you have had a material change in health, be cautious about giving up
    any existing coverage without a careful analysis. Consult with us to help evaluate your options. By choosing the Installment Payout Option, you may be able to neutralize the impact of a higher premiums.
    What Insurance Companies Underwrite the Installment Payout Option?
    The Installment Option is available from several of the most highly rated life insurance companies in the United States.

    Please call me at 561-869-4500 or email me, Ted Bernstein, about a complimentary review of your existing policies.

  • Buying A Jumbo Life Insurance Policy, What You Need To Know.

    Buying A Jumbo Life Insurance Policy, What You Need To Know.

    Jumbo life insurance policies typically exceed $10,000,000 but there is no hard and fast rule about this. Both term and permanent life insurance can qualify. Jumbo life insurance policies are bought by high income earners, high net worth individuals and ultra-high net worth individuals. Underwriting these policies is completely different than underwriting policies with smaller face amounts and lesser premiums. Many insurance companies have special underwriting teams dedicated to jumbo policies and the agents who specialize in them.

    What are the Advantages of Buying Jumbo Policies?

    If you own or if you’re in the market for a jumbo life insurance policy, you should be seeking the best policy rates. Whether you are considering term insurance or a permanent policy, our knowledge and experience in the jumbo market will help you secure the best coverage possible at the lowest possible price.

    High net worth consumers and ultra high net worth consumers often need permanent life insurance, which is the most cost advantageous way to purchase life insurance. Permanent life insurance has superior net cost, versatility and flexibility. When purchasing jumbo insurance coverage, you want to take advantage of the special policies and programs for the jumbo market. Not all insurance companies specialize in this market. The ones that do may have special rates for larger face amounts. The ultimate rate class issued to the policy is crucial in this market where the difference between a preferred and standard rate could be as much as 20% annually.

    As such, the underwriting class for jumbo policies should be the top priority for the agent representing you. This means the agent should be knowledgeable, experienced and able to demonstrate previous success in this market. Agents must be experienced in the medical and financial underwriting issues, which are big parts of these cases. For example, a $2,000,000 term policy might cost 10% more for a standard rate as opposed to a preferred rate. That difference might only be $150 per year because of the low face amount and low premiums for term insurance. But, when comparing that same 10% difference for a $20,000,000 permanent policy, the annual savings may be $50,000, or more. The best rate class always matters and it should be priority number one!

    Better Rates For Jumbo Policies

    Agent’s Role in Jumbo Life Insurance Underwriting.

    Experienced agents are advocates for their clients while simultaneously acting as a fiduciary working in their best interest. Fighting for the best rate class can be a contentious process. Undoubtedly, every agent wants a shot at placing a $50,000,000 policy but most are simply not experienced or knowledgeable enough to provide the level of experience and professionalism that is required to get these policies placed. Clients win by working with us. Contact me for a jumbo life insurance quote.

    Management of your underwriting information is very important in jumbo cases:

    Insurance companies often share information with other insurance companies, either directly or through the Medical Information Bureau (MIB). Of course, this is typically disclosed and authorized by the life insurance application. The chances of future underwriting problems can increase if the underwriting process is not managed properly, each and every time you submit an application.

    Tips for buying jumbo life policies:

    1. Clear up previous underwriting history. It is important to start the underwriting process by documenting a 5 year health history. An explanation detailing how much coverage is currently inforce is critical. How much existing coverage will be replaced and how much total coverage will be inforce at the end of the process is helpful information for underwriters.
    2. Identify the right insurance company for each insured. There are hundreds of insurance companies vying for these policies. Quickly, we are able to rule out the companies that don’t fit and focus on the right ones. Consumers are not being served properly by spreadsheeting life insurance rates on websites. Trying to put all the important variables on a spreadsheet in an attempt to compare “apples to apples” is shortchanging life insurance buyers, especially jumbo life insurance policyholders. It is done to commoditize insurance products for the insurance companies. Think of insurance companies as product manufacturers.
    3. Prepare a cover letter, including health history. This is an agent drafted story of the case that helps underwriters justify the best possible rate for the new coverage, including any current and past health issues. We recently helped a 66 year old woman acquire a jumbo policy for succession planning purposes. She had been on lithium for 15+ years without incident. Suddenly, she developed a lithium tolerance that created unique health issues and significant underwriting challenges. By providing this information to the underwriters, it helped them realize it was an uncommon medication problem, enabling them to make a reasonable offer.
    4. Product and company consideration. The underwriting classes are often different for permanent and term insurance. Some companies may be more competitive for permanent coverage while others are well known for low term rates. Selecting the right product from the right company can be complex.

    Please contact me at 561-771-4647 or email me at TB@LifeCyclePlanners.com for more information.

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  • Is The Estate Tax Going Up?

    Is The Estate Tax Going Up?

    https://ted-bernstein-insurance.blogspot.com/2019/01/estate-tax-and-life-insurance.html

    Visit my blog for insight and commentary about changes that may affect your planning decisions. The day after this post, Senator Sanders released his proposed bill to increase the federal estate tax.

    The Sanders proposal calls for your estate to pay a 70% tax on assets exceeding $3M per person. For a married couple, assets over $6M – $7M will be taxed. Our recommendation is to plan as if the tax is 50% over $6M of assets.

    Although you may have recently been told that the 40% estate tax would not increase and the tax free credit would never drop from $11,000,000, per person, lawmakers are at it again. To plan properly, it is helpful to use levels that reasonably represent both taxes over the past 50 years. This will provide sufficient liquidity at death to help pay the tax. Otherwise, your estate will shrink by as much as the net tax amount.

    For example, if we assume a $12,000,000 estate and a 50% estate tax for assets over $6,000,000 per couple, the tax calculation would be $6M X 50% = $3,000,000. To pass the full $12,000,000 to your heirs without any dilution, it might be wise to own $3,000,000 of permanent life insurance. The cost is minimal compared to the tax savings.

    If it turns out there is no tax at the time of death, the life insurance always proves to be welcome liquidity for your heirs. This liquidity is an immediate infusion of tax free money with benefits on many levels. The leverage of permanent life insurance for this purpose is undeniable.

    Please contact Ted Bernstein if you are concerned about the estate tax increasing. Let’s discuss your options and the planning strategies to mitigate the hit to your estate.

  • Why Do Some People Own Permanent Life Insurance?

    Why Do Some People Own Permanent Life Insurance?

    Permanent life insurance offers the best value possible. In the world of life insurance, the lowest net cost means the best value. People who can afford higher premiums in the early years demand the best value and they will be infinitely better off, in terms of the net cost, with a permanent form of life insurance.

    Term life insurance has low entry premiums but it is only temporary insurance and it is priced accordingly.

    Because it has low entry premiums, term insurance is easy to sell. The Term-ites (term only salespeople) attempt to commoditize this product so it can be easily sold online without a professional’s help. They can be somewhat cultish about why they believe term is better, all the time, for everyone. Some life insurance companies have carved out a niche as term only carriers because term insurance certainly has its place in the market. It is often the right choice for buy-sell agreement funding, short term loans and young families with limited financial resources.

    Permanent life insurance is often referred to as whole life insurance and it offers much better value for life insurance buyers who want lifetime coverage and can afford higher premiums in the early years. Comparing the net cost of permanent life insurance to to the net cost of term insurance is the right way to measure its superior value. Using the simple definition of net cost to be the total premiums paid minus total cash value, the goal of switching from term insurance to permanent insurance is an important step to take in optimal life insurance planning.

    What is the difference between term insurance and permanent life insurance?

    Permanent life insurance is better value for anyone considering coverage for life. Term insurance is the ideal name for temporary insurance. Term premiums increase when we are forced to renew. When the temporary insurance expires, people often find themselves without coverage when it is needed most.

    People buy permanent life insurance once its superior value is understood.

    “But Dave Ramsey and Suze Orman don’t like permanent life insurance”. Neither of them are insurance professionals and neither one counsels individuals. Their target audiences are young families unable to buy anything but term coverage and we applaud these families for doing so. Dave Ramsey and Suze Orman’s job is to sell ads and one way to do that is by making indefensible claims about popular products.

    When people move out of the “paycheck to paycheck” lifestyle, they become potential permanent life insurance buyers. Since more than ninety seven percent of ALL term policies do not pay a claim, then 97 percent of ALL term premium are wasted.  High Net Worth (HNW) consumers and high income earners need permanent life insurance for many different reasons:

    Income Replacement:  If your family  or business depends on your income, regardless of your age, life insurance guarantees no family disruption due to loss of income. 

    Immediate Liquidity – Wealth Transference:  High net worth and ultra-high net worth people own life insurance because they want GUARANTEED LIQUIDITY at death and they purchase permanent insurance because it’s guaranteed for life. 

    Some others are:

    • Asset values can fluctuate significantly. 
    • 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 the business.
    • Many clients own a life insurance policy for each of their grandchildren. The insurance policy is straightforward and inexpensive.
    • Premium Financing. HNW people have the ability to finance life insurance. When it makes sense, it is a very effective tool to create tax free wealth.

    High Net Worth people own life insurance to reinforce their succession plans. In these cases, assets may be real estate, businesses and other non-liquid assets. Life insurance provides immediate, tax free liquidity. It gives the family and their advisors time to properly execute the succession plan. Too many times, without sufficient liquidity, anxiety creeps in and family members get nervous. This can lead to litigation, confusion and disruption.

    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

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  • Jumbo Life Insurance Policies: Which one is best?

    Jumbo Life Insurance Policies: Which one is best?

    Jumbo life insurance policies typically begin with face amounts of $10,000,000 and are often purchased by high net worth and ultra-high net worth people. Some insurance companies and some life insurance professionals cater to this market which is highly specialized. 

    Jumbo life insurance buyers will work with insurance professionals to secure coverage with the lowest rates and the best underwriting class. There are considerable differences when underwriting policies for $1,000,000 and ones for $15,000,000, $50,000,000 or $100,000,000.

    A key factor in determining the policy’s premium is the underwriting class that is offered. The difference in underwriting classes can be dramatic. Double digit differentials are typical because the cost of insurance is higher as the classes reflect.

    Don’t be fooled by “loss leader” rates that initially look good during the quoting process. The quoting process is not where the battle is won and lost.

    The best preferred rates are offered to people who take no medication, have no medical history and whose families have no medical histories. Underwriting term insurance is very different than underwriting permanent insurance such as whole life, indexed universal life and guaranteed universal life. Most high net worth consumers prefer permanent life insurance because they understand that the net cost of permanent life insurance is much lower than term insurance.

    In fact, getting you the best underwriting class should be the agent’s top priority once underwriting begins. Doing this properly requires experience and expertise from a professional who is willing to push back based on knowledge about illnesses and medications. The right agent will have extensive relationships with underwriters and who can represent all companies. Working with insurance agents who represent only one insurance company, known as a captive agent, is working against the best interest of life insurance buyers.

    There are only a small group of insurance companies specializing in the large case life insurance market. Insurance companies may share underwriting results with one another, which is authorized through the application process. One way is through the MIB (the medical information bureau). The chance of future problems increases if the underwriting process is not being managed properly. The best outcomes occur when insurance professionals represent the best interests of their client by approaching the process with complete transparency and disclosure.

    What you need to know for obtaining the best rates:

    Check your known underwriting history before submitting new applications. I work with my clients to get an accurate picture of their health history and their life insurance history, including previous submissions. With this information, we create a report of how much coverage is currently inforce and how much will be replaced, if any. The total amount of inforce coverage at the end of underwriting is critical information to share with underwriters, at the beginning of the process.

    Chronicle the medical history. This helps us understand both current and past health issues which may impact underwriting decisions. We recently helped a 66 year old woman acquire a jumbo policy for succession planning purposes. She had been on lithium for 15+ years without any problems. Suddenly, she had developed a tolerance to the lithium that created some temporary issues. All her current coverage was issued on a preferred basis. Knowing the history helped the right underwriters understand it was a medication problem and nothing else. Many underwriters declined the case.

    Product Design. The underwriting criteria is different for permanent coverage than it is for term insurance and selecting the right product can be complicated. Commissions, high cash value riders and term blends should all be considered as each of these variables can impact price and net costs. 

    Premium financing and jumbo life insurance: In many cases, it is a perfect combination. Premium financing is often an ideal strategy for purchasing permanent life insurance. Like now, loan rates are significantly lower than a policy’s rate of return and a policyholder’s ROI. An in depth analysis must be done by the life insurance professional to outline the pros and cons of Premium Financing:

    Cover letters go a long way in helping underwriters understand what a prospective client is trying to accomplish with life insurance. Often, these jumbo life policies involve complex estate planning strategies. A cover letter is always beneficial. 

    Please contact me at 561-771-4647 or email me. I offer a complimentary consultation to discuss anything you wish about life insurance or annuities. I am proud of the things many clients have chosen to say about us and perhaps they will give you additional insight about how we do business.

    You can visit us at www.facebook.com/lifecycleplanners

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

  • “Not My Family!” Strategies To Avoid Wealth Destruction

    “Not My Family!” Strategies To Avoid Wealth Destruction

    Wealth destruction at inheritance time is showing no signs of slowing down. More and more family members are litigating with one another including attorneys, CPAs, wealth managers, family businesses and other related parties. Why is behind this unfortunate trend?

    Too often, all the planning attention is placed on the family’s financial and real estate assets. There is nothing wrong with this but when there were dysfunctional family dynamics before inheritance, it is likely there will be dysfunctional family dynamics upon death. Neglected during the planning process, this dysfunction can lead to unintended consequences for family and business relationships. Most people passing on wealth do so with an expectation that their generosity will be received in the spirit it was intended. Without a proper amount of focus on family dynamics, succession inheritance can cause further damage to family relationships.

    Avoiding Wealth Destruction

    “If your wealth transfer plan is not done carefully, your wealth will be transferred… just not where you intended. It will end up being transferred, that’s for sure. It will be paid out as legal fees to law firms and other professional firms. In no time, millions of dollars can be wiped out in fees and settlements.

    AVOID WEALTH DESTRUCTION – CLICK HERE

    Contact me at 561-869-4500 or email me at TB@LifeCyclePlanners.com for a complementary consultation. Or, visit us at Facebook

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  • Federal Estate Tax Repeal – Bad For Business

    Federal Estate Tax Repeal – Bad For Business

    The life insurance industry let us down when it allowed the estate tax rate to settle at 40% and the lifetime credit (exemption) to  rise to $12MM per couple. The impact is still punishing planners of all stripes. It is time for life insurance companies to step up and commit to national advertising and marketing campaigns to promote the virtues of their core products, especially permanent life insurance.

    Since then, the pin has been pulled from the grenade for PERMANENT life insurance. If the estate and gift taxes are successfully repealed in an upcoming tax reform act, it will be a devastating blow for the jumbo case market and for PERMANENT life insurance. The grenade will have gone off. I understand there will be a few niche markets (key man, forced savings strategies, over-funding for retirement income, premium finance and others) that will survive. Those niche markets for permanent insurance may be meaningful enough for a handful of carriers; not for dozens of them. There will always be a need for low face amount, permanent policies. To be clear, the sale of these permanent policies does not support or lead to a successful, bustling practice. That model used to work by helping new agents develop the stepping stones to much larger opportunities. That model is on life support and the repeal of the estate tax will be its end.

    Just look at the overall permanent insurance numbers since the industry did not prevent the tax from being lowered or the exemption from rising to almost $6MM per person. Hopefully, the life insurance industry is mobilizing their influence and inspiring their troops to prevent the estate tax repeal from becoming reality. Personally, I don’t see it happening and I’m not sensing the passion and the fear required to win this battle. As much as anyone else in our industry, I hope that I am wrong.

    Whether the tax is repealed or not, I would urge life insurance companies to act like companies in  other industries who own the responsibility for creating a product’s demand. Without advertising and marketing campaigns on a national stage to re-brand the image of permanent life insurance and its distribution system, the remaining agents who average 60 years old will continue jumping ship. Leaving the responsibility and the cost of creating demand for this product to the distribution system, or no one, is a recipe for further disaster. Manufacturers create organic demand for their products. The auto industry and consumer electronics are two great examples.

    Imagine if Apple and BMW left all sales and marketing solely to their local dealerships or the local wireless stores? No national sales and marketing campaigns to launch new products, defend against competitors, shape markets or educate consumers?

    Today, most life insurance companies do not advertise on a national stage and if they do, they are brand advertising, which is of little or no value in business development at the local level. We don’t need anymore TV branding ads from insurance companies during The Masters. What the industry DOES NEED is for every relevant company to start running advertising campaigns about the virtues of permanent life insurance (and their other products) during the NCAA tournament, The Bachelor, the morning news shows, The Late Show with James Cordon and The Masters. This is an industry-wide problem and the industry needs to step up.

    Permanent life insurance is a remarkable tool with extraordinary flexibility and great versatility. It can be customized, by the right professional, so that no two permanent life insurance policies are the same. No two buyers are the same. Their policies can and should reflect their differences, their needs and their desires, now and in the future.

    One client may have an over-funded $5,000,000 IUL with Option C and a death benefit payable in a lump-sum. Another may have a $5,000,000 GUL with Living Benefits and the Installment Payout Option to protect his/her family with 20 guaranteed payments of $250,000 for 20 years. Another client may have a minimum funded UL tied into their lifestyle, earning credits for living the good life. And another might have a $5,000,000 WL policy with vanishing premiums.

    Just like the combination of apps on my Smart Phone are not like the apps on another’s, no two permanent life insurance policies should be the same. We each start with a Smart Phone that makes calls. But, the way I intend to use mine is different than how you use yours. Our needs are different and that is what leads to which apps we download.

    To help our industry fight the battle against the estate tax repeal, contact AALU for information about who to contact in Washington.

    Ted Bernstein can be reached at Life Cycle Planners or by calling him in Boca Raton, Florida at 561-869-4500.

    Don’t need your life insurance policy anymore? It has value, even term insurance. Read more…

  • Don’t Need or Don’t Want An Existing Life Insurance Policy?

    Don’t Need or Don’t Want An Existing Life Insurance Policy?

    Do You Know The Market Value Of Your Existing, Inforce Life Insurance Policy?

    Every day, people are receiving significant cash payments for unwanted or unneeded life insurance policies they thought had no value.

    If you are 65 or older, you may have a policy with asset value in the secondary market. The value of policies is measured as a percentage of the face amount. If you have a $2,000,000 policy with a settlement value of 10%, it is worth $200,000. It is fairly simple and straightforward to get an appraisal done to determine your policy’s value.

    Please email or call me at 561-869-4500. Visit us at Life Cycle Planners in Boca Raton, Florida.

    The secondary market is the market for unwanted life insurance policies – they are usually institutional investors. A good analogy is Carmax. They buy cars from people who don’t want or need them anymore. They specialize in the aftermarket of automobiles. In the life insurance industry, there are buyers who specialize in this market and they are typically the highest bidders.

    The state of Florida has made it mandatory for life insurance companies to inform Floridians that they should consult with a professional when contemplating a change:

    …“a life insurer shall provide an individual life insurance policyholder with a statement informing him or her that if he or she is considering making changes in the status of his or her policy, he or she should consult with a licensed insurance or financial advisor.”

    If you have a policy with cash value, its value is based on it and nothing more. Life settlements may not appeal to everyone. Some people don’t like the idea of strangers having an interest in their mortality. It is a perfectly reasonable position, regardless of the potential financial benefit that might exist. There can be meaningful differences in the offers you receive from the secondary market.

    Term life insurance policies may have value in the secondary market.

    There may be no cash surrender value in your life insurance policy but there may be great “market value” for a life settlement company. The payment you receive in a life settlement transaction is the market value (see the recent case studies below).

    It may be in your best interest to consider selling. The goal is to compare offers you receive against the value in the policy.

    More than 90% of seniors lapse policies without knowing about this option. They would have considered a life settlement if they were aware of the process.

    Further, 79 percent feel their advisers should have told them first.

    Depending on several factors, including age, health and policy type, life insurance policies can be valued as much as 20-30% of the face value. If you no longer want to pay premiums for a policy, there are realistic options to consider.

    The reasons to  consider selling an unwanted or unneeded policy:

    · Receive a higher cash payout than cash surrender value.
    · Receive money for a term policy.
    · Create cash to fund retirement solutions such as guaranteed income annuities, long term care insurance or life insurance with the installment payout option.

    For example, 30 years ago, Dr. Smith purchased $2,000,000 of life insurance to protect his wife and children against the loss of his $300,000 income. He was 46 when it was issued and today, at 75, his children are grown and the need for income protection is gone. With nearly $200,000 of guaranteed lifetime income from annuities, a pension and social security, Dr. Smith feels the policy is unnecessary.

    The insurance policy had a cash value value of $90,000 if he walked away. The Life Settlement value was 15% of the face value, or $300,000. The decision was simple in this case.

    Unfortunately, each year there are too many people who are still unaware of life settlements or they fail to give it proper consideration.

    Potential Disadvantages:

    1. Life Insurance benefits are usually income tax-free. Some portion of a life settlement may be subject to income tax.
    2. Paperwork is required to transfer the ownership of the policy.
    3. Proceeds will benefit the buyers, typically non-family members.

    Organizations such as the AICPA and hundreds of esteemed estate planning law firms are on record advocating the benefits of life settlements. Life insurance is an asset with great potential value.

    RECENT CASE STUDIES REPORTED IN THE INDUSTRY

    – an 88 year old male sold a $2,500,000 John Hancock policy, which netted him $500,000 (cash surrender value was $0),

    – an 88 year old male sold a $2,000,000 universal life policy for $1,110,000 (cash surrender value was $218,000),

    – a 64 year old female sold a term policy for $20,100 (the face value was $250,000; she kept $50,000 for her beneficiary),

    – a 72 year old man sold a $896,450 Transamerica policy for $196,476 (cash surrender value was $94,647),

    – a 61 year old man sold a $400,000 Mass Mutual term policy for $220,400.

    Please email me at Ted Bernstein or call me at 561-869-4500. Visit us at Life Cycle Planners in Boca Raton, Florida.