Life Cycle Financial Planners, LLC

Category: Life Cycle Planning

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.
February 15, 2017
Today Show: Make your money last with an annuity

The Today Show this week includes an important recommendation about guaranteed, lifetime income. Although 2016 was a banner year for indexed annuities, we have a long way to go. Too many people do not understand indexed annuities and as a result, they are still measuring their retirement security by the size of their portfolios. As this story points out, you want to “convert” your retirement assets into an income stream that will last as long as you do. Guaranteed income in retirement is the gold standard for security.

“Building block 2: A Fixed Annuity.

Consider converting a portion of your nest egg into a fixed, immediate or deferred annuity that will cover the gap. Essentially, you’re using part of your nest egg to buy a paycheck that can be structured to last as long as you (and perhaps your spouse) live.”

http://www.today.com/series/starttoday/jean-chatzky-how-make-your-money-last-after-retirement-t106561

If absolute security is a primary retirement goal for you, please contact me to arrange a discussion about guaranteed income solutions. There are dozens of threats to your nest egg in retirement and I will explain how to mitigate them with the power of guaranteed income contracts. You will not learn about these strategies from traditional money managers. You can email me or call me directly at 561-869-4500.

January 4, 2017
Long Term Care Covers More Than You Might Think.
Most people report uncertainty about the definition of claim triggers in their long term care insurance policy. My experience confirms that people want a better understanding about what IS covered and what MAY NOT be covered. You will be surprised about today’s long term care policies and find they DO cover you when you need it most.

The issue of Long Term Care is at the top of the list of retirement threats facing many of us. It is one of the largest uninsured financial risks facing the elderly in the United States today. Incredibly, long term care represents about 8½ percent of all health care spending for all ages and more than 1 percent of GDP.

Eligible claims: Let’s focus on what many people find confusing – benefit triggers and when can you claim? For example, the REQUIRED wording for chronically ill is:
1. You cannot perform at least two activities of daily living without substantial assistance for at least 90 consecutive days; or
2. Cognitive impairment issues creating and requiring supervision in order to protect you from health and safety threats.
These are standard and straightforward definitions. Being aware of them will lead to the receipt of proper benefits under the contract.

The benefits are in the details! Looking closer at number One:

‘You cannot perform at least two activities of daily living without substantial assistance…’ Does this definition require the insured to be sick in order to meet the chronically ill definition?

No. These benefits are triggered by a loss of functional capacity – meaning you cannot manage Activities of Daily Living (ADL) without assistance.

Activities of Daily Living (ADLs) are defined as “the things we normally do… such as feeding ourselves, bathing, dressing, grooming, work, homemaking, and leisure activities”.

Eligibility of claims in these cases IS NOT tied to a specific diagnosis or injury. You are not required by the policy to have MS, Parkinson’s, a stroke or any other diagnosed medical condition. You might be 70 years old or 85 years old – that does not matter.

A large number of people receiving long term care benefits do have one or more chronic conditions but do not have a catastrophic diagnosis. They are still eligible for claims under the right contracts.

Without a doubt, the longer we live, the more likely it is that we will need help with our daily living activities.

Fortunately, being sick is not a requirement to receive legitimate benefits.

Please feel free to contact me to arrange a consultation about long term care. There are dozens of threats to your nest egg in retirement and I will explain this one and any others you wish to discuss. You can email me or call me directly at 561-869-4500.
December 27, 2016
The Longevity Story

Longevity is extending. Both science and technology are on the verge of solving many every day problems of aging. What if we could not only add years to our lives? What if we could spend those years being physically fit, functionally independent, emotionally and mentally healthy? To do this, we must make ourselves FINANCIALLY SECURE through plentiful amounts of guaranteed, lifetime income?

At that point, it is no longer a story about old age. We have a story about long life!

Read more about longevity risk:

http://www.investopedia.com/terms/l/longevityrisk.asp

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=17&cad=rja&uact=8&ved=0ahUKEwivofism-vSAhVP6GMKHdu9AlEQiBUIbjAQ&url=https%3A%2F%2Fplus.google.com%2F114674288256493099531%2Fposts%2FZBnygLHNoXQ&usg=AFQjCNGDDCF2yiuSBPXppEbcbN_nL9zsMA&sig2=nPbXUXWPjGd9s379q6sZuA

http://www.institutionalinvestor.com/article/3373646/investors-pensions/the-rising-challenge-of-measuring-and-managing-longevity-risk.html#.WNMC4O-guUl

December 16, 2016
7 Helpful Tips to Review Life Insurance
Life Insurance Policy Forensics

Follow the 7 helpful tips to review life insurance coverage below and you will either improve it or have confirmation that the policy is appropriate. It makes sense to review all insurance coverage every two years. Done this way, each type of insurance should take no more than 15 minutes.

For many individuals who own or purchase life insurance, having an objective and impartial advocate in the process proves to be invaluable. It is a complex asset class, there are hundreds of insurance companies with 50 State Insurance Departments. For individuals or businesses, our service helps you navigate the life insurance world with the comfort of impartiality defining underscoring the relationship. Acting in the best interests of our clients is the cornerstone of our practice.

For institutional owners of life insurance policies or individual trustees of trust owned policies, life insurance is an asset that must be regularly monitored by the policy owner. The owner is a fiduciary and is therefore responsible for the policy and for keeping it in good standing as any other asset for which they have this responsibility. When revocable or irrevocable trusts are owners of life insurance, we recommend that the policy or policies be reviewed on a regular basis by the Trustee. If the review is out-sourced to a professional, we suggest that these reviews be done on a fee basis.

Long before other professionals began working in this area, we recognized the value of an unbiased, fee-based option to give trustees and owners the proper level of due diligence assurance and trustee compliance.

The life insurance industry is in a constant state of change making a life insurance policy a complex financial tool. Many types of policies and their components are misunderstood by the policy owner. The insurance industry is constantly changing the way life insurance is designed, priced and underwritten. Having an objective professional who is not contractually prohibited from selling products is similar to the value of a real estate appraisal done by an independent appraiser.

FREE OR FEE? IS THERE A DIFFERENCE?

Trust Owned Life Insurance (TOLI) should be treated as a “buy and manage” asset. Too often, life insurance agents offer only the buy function and not the manage function as this is typically not part of their standard discipline. Every Trustee and Owner of a life insurance policy must ask themselves this question: “Is there a difference in the value of a life insurance policy review done on a fee basis versus a free review?” Is the review being done by a sales agent as a way to create selling opportunities? The goal for policy owners is to develop a review and monitoring model based on best practices versus predatory practices. When the owner is in a fiduciary capacity, the review process should be done on a fee basis to ensure impartiality.

THE 7 BENEFITS OF A REVIEW – CHANGE CREATES RISK FOR OWNERS HELD TO A FIDUCIARY STANDARD.
1. Life Expectancy has lengthened. Insurance companies have implemented pricing and underwriting standards to reflect these improvements. There have been significant changes in heart disease, cancer, diabetes, high blood pressure, mental disorders, medications and other medical issues.
2. Insurance companies have introduced innovative new products and pricing techniques that reduce premiums and improve policy performance. For example, indexed universal life is policy type that did not exist 20 years ago.
3. Interest and dividend crediting rates change. Economic conditions are always changing, requiring insurance companies to either increase or decrease their crediting rates. These crediting rates are directly tied to the rate of return in the policy. As a result, due to today’s low interest rate environment, many interest sensitive policies such as Universal Life, Variable Life, Indexed Universal Life and various combinations of these, issued prior to 2000 are not performing as originally intended.
4. Market conditions have changed. Fluctuations in the stock market have impacted life insurance. Many customers purchased Variable Universal Life policies in the 1990s that are at risk of failing or in need of re-calibration due to these fluctuations.
5. Planning goals of the policy owner may have changed. Evaluation of current goals and needs is an essential part of the life insurance audit process.
6. New products have emerged possibly making previous product selections less desirable in light of new options.
7. Federal Estate and Gift Tax laws have changed which can eliminate the need for coverage.
WHAT IS INCLUDED IN THE REVIEW?
- A client update of original goals and objectives and a policy summary.
- Location of original policy and all amendments.
- A review of the structure of the policy, ownership, beneficiaries, payment methods, relative to the client objectives.
- An assessment of possible rate class improvements.
- An evaluation of the effect of changes in interest rates/sub-account performance, increase in cost of insurance, or any combination thereof. Updated carrier ratings provided from national rating agencies.
- Market Comparison. An objective evaluation on whether there is a more cost effective and reliable way to provide the results the client expects. This is intended to ensure that the client’s current and future objectives are being met. Also review the availability of new or improved carrier products.
- Context Analysis –is the policy still suitable for the current estate plan, as circumstances are constantly changing in clients’ lives as well as applicable tax law?
- Premium Funding Analysis – Many policies will eventually lapse due to poor policy performance, leaving the client with a sizeable premium increase. Current projections will be obtained to view the policy under different conditions.
- Stress Test – Worst case scenarios will be analyzed by running a variety of different illustrations from inforce carrier(s) and alternative carrier(s).
- Secondary Market Analysis – If it is determined that a policy is no longer needed or wanted, rather than lapsing or surrendering the policy, it may make more sense to sell to a third party institution in exchange for an immediate cash settlement or arranging for a lender to make the premium payments.
Before any review can be begin, it is critical that we speak with the insured/owner and their advisors in order to gain important insight concerning the policy’s origination, purpose of insurance and how it fits into today’s planning goals and objectives. Please contact us at 561-9-869-4500 or email me to arrange a complementary consultation about our policy review services.
December 8, 2016
The Value of a Professional’s Advice
Professional Advisors Vital to Financial Health.

Make no mistake about it. The research continues to confirm that getting advice from professionals is beneficial in every measure: insurance, retirement planning, investing and quality financial plans.
- Within 4 to 6 years, households who used advisors accumulated 58% more assets than those who self-directed their investments.
- Using a professional advisor for 7–14 years essentially doubled the wealth accumulation of those without an advisor.
- After 15 years, households held 2.7 times more wealth than those who did not seek professional guidance.
- No other strategy guarantees lifetime income with no principal risk like indexed annuities.
These are NET RESULTS after taxes and accounting for the costs of the professional advice.

Advisors encourage their clients to save twice as much while simultaneously helping their clients develop long-term insurance, investment and retirement plans.

The Growing Demand for Advice.

Millions of people benefit each year from the value of annual reviews. Life Cycle Planning is financially rewarding and leads to more security. We will continue to demonstrate the value of professional advice by offering the best products, solutions and service to our clients. Please call us at 561-869-4500 or email me to arrange a complementary meeting to discuss how we may help.
December 3, 2016
Everyday Tips For Longevity In Retirement.

1. Time passes faster every day. Don’t make it worse by rushing and stressing over time. Where are you going?

2. Take care of your body so it will take care of you later. Don’t let your world get smaller each day – stay fit and mobile.

3. Intimacy and friendships remain important regardless of where you are on the life cycle spectrum.

4. Healthy relationships are the most important thing in your life. Steve Jobs at end of life:

While the above-quoted essay does not represent either Steve Jobs’ final words nor remarks he made (in either oral or written form) at any time during his life, his biographer Walter Isaacson did record Jobs’ expressing regret at the end of his life about how he raised his children:

“I wanted my kids to know me,” Mr Isaacson recalled Mr Jobs saying, in a posthumous tribute the biographer wrote for Time magazine. “I wasn’t always there for them, and I wanted them to know why and to understand what I did.”

“He was very human. He was so much more of a real person than most people know. That’s what made him so great,” he added. “Steve made choices. I asked him if he was glad that he had kids, and he said, ‘It’s 10,000 times better than anything I’ve ever done’.”

It wasn’t always thus. In the early stages of his career, Jobs, who was adopted, denied being the father of Lisa and insisted in court documents that he was “sterile and infertile”. He acknowledged paternity when she was six, and they were later reconciled.

5. Money talks. It says “Goodbye.” If you don’t convert assets in the market into guaranteed lifetime income, you’ll wish you had. And then it’s too late.

6. Many of the seeds you planted in the past, some good and some bad, will begin to bear fruit and affect the quality of your life as you get older.

7. Acceptance is grace, freedom and peacefulness.

8. Don’t let your possessions own you. Consider them on the trouble vs. enjoyment scale. Simple but enlightening.

9. You may regret some things you didn’t do far more than the ones you did that were “wrong”. If you get the chance — do them. You may not get the chance again.

10. Every day you wake up is a gift.

11. Converting retirement assets – stocks, bonds, CDs and Treasury’s – into a Longevity Annuity will eliminate risk, guarantee income for life, allow you to enjoy retirement and sleep at night. Do you want to receive guaranteed monthly income, paid to you no matter what? Or, do you want to be responsible to mange a complex investment portfolio into your 80’s and 90’s? Talk to friends and others who receive large amounts of guaranteed, lifetime income and ask them for their opinion about this critical issue.

If guaranteed lifetime income is a primary retirement goal for you, please contact me to arrange a no obligation discussion about my views concerning retirement security. There are dozens of threats to your nest egg in retirement and I will explain the power of guaranteed income contracts and why you will never learn about these strategies from traditional money managers. You can email me or call me directly at 561-869-4500.

November 21, 2016
2016 Election and Your Retirement

The 2016 Elections are over, and now you should learn on how this will affect your retirement. Here are a few resources to help clarify the change of landscape:

What a Trump Administration Means for Your Retirement

What impact will a Trump presidency have on the 46 million Baby Boomers living in the U.S.? President-elect Trump, a Baby Boomer himself, has his work cut out for him when it comes to dealing with Social Security and Medicare. READ MORE

Why The Roth IRA May Be Big Winner In 2016 Presidential Election

With the 2016 presidential election behind us, we can all start thinking about what this country will look like under President Donald Trump. Notwithstanding all the pre-election campaign rhetoric about immigration, foreign policy, etc., one thing we are quite certain about is that President-Elect Trump is serious about reducing personal income and corporate tax rates across the board. READ MORE

The Real Lessons the Presidential Election Holds for Your Retirement Strategy

Since last week’s presidential election, we’ve seen a deluge of investing and retirement advice. Some is perfectly reasonable: Don’t make any radical moves in your 401(k)! But some recommendations, such as putative ways to “Trump-proof your portfolio,” are in my opinion questionable to say the least. READ MORE

If you would like to take that first step, please drop me an email, or give me a call. I am Ted Bernstein, and I will answer any questions that you might have. No stress, no pressure, just a simple first step in the process.

Please call me at 561-869-4500 or email me at tb@lifecycleplanners.com

November 20, 2016
Beware of Bad Financial Advice.

Beware of bad financial advice from your friends and family https://t.co/h5zoIuf6SF

— dnason (@dnason) November 7, 2016

November 7, 2016
Lower Your Life Insurance Premiums With A Smart Hybrid Policy – Protect Your Beneficiaries Better.
Lower the Cost of Your Life Insurance and Protect Your Heirs the Way You Intended:

Until now, life insurance buyers did not have an option to structure the payment of the policy’s proceeds to their beneficiaries. All that has changed – now you have the control to design the payout exactly as you want them paid. Why does this matter?

Turning the proceeds into guaranteed payments by the insurance company LOWERS THE ANNUAL PREMIUMS as much as 40% and protects the proceeds from every kind of risk.

Do you want the beneficiaries of your life insurance policy to receive a lump sum? One of the most important things you can do for your heirs is to protect them exactly as you intended when you decided to purchase life insurance. Remarkably, life insurance proceeds only last, on average, 3 years! Ask any parent or spouse if they INTEND the proceeds to be gone in 3 years. That is never their intention.

The perfect plan guarantees the number of payments you choose, turning the proceeds into payments that can never be mismanaged. With interest, the insurance company makes structured payments to your beneficiaries based on the plan you create when you set up the policy. Everything is guaranteed. You can change the plan anytime.

For example, instead of a $2,000,000 lump-sum payment, your beneficiaries can receive equal payments of $200,000 for 10 years. Or equal payments of $100,000 for 20 years. How about a plan that pays $500,000 upon death and 10 more equal payments of $150,000? Each person is different and now, each person can customize the payout to meet their precise, individual needs.

It gets better. The premiums can be as much as 40% lower every year depending on the time frame you choose. Or, for the same premium in your current policy, you can increase the amount of insurance up to 40%!

The “Installment Payout Option” allows the policy owner, at the point of purchase, to choose how many years to defer these payments.

Win –Win: You either purchase up to 40% more life insurance for the same premium as a lump-sum payout or lower your annual premiums up to 40% every year. By choosing a greater number of payout years, the ANNUAL SAVINGS is increased.

The surge in annuity sales over the past several years is evidence that principal protection and guaranteed results are critically important to millions of consumers. “This groundbreaking alternative is the perfect life insurance solution”, says Ted Bernstein of Life Cycle Financial Planners. And, it is available for both term and permanent coverage.

Why upgrade to the Installment Payout Plan?
1. Transform lump-sum proceeds into guaranteed installments.
2. Offers the most competitive premiums available – everything GUARANTEED.
3. Reduces premiums as much as 40% for same amount of death benefit.
4. Protects life insurance proceeds from market risk.
5. Tremendous flexibility, installment periods between 5 and 30 years.
“The biggest challenge we face is raising awareness of this important option”, says Ted Bernstein, Owner of Life Cycle Financial Planners. “Almost everyone can upgrade their insurance coverage and we are uniquely qualified to help our clients…even smokers and people paying more for rated policies.”

Please call us at 561-869-4500 and let us help you compare your existing policy with the benefits of the Installment Payout Option. Or, email Ted.

Make sure to inquire about Life Insurance with living benefits and turn the face amount of your life insurance policy into an emergency health insurance fund.
October 20, 2016