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 performancein 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.
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?
Indexed universal life insurance (IUL) is an innovative, low risk type of permanent life insurance. It is primarily intended for people interested in long term life insurance coverage and tax favorable distributions, typically during retirement. These policies are well suited for life insurance buyers seeking large policies, known as jumbo life insurance policies. For premium financing, some consumers prefer to use an indexed product (see reasons below). The use of indexing strategies guarantees there will a loss of cash value when markets are down. No market losses makes IUL an appealing product for risk averse consumers. The fact that 0% is the lowest crediting rate possible makes it worthy of consideration, especially when the stock market is down 30%. The interest credited to IUL policies will never be below 0%. In fact, some products guarantee a floor of one or two percent.
Do IUL policies reduce risk for life insurance buyers? Since none of the policy’s cash value is ever invested directly in the stock market, it does provide a buffer against normal market volatility.“Zero is your hero” feels pretty good when markets are down 25%.Market losses during these market cycles can be quite damaging.
We might think that dynamite and an IUL insurance policy are nothing alike. One is an explosive and the other is often described as another boring type of life insurance policy. While that may be true, in the wrong hands, dynamite can be catastrophic. In a professional’s hands, dynamite can be part of a well controlled plan to bring down a multi-story building without much of a fuss. In the wrong hands, an IUL policy can make a big mess and create nothing but unintended future problems. Properly used by a professional, an IUL policy can be the ideal product choice. Not all buildings should be brought down with dynamite and not all insurance plans call for IUL.
The use of indexing strategies may result in buying a policy with the lowest possible net cost of any policy measured in the medium and long term. Of course, this depends on how markets perform, the sequence of returns, how the policies are credited and how often and when the insurance companies lower the cap or participation rates. In order to achieve optimal returns, a greater level of understanding and responsibility by the policyowner is essential. It is definitely not a set it and forget it type of life insurance policy, unlike whole life. With the proper amount of education, indexed universal life is suitable for the following insurance buyers:
Between ages 25-55 (ideally).
Want permanent life insurance.
Appreciate flexibility.
Consistent, high income.
High net worth.
Interested in retirement income.
Considering premium financing.
Willing to routinely review inforce policies.
Like other permanent life insurance contracts, IUL builds up tax deferred cash value when interest is credited to the policies. A number of well-known indexes, such as the S&P 500 or the Nasdaq-100 are typical indexes options. There are no government imposed restrictions or limitations on contributions or distributions, like there are with qualified retirement plans. The cash value can be accessed without penalties or taxes, unlike a 401(k) or IRA. These policies are often used as private pension plans by people without access to a corporate pension plan.
There are policy expense charges and fees in IUL policies that should be understood by the agent and the policyowner. In good contracts, the fees are capped, which means they are less impactful as the premium levels increase. Indexed Universal Life is not a good alternative to term insurance or other products that do not build up cash value. It is most beneficial for younger consumers who want permanent insurance, flexibility, strong potential upside and tax free withdrawals near retirement.
The advantage of a policy that guarantees to never lose principal due to market performance can be compelling. Another reason for IUL’s popularity is because it is a powerful tool that smooths out returns. “The key to minimizing sequence of return risk is to reduce volatility, which IUL does far more than the S&P 500”, says Sam Rocke, SVP at Ash Brokerage.
Insurance companies share in the index’s upside when markets are up. They do this with simple cap rates and/or participation rates. For example, if the S&P is up 20% one year, a policy with a cap rate of 12% will credit the policy with 12% interest that year. Essentially, cap rates and participation rates create a partnership between policyholders and the insurance company. The insurance companies take all the risk.
The results are impressive as consumers are flocking to the safety of indexed universal life insurance. The product had $2.3 billion in sales for 2019 and the first half of 2020 saw more of the same record breaking growth.
Why Universal Life Insurance?
The retirement vehicle for many corporate employees is a 401(k). There is market risk with 401(k)s which is fairly well understood by individual investors. In addition to the market risks they assume, there are contribution limits, taxes that are deferred until withdrawal time as well as substantial recurring fees. For many, a 401(k) may not be the perfect retirement solution, by itself. Near retirement, the loss of principal is too costly. For others, they want the option to make flexible and much larger contributions than 401(k)s or IRAs allow. For these people, an indexed universal life policy can be an excellent addition to the other investment vehicles.
The stock market is volatile and it has been known to punish short term and medium term investors. Once people can see retirement in their future, a growing number of them begin to feel differently about the inherent risks in the stock market. Principal protection quickly becomes their main concern, rather than maximum yield. Yield is undoubtedly important, but an extra 1% is not worth exposing principal to drops of 30%.
What are the costs? Funded properly, these policies should have sufficient internal growth to offset the increasing cost of insurance charges and other internal fees. The current cost of insurance expenses and fees are subject to change and they are deducted from the cash account each year. Managed and funded properly, the account values should outpace annual deductions. I have many younger IUL clients who began funding their IUL contracts with oversized premium contributions. They benefit in two ways by doing that. Overfunding creates a cushion of cash value that can be used if income takes an unexpected hit and overfunding in good years can help in smoothing out the returns.
What is Universal Life? Some history about this product is beneficial. In the 1970’s, the rate of return of whole life insurance was 2-3%. When interest rates shot up to historic rates in the late 70’s and the 1980’s, EF Hutton created a flexible, interest sensitive product to compete against whole life. Other life insurance companies followed, with some crediting more than 12% at the time. Sales of universal life were meteoric. Billions of premiums poured into these contracts. As a young agent during this time, there was insufficient agent education about the impact of interest rates on long term policy performance. Policies sold based on double digit projections were destined for trouble.
As interest rates gradually decreased, new projections should have been provided to policyholders, by their agents. If a policy was purchased using illustrations based on 10% assumptions, it should have been re-projected again when rates fell to 6% and again when rates fell to 4% and again when they fell to the guaranteed rates in the contract. LOWER INTEREST RATES WILL CAUSE THE POLICY TO NEED MORE PREMIUM TO MEET THE PROJECTIONS THAT WERE BASED ON HIGHER RATES. WHEN THESE POLICIES WERE NOT FUNDED WITH THE HIGHER PREMIUMS NEEDED TO OFFSET THE LOWER CREDITING RATES, THE POLICIES TURNED INTO TICKING TIME BOMBS.
Adding insult to injury, when the looming crisis in a policy isn’t detected, it may leave the policyholder with no options. It’s like driving towards the edge of a cliff in the dark. You have no idea until it’s too late. The problem happens faster for older policyholders. For most agents, companies and policyholders, these were tough lessons. They taught us the value of regular reviews and to project life insurance conservatively. Things change that affect policies. The problem is not universal life. The problems were aggressive insurance company projections, insufficient agent education.
Indexed universal life (IUL) is not a “set it and forget it” type of policy to own. There are other policy types that are much easier to manage. Every potential IUL buyer should only work with an experienced life insurance professional familiar with indexing strategies. Choosing the right life insurance company is more critical than ever with this type of policy. Some companies are new to IUL and others have been real innovators and pioneers over the past 20 years. These are things the right life insurance professional will share with you.
Most people may know that the stock market index has returned approximately 8% over the long term but less than 4% for average investors over the same time frame.
A variety of reasons are attributable for this gap. The biggest factor is emotion. Investors make all types of investment mistakes for many different reasons. Some are due to panic and some are due to their understandable inability to devote enough time and attention. Not only do investors have to be willing to commit the time, they also have to be ready to act every time action is required. Too many find that impossible while they are working, running businesses and caring for families.
Individual investors can never take their eye off the ball. Failing to buy and sell at the perfect times make it impossible to attain the average long term historical rates of return.
Timing the market is tough, even for professionals. When mistakes occur, they impact the overall yield. Warren Buffett says the first rule of investing is to never lose money and he’s right. But to do that, you must be laser focused at all times. Using an IUL prevents investors from ever losing money due to stock market returns.
IULs have a minimum rate of return, usually between 0% and 2%. For example, if you have $200,000 in a stock account and it drops 20%, you will be down by $40,000. The account value starting in the next year would be $160,000 (minus any fees). In the IUL policy, the same 20% market loss would result in the cash value remaining at $200,000 (minus any fees).
The Concept of Stacked Gains. The importance of stacked gains can not be stressed enough when markets are up. A 10% gain in the following year would result in new interest being credited to the policy in the amount of $20,000, putting the policy’s value at $220,000 at the end of the second year. In the stock account, there would be $160,000 plus the same 10% for year two growth (minus fees). The stock account value at the end of the second year would be $176,000 (minus fees).
The comparison is $220,000 in the IUL versus $176,000 in the stock account. From that point forward, the new base in the IUL is $220,000, never to go lower than that from market losses. Over time, protecting your principal from market loss, makes a huge difference in the policy’s accumulated savings. The cash value in an IUL can drop due to cost of insurance charges and/or fees. It shouldn’t happen but it is something to discuss with a life insurance professional at the point of purchase.
The Upside (cap rates) and the Downside Protection (the floor).
If never losing any principal due to negative market returns still sounds too good to be true, let’s peel back the onion a little bit. Quite simply, they are buying options to insure the downside guarantee that your policy will never lose principal from market losses. Life insurance companies employ some of the sharpest minds in the investment world to manage these assets. The people they have working for them are dedicated to nothing else. There can be billions of dollars allocated in these strategies.
Life Insurance Premium Financing
Using IUL contracts for premium financing is another strategy we use when it is appropriate for individuals to finance a policy. Today, it is the lure of low interest rates that makes financing a consideration. Premium financing should only be for high net worth individuals with at least $5,000,000+ of net worth. A person who needs permanent life insurance but does not want to use their own capital to pay the premiums is a good candidate for premium financing. An arbitrage should exist between the cost of the premium finance loan and the policyowner’s return on investment. For example, HNW people with an ROI of 10% on their assets can borrow the premiums today at 2% and for them, that may be ideal. That creates an 8% arbitrage and some lenders will gladly lock in longer term rates with favorable terms.
The goal of a premium financing strategy is to pay off the loan and be left with a properly funded life insurance policy, payable at death. With more than 30 years of premium finance experience and having placed over 600 financed policies, I have strong relationships with traditional lenders and specialty lenders that work with our clients to finance these policies. Many of our clients have their own banking relationships and they prefer doing business with them. In those cases, our job is to guide them through the insurance company requirements. You can learn more about premium financing here.
Policy Design
The way in which an IUL is initially designed is determined by the goals and objectives of the policyholder. For example, when using the policy to maximize tax-free income in retirement, the policy should be maximum funded, meaning the initial death benefit is low. A lower death benefit will result in less cost of insurance charges.
Is there a “best index or design” to choose? There is no way to know which indexed strategy will perform the best, either over the long term or the short term. We encourage our clients to work with professionals who will follow “best practices” when recommending index strategy allocations. That includes proper understanding of the index choices in order to make the right decision about which fund or funds to select.
Taxation – Indexed Universal Life Receives Favorable Tax Treatment which should be discussed with your insurance professional. Qualified plan distributions from a 401(k) and an IRA are subject to income tax while the death benefit is income tax free. If an estate is large enough to trigger estate taxes, the policy can structured in trust to avoid estate and gift taxes.
Loans are not income, according to the IRS. Therefore, any withdrawals taken as loans are not taxable. For retirement purposes, this is advantageous as the distributions from your IUL are not reported on your income tax returns because they are not treated as income. As a result, this money does not affect your social security taxes or Medicare.
The IUL Loan Structure
Tax-free loans are one of the most compelling reasons to consider IUL, especially for retirement income planning. Indexed Universal Life has different loan types, including an indexed or participating loan. The discussion of policy taxation and loans are important ones and a web page is not a sufficient resource to explain these loans. A web page is good for reference but to cover this topic in the best interest of policyholders, it should be done person to person.
Considerations:
Tax-free distributions and death benefits
Guaranteed principal protection during negative market returns
Maximum flexibility
Favorable policy for premium financing
Unstructured loans
Stacked gains from indexed growth
Less risk
Caps and participation rates are not guaranteed
Decreasing surrender charges
Creditor Protection (varies by state law)
Living benefits
Financially strong underwriters
Please contact me at 561-771-4647 or email me to arrange a complimentary consultation about anything on your mind concerning life insurance, annuities or retirement planning.
Are the premiums higher if you buy life insurance without going through medical underwriting such as bloodwork or a medical examination? The answer is no. You can obtain the best life insurance policy online without a visit from a medical professional. That means the best rates and the best policies are available online. Accelerated underwriting does not mean expensive, guaranteed issue. The insurance company still underwrites each individual policy but in a completely new way. Some life insurance companies are leading the way by using information and data they believe is better.
Although this may be counter-intuitive, you do not pay more. Buying life insurance online is not “buying direct” from the insurance company either. Life insurance companies do not sell policies direct to consumers. They sell only through licensed insurance agents, without exception. Some insurance companies tried going direct, without success. Life insurance is sold, not bought.
Behind every online site selling life insurance, there is a licensed life insurance agent. For every sale, the insurance company pays a commission to the licensed agent named in your application. You may not realize a life insurance agent is writing the policy, but in fact, it is required by law. Some of these online agencies are hoping consumers believe there is an advantage in going “direct” and cutting out agents. It helps to know that online sites are no different than any other insurance agents or agencies.
Why It Matters.
Now that you know there is an agent getting paid a reasonable, non-negotiable commission, you want to always use the help and guidance built into the pricing of the policy. The insurance companies want educated consumers. Some life insurance buyers may incorrectly assume that buying online is “going direct”.
State of the Art.
In conclusion, you can now purchase the best life insurance policy online and get it done WITHOUT A MEDICAL EXAM, without lab tests (non blood or urine) or face-to-face visits, if that is what you prefer. The maximum is $5,000,000 per person and we have companies that write up to age 65 without medical evidence. The whole process can be done within an hour.
Contact us for a quote to apply and buy. Reach Ted Bernstein at 561-771-4647 or by email. We are close. People often search for “life insurance near me” or “life insurance agent near me” and we are one of the results. Online, we’re all close for business purposes. It truly is one of the great benefits of the Internet. Check out our 5 Star rating on Google or on our testimonial page.
The two most important considerations to focus on before a term policy expires are your current health and the policy’s conversion option. Every option you will face involves these considerations. Whether you keep, convert or sell the policy, current health and convertibility will be factors. The best time to deal with the end of a term policy is well before its end, allowing for enough time to consider a plan based on the options available in the contract. This way, you retain control over keeping the coverage or shopping for a new policy.
Long duration, guaranteed term insurance is a relatively new product in the life insurance industry. It started getting popular about 25 years ago. Low premiums have enticed many insurance buyers to overlook some disadvantages. For example, let’s assume a 35 year old person bought a 20 year term policy, 20 years ago. Twenty years later, around age 55, the policy is expiring. What we find is that a very large percentage of people in this boat want to extend the coverage, but they cannot. There are many reasons for this which I cover extensively on this site.
Before a policy expires, you want to be aware of the following:
If the policy served its purpose, you can walk away, assuming there is no secondary market value. If you are over age 70 with some significant health issues, you might want to explore the secondary market to determine its value to a settlement investor.
Another option is to convert your policy to a permanent one from the company that issued the original term coverage, after making sure the conversion privilege is still in effect and available to you. DO NOT ASSUME IT WILL BE. The conversion option is the single most misunderstood provision in term insurance. Most policies limit the time you can convert. Once it passes, you are out of luck and you will then need to prove evidence of insurability to the insurance company. They will want new and updated health information, new blood and other labs, at the very least. They will re-underwrite you again as if you’re a new policyholder. If, however, you are ABLE to convert WITHOUT evidence, you still may NOT want to exercise this option. It will depend on your health.
Another possibility is to buy another term policy if you are insurable. If you are, shop the market with an insurance professional who can find you the most competitive policy at that time. No matter what you do, you are paying for the professional to assist you. If you buy a policy and use no help from anyone, the insurance company will pay the full commission to the designated agent assigned to your purchase. There is no way around this. Like the car business, you cannot call Ford and bypass the dealerships. My point is to take advantage of what you are paying for and find an agent you are comfortable working with.
Or, you can buy a permanent policy. Beforehand, shop the market with an insurance professional who can maximize the value of your purchase, especially with a permanent policy. See point #3. Be selective and try to find a professional with experience, an impeccable reputation and solid referrals.
Another option is to extend the coverage by paying the “renewal” premium offered by most policies. The rate will be much higher than the rate you’ve been paying. This option usually means the insured is in bad health and has no other options.
The most important thing I can offer as a takeaway is to review the policy every couple of years and talk through these options to be mindful of when the conversion date expires. Planning around that date will prove to be beneficial in the long and short run.
Give us a call at 561-869-4500 or email me at TB@LifeCyclePlanners to get started. I offer a complementary conversation about anything on your mind concerning your insurance coverage or succession plan.
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.
What do Barbara Eden and Elizabeth Montgomery have in common with buying life insurance today?
Magic!
As fast as they blink and twitch is all the time it takes to buy the best life insurance available in the market today. Apply and Buyis done without a medical exam, without lab tests or without the traditional underwriting hassle. Everything is done online with the guidance of experienced professionals. Whole life insurance, term life insurance, permanent life insurance are all available, up to $5,000,000. For qualified prospects, no traditional underwriting means:
No bloodwork, no needles.No other body fluids necessary.
No visit from the doctor.
For approved candidates, issued and paid in an hour.
The Need For Speed.
Consumers today expect everything done quickly. Many people do not review or upgrade their existing life insurance coverage because they dislike the process and it takes too long. But speed alone is not all it takes to make a great life insurance experience. Considering it is among our most important assets, quality is equally important. Without exception, the insurance companies underwriting these programs are market leaders.
Welcome to the future where you can buy the most competitive life insurance coverage in a single phone call. By collecting information such as prescription history, DMV reports and typical credit and consumer information, you will get a policy in a fraction of the time and none of the aggravation.*
Everything is done online. In one sixty minute phone call, you can apply and buy up to $5,000,000 of coverage. Everyone under age 65 is a candidate. Therefore, if you have been putting off the decision to review or upgrade your coverage, now is the perfect time to speak us.
What Type of Policies Are Eligible for Accelerated Underwriting?
Term and permanent policies are eligible, including whole life. There is no difference between these products and the ones available through traditional underwriting, which is the biggest concern people state for not upgrading their existing life insurance coverage. People realize that policies are better than ever before but at least 50% report taking no action. Enhancements like living benefits, vitality pricing, lifestyle credits and lower premiums are not enough to overcome the hassle of underwriting. The typical concerns stated by most people include:
I am often contacted by owners of term life insurance policies when the policy is nearing the end of its guaranteed term period. Whether that is 15 or 20 years from when it was issued, people want information about their options at this very important time. Like many things involving insurance, reaching out for a life insurance professional is your best bet. Understanding the options will provide comfort and clarity. Because nothing about life insurance is one size fits all, there are no simple answers here. The end of a term insurance policy brings the need for life insurance into focus again. Typically, healthy people have good options to buy new insurance. An expiring term insurance policy should be treated like the purchase of new insurance. How much coverage is needed, for how long and what type are important questions to consider.
Deciding how long a life insurance policy should last is one of the toughest decisions we face when buying life insurance. The duration is a huge factor in determining the policy’s premium. The longer you want a policy to last, the higher the premiums will be. In contrast, the sooner you can lock in a permanent insurance rate, the less it will be over time. For those who prefer to minimize future costs, permanent insurance is more economical. Permanent life insurance has a much lower net cost than term.
Knowing that permanent life insurance has a much lower net cost than term insurance, why do people stay with term longer than they should?
In a perfect world, everyone wants lifetime coverage for the cost of term insurance. But, when we are young, term is easy on our budgets and life expectancy seems like a hundred years away. Younger insurance buyers are often led to believe they won’t need insurance in the future because:
their kids will be grown
other assets will have increased, and
their spouse won’t need liquidity when the kids are gone.
In reality, we get older quickly and our feelings about how long we want life insurance change – ask anyone over 50. In our 30’s and 40’s, we might think we only need coverage until retirement or when the kids are self-sufficient. In situations of divorce, everything changes. Many people choose term insurance hoping to replace it with a better policy when cash flow improves, before the term policy ends. Unfortunately, that is not what happens. Data strongly suggests that life insurance reviews are easy to kick down the road. Fifteen or twenty years passes quickly, making the flaws of term insurance painfully clear.
The number one problem with term insurance is that it lapses before it is needed most. After the initial term period, the much higher renewal premiums may be unaffordable and they catch people surprised and unprepared. A 55 year old may now have health issues. If health has changed, the problems begin to compound. Older age and less healthy combines to make term coverage far less desirable, making this the first time people realize that term insurance may have cost less when they were younger, but it is not better value. It simply cost less in our low risk years.
What to do with current, inforce policies?
Life insurance buyers can benefit from innovation, technology and science. However, it is likely that your current policies are not receiving these enhancements. For example, new policies allow people to take an accelerated benefit against the face amount of the policy, at no cost, when they have a health emergency. In the proper policy, a $2,000,000 policyholder is eligible to take more than a million dollar advance from the face amount, under the illness rider. There may be zero cash value in the policy but it remains eligible for an advance because these advances come from the face value, not the cash value.
In order to take advantage of these innovations, life insurance owners only have to let an experienced agent do a market review.
Another innovation, apply and buy, allows people to get up to $5,000,000 of coverage approved and issued online, in one meeting, without submitting any doctor records, blood, urine, or taking a medical exam. The rates for expedited policies are exactly the same as they are for people who are underwritten traditionally. There is no additional cost for this remarkable convenience. Whether it is term, whole life, universal life or term to 100, the coverage can be applied for and issued in less than an hour.
Innovations in cash value policies are equally remarkable. In the right indexed universal life policy, the insurance company GUARANTEES there will never be market losses, only gains. Indexing strategies are transforming the uses of life insurance.
For people older than 70 with expiring term insurance policies, they should consider selling the policy in the secondary market rather than just letting it lapse. The policy may have no value, but it is possible. A few months before the policy lapses, getting a valuation makes sense.
Give us a call at 561-771-4647 or email TB@LifeCyclePlanners to get started. I offer a complementary phone call about your current life insurance concerns.
Whole life insurance is specifically targeted to consumers seeking high guarantees, tax deferred growth, competitive rates of return and and THE LOWEST NET COST LIFE INSURANCE COVERAGE. Whole life is often recommended for high net worth life insurance buyers who appreciate competitive internal rates of return.
Let’s consider some of the more common questions about Whole Life:
Is whole life insurance right for you?
Does Whole Life cost more than other types of coverage?
Why does net cost matter so much?
Which company offers the best Whole Life?
Is Whole Life right for you? The best candidates for Whole Life are life insurance buyers who want and need guaranteed coverage for life and they can handle higher premium payments in the early years. The net cost of Whole Life is far superior to term insurance, challenging the misleading information that suggest term is cheaper. Whole Life insurance is one form of permanent coverage offering predictable outcomes and guaranteed results. It is not the right policy for short term needs or for people with limited budgets. Whole Life policies create cash value from your premium payments. The cash value growth is measured on two parallel tracks. One is on the guaranteed track and the other fluctuates through a variable dividend rate.
Does whole life cost more than other types of coverage? Yes and no. The premiums for whole life, in the early years, are higher than other types of insurance, such as term insurance or universal life. However, it is not inherently more “expensive” than other types of insurance. The higher cash outlays in the early years is what makes it appear to be more expensive. Over your lifetime, the net cost of whole life is much less than term insurance. The upside of these higher premiums in the early years is LOWER PREMIUMS or NO PREMIUMS later in life.
The net cost is the total premiums paid minus the cash value. Since whole life builds cash value within the policy, it stays inforce for life. Whole Life policyholders have coverage that never expires if premiums are paid as planned. Their premiums never increase and their policies are often flush with cash that can be used in a variety of ways.
The monthly payment for a 5-year car lease requires more cash flow than a monthly payment for a 3-year lease assuming you are leasing the exact same car. Does that make the car more expensive for a 5 year lease? Of course not. The same logic applies with permanent life insurance. While cars depreciate, insurance policies appreciate. To say whole life is more expensive insurance by definition may be misleading and simply not accurate. Pundits like Dave Ramsey and Suze Orman have rather sophomoric ideas about permanent insurance. They do not have professional designations or practical insurance experience, in my opinion.
Cost is one critical factor to consider when selecting a life insurance plan that best suits your individual needs. You can compare the approximate net cost of different policies by simply measuring the total premiums minus the total cash accumulation at different intervals.
Whole Life vs Term Insurance. Here are some advantages:
Policy Duration. With whole life, you are insured for life. As long as your premiums are paid, you’ll be covered, whether you’re fifty or ninety. Term life ends at a certain age leaving you without vulnerable if you need or want coverage to last longer. We tend to underestimate our desire for lifetime coverage when we are younger.
Whole Life accumulates tax deferred cash value. Cash value grows tax-deferred, like an IRA. You can borrow or use the cash on a tax free, low cost basis.
Future premiums can be paid from the cash value.
Flexibility. The cash value is protected from market fluctuations. The interest is tax-deferred and there are no limitations on contributions. You will likely earn dividends on the cash value as discussed earlier.
Which Company Offers the Best Whole Life Policy? There are only a few companies remaining that are dedicated to creating and managing Whole Life products. There is competition among them and each has developed niches where they excel. The process of buying a suit is a good analogy to the process of buying a Whole Life policy. A good suit is customized or tailored to fit you perfectly. The same is true when buying a Whole Life policy. There are many factors to consider, including which company and which product you choose. No one insurance policy is going to be perfect for everyone.
By doing your research and working with experienced professionals that represent the entire market, you will come close to finding the best policy to suit your needs at this point in time.
Please contact me at 561-869-4500 or complete the contact form on this site to schedule a complementary discussionor look me up on https://www.advisorycloud.com/profile/Ted-Bernstein
Worried that your term life insurance is expiring soon; without good options? Or it can’t be extended without paying 5x more premium?
By taking control now, we will help you find the best solution the market offers.
If your existing policy is going to expire soon because the conversion deadline passed and the term period will expire, there are good options even if your health has changed. Many people bought term insurance in their 30’s or 40’s who may have been advised that 20 years of coverage was sufficient. Today, if coverage is still needed, there are policies that have been designed for you. By following a few simple tips, you will NEVER have a gap in coverage again.
Creating a customized plan is what people want today from their life insurance policy. Our goals and objectives change over time. Understanding this, we make sure the policies and plans we offer adapt to the changes in your family and business. The best life insurance policy offers maximum flexibility.
“What is the best type of life insurance policy” is the most common question I am asked about life insurance and “How much should I own” runs a close second. Simply, there is no such thing as a “best” life insurance policy. Each one does very different things. The right insurance professional offers every type of policy because buying life insurance is not a one size fits all strategy.
For example, if you want premium flexibility, you rule out whole life. If you need coverage for life, you rule out term insurance. The best life insurance policy is inforce when you need it and is competitively priced, today and tomorrow. The premiums can be structured to increase over time as income grows. Some people prefer to pay more today and eliminate or reduce premiums in the future. Customization and flexibility are the keys.
Pro Tip: Review the policy at least every two years, it’s painless. Every owner of life insurance is best served by reviewing it on a regular basis.
You want a life insurance policy where you will never have to provide additional medical evidence in order to keep it. This is the biggest problem with term insurance; it’s not affordable after the term period without more health evidence. If you own a term life insurance policy or you are considering a new term insurance policy, let us explain the options available that will put you in control, not the policy. Simple new innovations such as the Installment Payout Option can reduce the premiums annually and give you guaranteed protection for life.
Term insurance or permanent insurance? Which should you buy?
For many life insurance buyers, term insurance fails when it is needed most and permanent insurance is too expensive initially. Innovation has made customization possible. To get the best insurance policy for you, make sure to consider:
Flexibility to change design as needs change over time.
All life insurance is NOT created equal. There is nothing to gain by working without a professional. Whatever compensation is paid to the agent is a built-in cost. It is ALWAYS paid whether the policy is purchased online or from a professional.
Please contact me at 561-869-4500 or email me about a complimentary consultation.
