Life Cycle Financial Planners, LLC

Category: Life Insurance

  • Accelerated Benefits Turn Life Insurance Into Emergency Health Fund.

    Accelerated Benefits Turn Life Insurance Into Emergency Health Fund.

    After A Critical or Chronic Health Event, Advances Are Made Against The Face Value, Not The Cash Value:

    We don’t often use a term like “groundbreaking” when talking about life insurance. But in the case of living benefits, the policyowner now has the ability to take a no cost advance against the policy’s face amount, after a critical or chronic health event. This feature is now available on all types of life insurance policies. Since 2012, we have been helping life insurance buyers learn about and enhance their coverage by adding this option. The ability to take an advance for which there is no additional cost could prove to be invaluable. Also referred to as Living Benefits, accelerated benefits are revolutionizing life insurance policies. Life insurance has traditionally benefited survivors only. The addition of living benefits transforms life insurance into an asset that also benefits owners of life insurance during their lifetime.

    Does your current policy allow you to take an advance against the face amount? Most likely, it does not. But now, you can get a better policy with accelerated benefits. Both term and permanent coverage are available with this option, from several top rated carriers. The question to ask yourself is ‘why keep an outdated policy that doesn’t have living benefits’?

    What is most important to know about living benefits? The advance is unrelated to whether or not there is cash value in the policy. This point is best illustrated through an example. Assume a 40 year old has a $2,000,000 TERM INSURANCE policy with an annual premium of $1500 per year. This policy will never have cash value but it is always eligible for getting an advance against the face value. Let’s further assume that the policyowner has a qualifying event in the 3rd year, entitling him/her to take an advance of $250,000. Of course, this term policy has no cash value and only $4500 in total premiums were paid to this point. The policy still qualifies for a $250,000 (or more) benefit, AGAINST THE FACE VALUE.

    Life insurance needs to be more relatable”, says Deborah Bernstein, owner of Life Cycle Planners. With accelerated benefits, people might think of this option the same way we thought about seat belts when they first appeared in cars. Would anyone accept a car without seat belts once they became available? The accelerated benefits add no cost to the policy but they dramatically increase its value”, she stresses.

    The living benefits turn a life insurance policy into an asset with a dual purpose. In addition to the traditional life insurance benefits for your beneficiaries, the policy is also an emergency health fund for the owner in case of a chronic or critical health event. Even though most people are still unaware of the accelerated benefits option, more and more of the policies include them, FOR NO EXTRA PREMIUM.

    Am I borrowing the cash value from my policy? NO. The advance is against the face amount, not the cash value. No loan or cost is involved in drawing against the face amount of the policy. In fact, this benefit is available on term policies which never have cash value.

    How Do Accelerated Benefits Work?

    In the case of someone who suffers a stroke, for example, the living benefit option allows the policyowner to make a claim which ultimately reduces the face amount of the policy. Perhaps the policyowner wants that $250,000 to help manage the stroke recovery process. The approved amount will reduce the face amount of the policy and future premiums will be reduced. Other illnesses, such as MS and Parkinson’s, are also covered even though they are chronic illnesses.

    Those of you who are familiar with our content, you know that we stress the importance of always working with an experienced life insurance professional. In the case of accelerated benefits, this is never more important. As insurance professionals, we spend a great deal of time learning about the products of different carriers and we know which product is best suited for each of our clients.

    Jumbo Life Insurance Tips

    Adding the Accelerated Benefits Option to Your Coverage.

    Once the best policy for you has been selected, the underwriting process can be done without medical exams or traditional underwriting. For people needing up to $5,000,000 of coverage, some companies no longer require traditional underwriting, meaning that no medical exam or doctor visit is necessary. In one online session, a policy can be applied for and issued. By applying to the right company or companies, the living benefits option will be automatically included in the coverage. It is worth noting that not all living benefits are the same. Some policies cover critical, chronic and terminal health issues – ALL 3 AT NO ADDITIONAL COST. There is no downside for having this extra layer of protection.

    If you need to make a claim for accelerated benefits, we recommend contacting our office and we will help with the claim process. Or, you can contact the insurance company directly, as this can be a very private matter. Once the claim is approved, there is a permanent adjustment to the face amount and the ongoing premium is lowered. Living benefits are considered not to be taxable but you will want to verify with your CPA, since this is not tax advice.

    To get a quote or start a dialogue, complete the contact form on this page or any page on our site and we’ll contact you immediately. Or, you can contact Ted Bernstein at 561-771-4647, or by email.

    To hear testimonials: https://vimeopro.com/aigmarketing/main/video/303384330 / https://vimeopro.com/aigmarketing/main/video/142685717

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  • 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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  • The Term Insurance Failure

    The Term Insurance Failure

    Buy Term and Invest the Rest – A Failed Theory.

    A growing number of life insurance owners are worried that their current TERM LIFE INSURANCE policy is expiring soon and they find themselves without good options for securing new coverage. Many of these people were sold a sales concept known as “buy term and invest the difference“. Instead of purchasing one policy that would last a lifetime, people were encouraged to purchase something like a 20-year term insurance policy and build up a separate savings account, outside the policy. To make this gimmick sound plausible, they were convinced they would not need, or want, life insurance later in life. Once they were near retirement or when their kids were independent, the term insurance was designed to lapse. For millions of Americans, this has proven to be nothing more than a sales pitch with very detrimental planning consequences. Not only are people forced to buy new coverage later in life, there is no side fund that is needed to pay for the new, and more expensive coverage. Adding insult to injury, some people will not qualify for a new policy.

    How Did This Happen:

    1. If there were side fund accounts, they did not grow close to 7%, after tax.
    2. Virtually no one “invested the difference” with any type of discipline.
    3. If there were side funds, they were often used for other things.
    4. The conversion deadlines passed in most policies.
    5. Health issues cause renewal premiums to be higher than anticipated.
    6. In divorce situations, the side funds were often divided.

    What Happens Now:

    1. Check the conversion language in your existing, inforce term policy.
    2. Determine your insurability for new coverage.
    3. Seek counsel from an experienced life insurance professional.
    4. Consider policies with different duration options.
    CALL NOW FOR A COMPLIMENTARY CONSULTATION AT: 561-771-4647

    Life insurance is a lifetime need. Ask anyone over 50 if they feel differently than they did at 35 about their need for lifetime coverage.

    Most people are unsure how some health issues might affect the rates for a new policy. A few extra pounds, controlled blood pressure or high cholesterol are common issues after 50. They may increase the premium for a new policy but not as much as you might think!

    More than 95% of all term premiums are wasted because they are NOT INFORCE as we get older. If you are currently facing any of these problems with life insurance coverage, contact us to discuss the options. There are solutions but acting now is essential.

    Without knowing the future, it is impossible to “predict” when your need for life insurance coverage goes away, if that ever really happens. If you bought term insurance in your 30’s or 40’s, you were likely told that term insurance was the best option. It was inexpensive because the premiums were low and the premiums were low because the chance of dying was remote. If you are currently in your 30s and 40s, now is a great time to consider options that are flexible and customized to meet your goals and objectives.

    “Buy term and invest the difference” or “buy term and invest the rest” was a marketing gimmick promoted by non-insurance personalities like Dave Ramsey and Suzy Orman. There were thousands of untrained agents promoting this marketing strategy instead of counseling people about proven solutions and guaranteed outcomes. It has taken 20+ years, but we now have a national crisis in coverage that has not been seen before. A large part of the uninsured class now consists of previously insured people in their 50s, 60s and 70s.

    Term insurance may be appropriate coverage for young people with children who may not yet have the financial resources to pay for permanent protection. It makes sense to cover bank loans, key-person life insurance obligations and for divorce agreements.

    Busting the myths about term insurance!

    Please complete the contact form on this page. Or, contact Ted Bernstein at Life Cycle Planners for a complimentary consultation.

    CALL NOW AT 561-771-4647 FOR A FREE CONSULTATION

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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.

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

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  • Sell Your Unwanted Life Insurance Policy For Cash.

    Sell Your Unwanted Life Insurance Policy For Cash.

    Are you over 65 with a life insurance policy you no longer need or want? Like any other asset, it can be sold for cash in the secondary market.

    Life insurance policies have value in the secondary market. Institutional investors will buy policies from people who have determined they do not need or want the policy. The market is best for people over 70 who are not in perfect health. If you fit this profile, you have an opportunity to sell your unwanted policy for a lump-sum, before lapsing or surrendering it.

    Even term policies have value. We help policyholders determine the secondary market value of their inforce policies. The value of a life insurance policy is expressed as a percentage of the face amount. For example, if you sell a $1,000,000 policy for 5 percent, you would get paid a lump-sum of $50,000.  A $3,000,000 policy could fetch $150,000, or more, depending on the percentage. The important considerations are health and the type of policy. There may be some income taxes to consider on these sales (each sale is different) and that is easy information to obtain. After the policy is sold to the new owner, future premium payments are theirs.

    Term policies also have secondary market value but most policyholders are unaware of what this means.

    Life insurance is an important asset to your beneficiaries and I urge potential sellers to consider keeping the coverage whenever possible. There are many creative ways to retain an inforce life insurance policy and you may want to consider them before selling the policy or letting it lapse. There are hybrid arrangements in which you give up a piece of the face value in exchange for having the future premiums paid.

    Life Settlements convert your policy to cash through a sale to an interested buyer. This is no different than selling any asset when it is no longer needed or wanted.  The policy is  appraised along with your medical records and an offer is then made to the owner, if they determine there is value. Sometimes, no offer is made, depending on the outcome of these appraisals. Some people are too young and healthy or they have a policy that is not attractive to buyers. Other times, the market favors sellers, not buyers.

    Getting an appraisal by working with a broker creates great value to sellers. You may have heard ads from some buyers who are attempting to go direct to sellers and that is certainly one approach but it is not optimal? Why deal only with one buyer when there are dozens, if not more?

    As a life insurance professional with secondary market experience, I represent sellers by bringing the policy to all of the market. By putting buyers in a competitive situation, your offers will increase. The U.S. market is robust and you want an agent with access to the maximum number of capital sources buying policies.

    Should you sell your policy? It pays in many ways to work with a professional working solely in your best interest. A life insurance professional is qualified to help you think through the pros and cons of selling a policy. Before making a decision, I advise my clients to speak with their spouse, other advisors and often, their heirs. This information about a life settlement transaction may help.

    Interested but unsure? The best way forward is to determine if your policy has value. There is no downside and no obligation to obtain this value or to get bids. You will learn a great deal about the policy you own.

    To determine its value, potential buyers need the following information:

    1. Policy projections including the premiums to keep the policy in-force to various ages.
    2. The type of policy and its terms. Some policies have no value in the secondary market because of their terms.
    3. The life expectancy of the policy owner which is determined by an independent, 3rd party analyst. No medical is necessary.
    4. A detailed history and understanding of the policy owner’s current and past health.

    Typically, there is minimal value for policies owned by healthy people under the age of 70. If there are health considerations leading to a shorter life expectancy, that may change the numbers in your favor. I recently helped a 73 year old man sell a $3,000,000 policy. Because of previous medical history, he received several offers. He sold the policy for 16% of face value, or a little bit more than $450,000.

    Are term policies eligible for sale in a life settlement?
    Yes. You should be age 65 or older with some decline in health since the policy was issued. Term policies are typically bought for a temporary insurance need, unlike permanent policies where the policy owner typically has a long duration or lifetime insurance need.

    Are there special requirements for selling a term insurance policy?
    Most life settlement buyers want term policies that are convertible to some form of permanent insurance. Therefore, being able to control future premium obligations through a conversion is usually ideal.

    When does the conversion privilege on a term policy expire?
    The answer varies among different policies even issued by the same company. Some limit the conversion period to a number of years; other companies may also impose a maximum age.

    When should I begin the process if a conversion is involved?
    A life settlement transaction requires getting medical records, in-force illustrations, life expectancy analyses, investor pricing and the closing. In addition, a term settlement usually includes issuance of the conversion policy. Because the entire process usually takes 3 to 4 months, you should get it started at least 4 to 6 months prior to the expiration of the conversion privilege.

    Can I sell part of a term policy and keep part?
    Insurance companies typically do not permit a permanent policy to be split for a life settlement. It is worth exploring if they will allow partial conversions. Then, it would be possible to sell only a portion of a term policy by doing a partial conversion as part of a life settlement transaction. The remaining policy can be kept as term insurance or be converted separately.

    I offer an initial, complementary consultation in person or by phone. Please email me or fill out the contact form on this page and I will contact you shortly. You can call me direct at 561-869-4500.
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  • Life Insurance Policy Review

    Life Insurance Policy Review

    Life Insurance Policy Review & Monitoring

     

    A life insurance policy review is strongly recommended every two years. For many life insurance buyers, an objective and impartial advocate always proves to be invaluable. For individuals, families or businesses, you can navigate the life insurance world with the comfort of an impartial professional. Transparency and disclosure is the cornerstone of our practice.

    After a life insurance policy review, you will learn about cutting edge improvements to policies, better pricing options and how your current policy stacks up. Although it’s counter-intuitive, if your health is the same, you should be able to improve your policy every few years.

    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 these reviews be done on a fee basis to ensure objectivity.

    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 fiduciary compliance that comes with being trustee. 

    I began offering a life insurance policy review service to individual consumers, law firms, CPA firms and Trust companies, reviewing more than 2000 Trust Owned Life Insurance Policies (TOLI) on a fee basis. 

    The life insurance industry is in a constant state of change making life insurance a complex financial asset.  Many types of policies and their components are insufficiently understood by the policy owner. Having an objective professional who is contractually prohibited from selling products is wise trust management for institutional owners.  

    checklist

     

    FREE OR FEE? IS THERE A DIFFERENCE?

    Your life insurance policy should be treated as a “buy and manage” asset.  Life insurance agents typically offer only the buy function and not the manage function.  If you are a Trustee or 3rd party Owner of a life insurance policy, ask yourself 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 LIFE INSURANCE POLICY REVIEW.

    • Life Expectancy has lengthened. 
    • 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.
    • Interest and dividend crediting rates change.  These crediting rates are directly tied to the rate of return in the policy. 
    • Market conditions have changed which can affect policies tied to the markets.
    • Planning goals of the policy owner may have changed. Evaluation of current goals and needs is an essential part of the life insurance policy review process.
    • New products have emerged, often making previous product selections less desirable in light of new options.
    • Federal Estate and Gift Tax laws have changed which can eliminate the need for a trust to hold this asset.

    WHAT IS INCLUDED IN A LIFE INSURANCE POLICY REVIEW?

    • Update original goals and objectives, including a policy summary.
    • Location of original policy and all amendments.
    • Confirm current contact information for owners, trustees, etc.
    • A review of policy structure, ownership, beneficiaries, payment methods, etc.
    • Assessment of possible underwriting 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.
    • An objective evaluation on whether there is a more cost effective and reliable way to meet client expectations. 
    • 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 may lapse due to poor policy performance, leaving a sizeable premium increase. Current projections should be obtained to view the policy under different conditions.
    • Stress Test – Worst case scenarios should be analyzed.
    • Market Comparison – It is important to assess whether there are savings and other benefits available to the client should they choose to switch to a new carrier. 
    • Secondary Market Analysis – If it is determined that a policy is no longer needed or wanted, rather than lapsing or surrendering the policy, does it make sense to settle the policy?

     

    Before a life insurance policy review is undertaken, it is helpful to 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.

    Please email me at Ted Bernstein or call me at 561-869-4500.

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  • Selling Un-Needed Life Insurance Gains Acceptance

    Selling Un-Needed Life Insurance Gains Acceptance

    Selling un-needed life insurance policies in the secondary market is now considered mainstream. It is a noteworthy development when class action lawsuits against life insurance companies are brought by policyholders. Should you sell an un-needed  or unwanted life insurance policy? Most qualified sellers are happy to learn about the benefits of selling their policy in the secondary market. It pays to seek the guidance of a professional when dealing with life insurance matters. Selling an un-needed life insurance policy in the secondary market is known as a life settlement transaction.

    Unsure about it? Ask your CPA or tax attorney about life settlements. Those with life insurance experience are advocates. I advise potential sellers to only work with insurance professionals to help maximize the value of an unwanted or un-needed life insurance policy. The right professional will make you aware of issues such as potential income taxation.

    Selling un-needed life insurance policies is all about the value.

    To determine the value of a policy you are considering selling, potential buyers need the following information:

    1. The required premiums to keep the policy inforce to life expectancy.
    2. The type of policy and its terms.
    3. Your life expectancy which is measured by an independent, 3rd party specializing in this practice.
    4. A detailed history and understanding of your current health and past health.

    With this information, you should get initial offers. Typically, there is minimal value for policies owned by people under the age of 70. If there are health considerations leading to a shorter life expectancy, that may change the numbers in your favor. I recently helped a 77 year old woman sell a $2,000,000 policy she purchased at age 54. Because of previous medical history, she received a bit more than $400,000, net. Some clients I’ve helped have only received offers of 4 to 5 percent of the face amount.

    If you have a policy you may no longer need or want, there is no downside to knowing its value.

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  • Permanent Life Insurance, Lower Net Cost Than Term.

    Permanent Life Insurance, Lower Net Cost Than Term.

    Term Insurance or Permanent Insurance?

    Watch out for these term insurance risks .

    Do you want permanent life insurance coverage for your family or business, regardless of how long you live? Then a permanent insurance policy is right for you.

    There are important differences between term life insurance and permanent life insurance such as whole life and universal life. These differences go way beyond price. The proper way to compare life insurance is to compare the net cost of different options. The people pushing term insurance use a marketing gimmick known as “buy term and invest the difference”. The problem is:

    Nobody invests the difference!

    If you want a policy that will protect your family for life, a permanent policy is the only option. If you want a better net cost, again you want to be looking at permanent coverage. The net cost is much lower than term insurance.

    The Risks of Term, Look at the Math: A male 35 will pay $950 annually for $1,000,000 of term (for a female, a little less). The 10-year net cost of this policy is a LOSS OF $9500. Over 30 years, the policy will have a net loss of $28,500. The term policy will lapse at age 65 with no value. If this person is healthy, he has 20 more years to live, using today’s projections. If the person is unhealthy, he will be unable to get life insurance or it will be un-affordable. Millions of people over 60 today cannot afford what is available to them.

    The Advantages of Permanent Life Insurance: On the other hand, the same 35 year old can buy a permanent policy for $9525. Yes, the premium is significantly more than an equivalent term policy and this automatically rules out all the people who currently do not have the cash flow to buy a permanent policy. The $9525 premium is guaranteed to stop at age 65. The 10-year net cost of this policy is projected to be a GAIN OF $2721. The 20-year net cost is a GAIN of $97,816 and the 30 year GAIN is $343,059.

    Over 30 years, the net cost for term is a negative $28,500. The projected gain, using the current dividend scale, is a stunning $343,059. If you would you like to see a simple presentation customized for you, please complete this form and we will be in touch or feel free to call us at 561-771-4647.

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    A permanent policy will remain inforce as long as you need it to without any new medical information. The equity in the policy can be tapped at anytime and today, many permanent policies offer Accelerated Benefits for health emergencies.

    Why doesn’t every life insurance buyer own a permanent policy?

    The number one reason young people select term insurance is affordability. Many young life insurance buyers do not currently have the necessary cash flow to purchase permanent life insurance, and that forces them to purchase term. In too many cases, the term policy that was selected only for its lower cost is not replaced with a better, more appropriate permanent policy, when it is affordable. The right insurance professional should be stressing the importance of replacing the term policy as soon as possible. Term insurance is the right product only if your need for coverage is temporary. Paying premiums into a term policy is throwing away money 97% of the time because 97% of all term policies lapse before paying a claim.

    Most young people underestimate their desire to have life insurance later in life. People over 50 want insurance for life to protect their spouse, children or grandchildren.

    If you have not looked at the net cost advantages of permanent life insurance recently, you might be surprised at its low premiums and low net cost. The entire process, from quotes to underwriting, can be done online and, in many cases, there is no medical exam at all.

    Why Permanent Life Insurance?

    • The net cost of permanent life insurance is superior to term.
    • Does not expire, is there when you need it most, one policy for life.
      • Consult with an experienced insurance professional to get a customized policy.
        • DO YOU WANT YOUR HEIRS TO RECEIVE LIFE INSURANCE PROCEEDS, GUARANTEED FOR LIFE? 
          • Secondary market value. A permanent policy can be sold for cash if you do not need or want the policy after age 70. Typically, you cannot sell a term policy in the secondary market if it can’t be converted.

    The following video speaks to the virtues of permanent life insurance.

    You can 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

  • 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