Life insurance companies and products are frequently changing but the reasons for buying life insurance have not;
- Family income protection
- Business succession
- Estate liquidity
- Equitable estate distribution among children involved with and outside of a family business
- Children with special needs
Whether it’s used to protect your wealth or minimize the financial impact of your death, life insurance is a strategic asset that plays a critical role in your overall financial planning.
Living longer, healthier lifestyles, significant advances in medical diagnostics and treatments continue to require that life insurance companies redesign and re-price their products. Like any other competitive marketplace, life insurance companies are constantly reevaluating their competitive position so they can focus on their most highly desired target markets. The ever changing economy also continues to play a big role in how life insurance companies adjust their business models to remain as competitive as possible.
Our commitment to our clients is to remain vigilant with our research and knowledge of the insurance marketplace so that our knowledge and experience inspires your confidence in us and the solutions that we recommend.
There are different types of life insurance products available today and each is beneficial in its own way:
Term insurance pays a death benefit only if the insured dies during the term of the policy. If the insured is still living at the time the term policy expires the policy terminates and no death benefit is paid. In essence you are renting life insurance protection.
Most term policies today are available for 10, 15, 20, 25 or 30 years with some extending beyond 30 years. The policy owner can cancel the policy at any time they like with no penalty but the insurer cannot make any changes to your policy as long as you continue to pay premiums. You choose the face amount of the policy, the term length and determine who should be the owner of it, for example you, a Trust, or a business entity and who will be the beneficiary.
Many term policies are convertible to permanent life insurance without evidence of insurability.
Why is term insurance great?
You get the most bang for your buck. You can obtain life insurance for literally pennies on the dollar. For most clients who wish to cover their mortgage or their children’s education in the event they die young, term insurance is a great and affordable solution.
Businesses often utilize term insurance to cover the owner(s) as a means to allow the surviving partners or family members buy back stock in an arranged buy-sell agreement. Also they use term insurance to provide coverage on key employees to protect the business, recognizing the financial implications of a key employee’s death. Businesses may also have a term policy to cover any debt obligations or as collateral for financing.
What should you look for in a term life product?
- A convertibility feature. Convertibility allows you to convert the term insurance to a permanent life insurance policy without proving your insurability
- A living benefit or chronic illness feature. In the event of a terminal or chronic illness, you can receive a portion of the policy’s proceeds before death, to help pay medical bills
- A company with strong financial ratings indicating a solid claims paying ability
These policies are most often utilized by our Estate Planning and Business clients who are seeking permanent and guaranteed lifetime insurance protection at much lower cost than traditional whole life. The premiums are higher than term insurance but the benefit is that the coverage can’t be outlived. The policies can be designed to have premiums paid for a specific period of time, for example a single payment, 10 payments, 20 payments, or payments until death. The insurer guarantees that as long as the premium is paid when due, the death value will be guaranteed regardless of how long the client lives.
Traditional Whole Life insurance provides lifetime death benefit protection with guaranteed cash values and fixed premiums. Many of these policies issue dividends annually which our clients often use to offset future premium obligations. Dividends are never guaranteed, merely projected. Some of the benefits of whole life insurance are tax-deferred cash value accumulation, income tax-free death benefit and cash values can be accessed either through partial policy surrenders or loans.
Second to Die life insurance is coverage on two individuals, generally spouses, which pays a benefit when the second of the two insured’s dies. These policies can be structured as term insurance or whole life, but most commonly they are set up as no lapse universal life insurance. The benefit to these policies is that they have lower premiums than single life policies do, and it’s a way to get coverage on an uninsurable individual if the other insured is in good health. These policies are most commonly set up as a specific estate tax planning tool, recognizing that federal and any potential state estate taxes will generally be due when the second of two spouses dies. Second to die provides the immediate liquidity needed to satisfy any estate tax obligations or other debts, income tax free.
Just a few of the companies we work with: