Life Insurance Planning should be the bedrock of any serious financial, retirement or estate plan.
According to surveys with LIMRA, Americans continue to see the value in life insurance planning. In fact, six in 10 people own life insurance, and for those who don’t have it many agree they need it.
Life Insurance Planning can be as simple as replacing the breadwinners income or making sure college tuition can be afforded. Many people just want to make sure the mortgage can be paid if something unforeseen occurs. Life insurance planning for these common concerns is vital. In today’s world, no one can know exactly how long they will live but with careful life insurance planning you can be ready when life throw’s you a curve-ball.
Now with the ease of online quoting and with many health conditions now considered insurable, life insurance protection is now easier to obtain and more affordable than ever before.
Why do many not have any or very little life insurance? Frankly, most people don’t like to think about their own mortality. It’s not a pleasant thing to think about. Therefore, many people simply put off this vital protection. Other reasons that life insurance planning is not done is many people believe its too expensive or too complicated or feel they cannot qualify for coverage. A good independent insurance broker can show you your options and research the marketplace for personalized solutions for your particular situation.
Let’s look at a couple of examples, a male age 35 non-tobacco user who qualifies at the best underwriting risk class in today’s marketplace. For less than $40 per month you could lock in $1 million of protection. And this rate would be guaranteed to remain level for 20 years. This is really quite remarkable. For about the price of one good meal out per month you can protect your family with $1 million of coverage. A 45 year old female non-tobacco user who qualifies at the best risk class could purchase a $ 1 million for approximately $70 per month.
It is estimated today that it costs nearly $250,000 to raise one child in the United States. Without proper life insurance planning many families are one unexpected event away from financial peril.
LIMRA has found that over half of the households in America would feel the financial impact from the loss of their primary wage earner in a year or less. In fact, over 40 percent would feel the impact within 6 months, including nearly 40 percent of households with an annual income of $100,000 or more.
Life insurance planning can also play a vital role in retirement and estate planning. A life insurance policy is another tool that can be used to help accumulate funds on a tax-deferred basis. In addition, those funds if properly accessed are allowed to be distributed on a tax-free basis. Using life insurance planning for your retirement needs is something many financial advisers overlook. Ed Slott, more commonly known as the “IRA GURU” and a leading tax adviser recommends using life insurance as an invaluable planning tool. You can see his video here on how to use life insurance in your retirement planning.
Life Insurance planning also can play a huge role in estate planning. Many individuals today belong to blended families. Their could be step children, adopted children, one or more ex-spouses or other family dynamics that make using life insurance essential when planning your estate. Life insurance placed inside of an irrevocable trust to help minimize the effect that taxes may have on the estate.
Life insurance can also be used to help with the tax hit that an IRA may have on children or spouses. Life insurance uses the power of leverage to create more money. Money distributed by an IRA can be used to fund a life insurance policy which then creates multiples of the original IRA amount as tax free death benefit. This money at death can then be used to help pay taxes, fund a charity or simply pass on an estate that was much larger than the original IRA.
When choosing a life insurance company for your planning needs you want to be sure and select not only an agency that is independent and can give you a wide selections of carriers to choose from, but also a company that is highly rated with the independent rating services. Companies like A.M. Best, Standard & Poors and Moody’s offer you an independent analysis to the strengths and weakness of every insurance company.
As you can see the uses of life insurance planning are endless. If you need assistance with any area of your life insurance planning whether it be simple income replacement or more advanced planning techniques please contact us at 1-888-393-9300 or mike@specialriskterm.com
