Category: Education

Clients today are  more concerned than ever before with loss of their assets due to a variety of factors threatening their wealth, including increased litigation risk, decreased compensation and earnings, stalled or negative investment momentum and, of course, the uncertainty surrounding pending estate tax increases. Thanks to the laws in many states that protect the cash value of life insurance policies, you can now be part of a solution to these exposures. In many states life insurance is creditor-protected by statute to an unlimited dollar amount. Most states have specific guidelines and definitions as to how the policies are structured in terms of owners and beneficiaries, and the level of protection varies widely from state to state. By understanding and using these statutes, you can convert exposed assets (cash) subject to creditor risk to protected assets with a death benefit.  But why would anyone consider allocating cash to insurance? There are several good reasons…. Cash is at an all-time high. Even with the threats to wealth outlined earlier, we have more liquid wealth on the sidelines than ever before (trillions of dollars in cash, by some accounts) due to the perceived current instability of both the stock market and real estate. In most cases, even for legally and financially sophisticated people, this cash is unprotected and exposed to any source of creditor risk or liability. Bank solvency risk continues. A recent report...

Definition of Single-Premium Life Insurance: An insurance plan in which a lump sum of cash is paid up front to guarantee payment to beneficiaries. Because single-premium policies are instantly fully funded, the money invested builds up rapidly because the policy is fully funded, making for a potentially sizeable benefit even in the event of the policyholder’s sudden death. Following the Tax Reform Act of 1986, this type of insurance policy became a popular tax shelter. There are a couple of popular single-premium policies: Single-premium whole life, which offers a fixed interest rate paid by the insurance company which taken on any potential risk rather than the policy holder; and Single-premium variable life, which allows policy owners to select from a menu of professionally managed financial portfolios. LIVING Benefits of SPL Consider unexpected expenses that can crop up in old age. You probably understand the importance of LTC insurance, but suppose you have put off buying this  coverage because of high annual premiums? Single-Premium Life Insurance can offer a solution. Some SPL policies will give you tax-free access to the death benefit to pay for long-term care expenses. This feature can help protect your other assets from the potentially overwhelming cost of long-term care. The death benefit remaining in the policy when you die will pass income-tax free to your beneficiaries. And if you don’t use any of it, the money will...