Search

The article discusses life insurance as part of purpose-based financial planning. Individuals' desire to create financial plans that align their assets with life goals is described, noting that life insurance can ensure the continuation of their financial legacy. Several approaches for life planning are discussed, including the method of questioning what an individual would like to accomplish before death, the method of seeking answers to essential questions underlying an individual's financial motivations, and the method of creating a graphical representation of an individual's satisfaction with various facets of life.

The insurance planning tools of leveraged premium funding with nonrevisionary grantor-retained annuity trust plans and the advanced premium payment methodologies with family limited partnership plans were examined. The Section 2702 of the U.S. Internal Revenue Code of 1996 and Treasury regulations permit insurance planners to design their own grantor-attained annuity trust plans as either one in which the grantor retains a contingent reversionary interest in the trust or a term certain plan wherein the remainder interest is not contingent on the grantor's mortality. The advanced premium payment methodologies with family limited partnership plans is a planning technique which can facilitate the acquisition and painless premium payment of the annual premiums for any type of life insurance plan.

The development of methods for estate planning helped financial service representatives improve interaction and service to their clients. Customers are more likely to understand estate planning using the picture process developed by financial advisers and agents. At the initial meeting between agent and client, the agent needs to explain beneficiary and ownership arrangements and premium paying methods. It is necessary that the financial representative agent review the objectives of estate planning, present the client with a clear and understandable picture of the situation and educate the client about alternate techniques to accomplish the objectives. Estate planning techniques are integrated into the meeting between the client and agent. It is realized that the picture process is effective in the estate planning process.

Cash value life insurance provides money when it matters, addresses the ultimate loss, ensures legacies, amasses money for living, and has other important uses. In his last column after 20 years of service Tim Lynch reminds us how we, as professionals, can use this multifaceted product to serve our clients' goals. [ABSTRACT FROM AUTHOR]

Life insurance value stems from the myriad purposes accomplished with the money it generates. Life insurance cash maintains lifestyles, discharges liabilities, and funds commitments as well as dreams. It enables vulnerable people to have the time and wherewithal to fashion a new normal following the loss of those they loved and were financially dependent upon. Life insurance money also is an effective way to address emerging social and economic realities. It protects financially dependent persons of all ages. It funds educational opportunities and other competitive advantages. Life insurance cash sustains family caregivers. It facilitates long-term care and eases end-of-life experiences. No other financial instrument guarantees generally tax free money far exceeding the capital infused prior to death, while also amassing cash that is available tax efficiently during life. [ABSTRACT FROM AUTHOR]

Financial service professionals can enhance their value to clients by learning more about hospice. They will be able to guide clients and their loved ones toward such care if the need arises. They will become more comfortable discussing death with clients, which will enhance the life insurance and other planning they do for them. [ABSTRACT FROM AUTHOR]

People have many explanations for why they choose not to buy life insurance. Ultimately, their choices reflect the relative lower level of immediacy and significance they ascribe to having such coverage compared to what they are spending their money on. Simulated postmortem reality exercises and client-centered storytelling can rouse them to revaluate their priorities regarding having enough life insurance to safeguard the futures of those they care about and are responsible for. [ABSTRACT FROM AUTHOR]

Life insurance does so much more than enable people to manage their human capital risk while they build financial capital. It facilitates their accumulation of liquid wealth certainly and safely, provides them with a hedge against their not amassing legacy assets, replenishes lost or expended resources intended for others, and supplies the means for them to foster self-reliance among their progeny. Life insurance is optimum risk management, certain wealth building, and responsible altruism for a defined premium investment. [ABSTRACT FROM AUTHOR]

People who perpetuate their passions ensure they will be remembered after they die for continuing their good work. Life insurance provides the financial means to enable people to accomplish this purpose. [ABSTRACT FROM AUTHOR]

The article discusses how life insurance and planning techniques should be considered in post-Economic Growth and Tax Relief Reconciliation Act (EGTRRA) estate planning, in the United States. Some states, such as California and Florida, are constitutionally prohibited from legislating a state death, inheritance, or estate tax not tied to federal law. It remains to be seen whether the state electorate would overcome such constitutional prohibitions if states find themselves unable to pay for teachers, firefighters, or other necessary services a civilized society provides its citizens. Reacting to actual or anticipated lost revenue, remaining states decoupled. States approached decoupling in different ways, some by adopting the federal code as of a date prior to EGTRRA, and others adopting EGTRRA with variations. In a decoupled state, drafting a will these days creates a major dilemma. Despite today's challenges, knowledge of EGTRRAs consequences can assist a planner to help his clients plan with flexibility.

This article discusses the use of life insurance in restricted executive bonus management when establishing a financial plan for retaining quality employees. This restricted executive bonus arrangement operates like a Bonus 162 plan which can control an employee's access to policy cash values. The arrangement has three components: First, the Bonus 162 plan which allows discriminatory selection of the employees who will receive this benefit and allows an employer to determine how large the bonus will be. The second component is the restrictive endorsement which is executed by the employer and employee and filed in the insurance company. The third instrument is a separate legal agreement between the two parties.

This article looks at the need for individual disability insurance (IDI), the importance of working in the middle-market multilife environment, the best prospects for this insurance, and the need to use a consultative approach to meet client expectations. The changing character of the U.S. population is providing opportunities for the IDI market. In addition, the personal savings rate in the country has dipped precipitously. With less of a reserve available if they are unable to work, these higher wage earners have a real need for protection from the devastating financial effects of a long-term disability. Successful marketing in the small- to middle-sized corporate marketplace requires convincing an employer through education that a need exists and then developing creative disability income protection solutions in response.

The importance of combining an insurance-funded buy-sell agreement with partnership and limited liability partnership (LLC) is explained. The arrangement has distinct advantages over corporate ownership of insurance because the arrangement is contractual in nature and therefore potentially more flexible than corporations which are governed by statutes. To effectively structure the partnership, each shareholder's partnership or LLC interest should mirror their ownership interest in the corporation. Although the structure adds a layer of complexity, a preferred approach may be to have each owner of the entity create and fund an irrevocable generation-skipping tx trust.

This article examines the implications of proposals to repeal or reform the estate tax in the United States. The repeal of the estate tax may have little effect on the advanced sales of life insurance. For as long as there is tax-favored wealth creation, the life insurance will have a tax-favored position when it comes to financial services products. Tax-favored creation is composed of two parts. A life insurance policy is funded from a tax-favored source of money and the inherent income tax advantages of life insurance. The most interesting arrangement for tax-favored wealth creation for life insurance involves qualified plans and individual retirement accounts.

Focuses on the opposing principle that a business cannot pay the taxes of its owner without such payment being taxed and bills allowing owners to pay taxes from their business without incurring more taxes. Absence of legitimate way to take income-tax-free money from businesses; Need for an exit strategy; Tax and financial benefits of Employee Stock Ownership Plans; Cash from life insurance and other alternatives.

The private split dollar has gotten the attention of advanced life underwriters and estate planning attorneys with the issuance of favorable private letter rulings. Two private letter rulings are outlined. The facts and results of the private letter rulings are summarized. Economic considerations of private split dollar as an estate transfer vehicle are discussed. In both private letter rulings the U.S. Internal Revenue Service ruled favorably on the gift and estate issues.

This article focuses on the myths financial professionals tell their clients about long-term care insurance (LTCI). Most insurance companies and many LTCI trainers encourage financial professionals to target prospects with estate values ranging from $75,000 to $650,000. The truth is that anyone who can afford the premiums should consider purchasing LTCI. There are a number of objective standards in measuring the financial suitability to a traditional LTCI prospect. The decision to consider the product is rather subjective and open to individual financial adviser interpretation, as well as buyer demand. Discussing averages may serve to dissuade clients from considering LTCI. The reason is that the wealthy are generally accustomed to a higher standard of living and are likely to spend whatever it takes to receive the best and most appropriate care. In addition, an LTCI policy is an important part of a comprehensive financial plan. Managing long-term care risk is no different than managing and leveraging other forms of risk. A high-quality LTCI policy combined with a professionally drafted document that clearly expresses the type and location of care desired provides the best course of action. Without it, clients may have to deal with a personal crisis in ways that may contradict what they wanted.

Section 412(i) defined-benefit retirement plans are being adopted in ever-increasing numbers because of a rare convergence of multiple factors. In the right circumstances, these plans provide large tax-deductible contributions for small businesses owner with a little additional cost for administration or non-key employees. The first factor is demographics. Baby boomer are passing the big '5-0.' Retirement will be determined through clients. Second, the myth of a one-way stock market has been painfully shattered. Risk and return are still connected. Third, the U.S. congress has removed the major obstacles that caused defined-benefit plans to fall out of favor.