|
Life Insurance |
Note: For help with any of your Life Insurance needs feel free to give us a call and our insurance experts will help you pick the right product or products for your particular needs. There is no fee for this service.
There have been many great books written about strategies that can be used to create great wealth for many generations utilizing different types of life insurance. We will try to keep things simple for our purposes here by explaining the different products available and when they may be used. Life Insurance has the best tax advantages of any available investment and offer far superior wealth transfer strategies than any other investment product available on the market. |
Term Life Insurance |
Term Life is becoming more and more popular due to the low cost of the monthly premiums. Term Life promises to pay a set amount at death for a specific period of time. Term Insurance should be used to protect against loss in the case of a potential need for a specific period of time. Here are some examples: Debt, like your home mortgage, credit cards and car payments. Children's education, if you wish to guarantee that your children will get a quality education without going into serious debt you can make sure this liability is paid. During your working years the Federal Government suggests that you carry no less than 10 times your annual salary for income replacement.
One negative of term insurance is that the term will likely run out before you die or your entire life insurance need goes away. Many times at the end of the term the insured can't qualify for new coverage so they can leave their family behind in a very bad situation. So a combination of permanent and term insurance should be recommended for most people. |
Whole Life |
Whole Life Insurance is oldest of the permanent coverage's. Everything in a Whole Life product is guaranteed. The death benefit and cash values are all guaranteed by the insurance company. These products, however, are very expensive on a monthly basis. The only time these products should be used is for the purpose of paying burial expenses for older clients that may not be able to be covered under less expensive products due to their health. |
Variable Universal Life |
Variable Universal Life products are not only designed to be used as a life insurance contract but they invest the monthly premium paid over the cost of the annually renewal term life policy inside the product to be invested in a family of mutual funds. If you have a true need for life insurance this can be the riskiest way to maintain the coverage because of the potential losses in the underlying equity investments. The cash value can be eroded and you may be forced to increase the amount of your premium to maintain the coverage. Many times when this happens the insured can't make up the difference and the policy is lost. STAY AWAY FROM THESE PRODUCTS! |
Universal Life |
Traditional Fixed Income Universal Life acts the same as the variable product above but has a huge difference. If you make a minimum premium set by the insurance company you can never lose the policy even if interest rates drop lower than the original proposal. This is a very low cost way for most people to insure against a permanent risk that are not interested in long term cash value accumulation. In many cases it can be used for older clients that have still maintained their health but are looking for a way to buy dollars to protect their families in the least expensive way possible. |
Equity Index Universal Life |
Equity Index Universal Life is the most flexible life insurance product on the market today as it can be used to help with a number of investment options as long as you are healthy enough to qualify. |
Just like traditional Universal Life products most EIL products have a minimum guaranteed premium to protect the death benefit even if the investment account does not receive the projected returns. |
But where the Equity Index Annuity shines is in the potential for return on investment, the liquidity of the cash value, the ability to take income in retirement completely tax free, tax deferred growth of the cash value, 100% of stock market returns up to a very high cap, excellent place to invest cash reserves as the money is easily accessible and the last but not least tax free death benefit. |
To maximize the full potential of the product you must be in a position to fund the product to the maximum amount allowed by law. |
These products can be beneficial for anyone with long term financial goals and a need for permanent life insurance coverage. |
In many ways the benefits of an EIL policy are much greater than making investments in an IRA or any other retirement asset which we will discuss in the qualified plan section.
|
