Protection Products

The Gift of Life Insurance


Protection

Your client may want to provide a meaningful gift for their favorite church or charitable organization, but they don’t want to take a large portion of your estate away from their heirs. Life insurance may allow you to leverage their current gift so they can leave a sizeable benefit for an organization and potentially gain some valuable tax advantages in the process. A donor has three basic choices in making a charitable gift with life insurance.

  1. Gift of an existing policy – Your client may give an existing policy to a charity, in which case all ownership rights should be assigned to the charity, and the charity is named as the policy’s beneficiary. They can then take an income tax deduction for the lesser of premiums paid or the value of the policy. If they continue to pay the premiums, those can also be taken as a deduction.

  2. Purchase of a new policy – The charity may apply for a new policy on your client’s life, with the charity as the original applicant, policy owner and beneficiary. Your client should transfer the funds to pay the premium to the charity, and those funds will then be income tax deductible. The death proceeds will not be in their estate, because no incidents of ownership were ever held by them. In this instance, it is important to understand insurable interest laws persisting to the purchase of life insurance for charitable planning.

  3. Naming the charity as a beneficiary of a new or existing policy – Your client may designate a charity as the sole or partial beneficiary of a policy that they continue to own. This will not produce an income tax charitable deduction at the time the beneficiary designation is made, but it will result in an estate tax charitable deduction for the death proceeds passing to the charity at their death. 

Put It In Practice: Making lifetime charitable gifts allows a donor to see how his or her generosity contributes to the mission of a favored charitable organization. However, the use of life insurance can leave a legacy for generations.

 

philanthropy charitable giving life insurance

Languished to Leveraged


Protection

Languishing assets are equivalent to, or possibly worse than, the depreciating assets we own. Take our vehicles for instance. We are at least aware they constantly lose value and eat up a significant portion of our resources through maintenance, wear and tear, leisurely activities and other costs. However, in return we are receiving something valuable: transportation. If our vehicles didn’t offer transportation and just consumed our resources, they’d be useless.

Languishing assets, as I am defining them, are those that offer little flexibility, few features and are easily eroded by inflation and/or fees. Common products that could fit this description are CDs, money market accounts, bonds, imploding universal life policies or even old fixed rate annuities. Why are we allowing our clients to plan with these highly inflexible, languishing assets?

I’m not advocating all of these strategies be abandoned (except an imploding UL – why not rescue the cash value and 1035 exchange it to stop losing value?). However, I am challenging you to rethink how often you might be using them. One specific situation to consider is when you have a client who plans to gift money or assets upon their death. Oftentimes, they have this money set aside in a languishing asset, and they have earmarked it as, “In case I need it” money. While their intention is good, better options are available.

The Estate Maximizer with Liberty Life is a great product that can significantly enhance their gift, offers full liquidity with no loss of principal, and creates an additional pool of money in the event of a chronic illness. This solution can enhance gifts as low as $15,000 and as large as $225,000. On top of that, one of the most compelling reasons to consider it is the 10-minute, instant-approval process. If your client can answer “no” to just four medical questions, then they can be approved within 10 minutes!

There potentially has never been a better time to use this product because most people are expecting rates to increase, but it’s probably going to take a while for that to happen. The opportunity cost is incredibly cheap for the Estate Maximizer because it offers a full refund of principal upon full surrender, even in the first year. You’re basically trading basis points in interest.

Check out this example: A 61-year-old woman can take her $50,000 CD and, in less than 10 minutes, turn it into $101,525 for her beneficiaries. Let’s assume she was earning 0.5 percent in her CD, which equates to $250 annually before taxes. If she finds herself in an, “In case I need it” situation, the Estate Maximizer can give her access to the entire $50,000, and all she has given up is $250 in interest. However, she has gained a significant pool of money for a chronic illness situation, leveraged a larger gift to her children and will see her surrender value eclipse the CD account value by the tenth year.

Put it in Practice: The Estate Maximizer is a great, flexible alternative to the rigid, languishing assets that are commonly utilized. Call us today, and your client you double their legacy in less than 10 minutes!

estate maximizer legacy planning life insurance

Fathers See Things Differently


Protection

As we all know, Father’s Day comes every June. While it’s not a major holiday, there is more to it than meets the eye. Trust me. As the father of four kids, I know how much it means to us to be celebrated for all we do … Even if we don’t say how much we appreciate the appreciation. 

Fathers are a proud group. We like to be the providers and protectors of our family. That said, we have a tendency to think we’re invincible. We don’t want to come to terms with our mortality because we think we’ll always be around to care for everyone else.

I must say, our thinking isn’t completely out of line with reality. We are living longer and taking better care of ourselves. We want to be around to see our kids grow up and have their own kids. This is where long-term care planning plays such an important role.

Because men can be difficult, you have to talk to us a different way. You can’t just throw statistics at us and expect us to understand. If you say, “There’s a 70 percent chance you’ll need long-term care,” let me tell you, I will always be the other 30 percent. My wife and kids won’t need to pick me up or help me out because it won’t ever happen to me. This is where the discussion needs to change.

Fathers care about their families, and we want to make sure nothing ever happens to them. So instead of asking about us, ask about THEM. “If” we’re not the lucky 30 percent, what would happen to our families? How would THEIR lives be devastated? 

Now you have our attention. If you can tug on that string, we will at least engage in the conversation. This goes back to my earlier blogs. Long-term care isn’t about trying to sell insurance. It’s about helping families plan for living a long life.

Put it in Practice: Now that we all have a better understanding of how dads think, find yours and let him know how much he means to you. Then, the next time you’re talking with a dad about long-term care, shift the conversation away from his weaknesses and instead focus on what will really matter to him.

fathers long term care family