Protection Products

Planning for the Medicare Surtax


If your clients had investment income in 2014, there may be something in their recently filed tax return they weren’t expecting – an additional tax. For individual taxpayers with an adjusted gross income of more than $200,000, or joint filing taxpayers with adjusted gross income of more than $250,000, the Patient Protection and Affordable Care Act created an additional tax of 3.8 percent on investment income, effective after Dec. 31, 2012.

The tax is levied on the lesser of:

  • Net investment income 
  • The amount by which their adjusted gross income exceeds the threshold limit of $200,000 or $250,000 respectively

Investment income specifically includes gross income from interest, dividends, annuities, royalties and rents. Investment income does not include distributions from qualified retirement plans, IRAs, gains on the sale of certain business interests, active trade or business income, or any income taken into account for self-employment tax purposes. 

Considering this new surtax on investment income and the additional tax burdens placed on high wage earners contained in the American Taxpayer Relief Act of 2012, it has become increasingly important to consider taxation when making investment and financial decisions. The sticker shock individuals are experiencing after reviewing their 2013 tax returns has resulted in an increased interest in tax-favorable strategies, such as maximizing qualified plan contributions, implementing non-qualified deferred compensation plans or contributing to charitable remainder trusts. Additionally, there has been an increased interest in taking advantage of the tax-favorable nature of cash value life insurance. 

Put it in Practice: The cash values inside life insurance policies grow on a tax-deferred basis and, when designed correctly, may be withdrawn free of income taxes. The new 3.8% surtax discussed above does not apply to life insurance cash values – make sure your clients know about this advantage. 


Patriot Trust an Option to Show Your Support


The impact of Sept. 11, 2001, is far-reaching and still being felt by many families today. If you or your clients are looking for ways to support those affected by the wars on terror, the Johnny Michael Spann Patriot Trusts Act created a unique option. Named for a CIA officer who was the first American to give his life for his country in the war on terrorism, the Patriot Trusts Act helps facilitate the flow of private money to the widows and orphans of American servicemen, CIA officers, FBI agents and other federal employees who have given their lives during wars on international terrorism after Sept. 11, 2001. 

This is separate from Sept. 11 Victim Compensation Fund, which was established by the federal government to provide compensation to any individual (or their family) who suffered physical harm or was killed as a result of the terrorist-related aircraft crashes of Sept. 11, 2001, or the debris removal efforts that took place in the immediate aftermath of those crashes. 

However, the Sept. 11 Fund doesn’t assist the families of military or government personnel who have been killed while fighting against terrorists in the wars that followed. The Johnny Michael Spann Patriot Trusts Act is unique because it not only created support for a different group of people impacted by Sept. 11, but it also created the option to have multiple funds – not just one – that supports the flow of money to these victims. Any charitable corporation, fund, foundation or trust that meets all applicable requirements under the law concerning charitable entities, and meets the requirements established in the act, is eligible to characterize itself as a Johnny Michael Spann Patriot Trust. Contributions to such a trust will be tax deductible.

Put It In Practice: If you or your clients want to create a lasting legacy of support for our military, specifically those impacted by the war or terror, consider creating or giving to a Johnny Michael Spann Patriot Trust. 


Military Trust Legacy

Paycheck Protection for Active Military Clients


When you watch fireworks in July, you can almost be certain you’ll hear, “God Bless the USA,” by Lee Greenwood. Such a powerful song, and a great reminder that we have those brave men and women in our military to thank for our freedom.

Let’s face it: Men and women actively serving in the military carry larger risks than most clients. In the event of a disability, they have benefits to cover their base pay, but that’s pretty much it. The majority of disability income carriers won’t give them any additional coverage. 

Peterson International is an exception. They’re able to give active military physicians and dentists additional coverage – 65 percent replacement of bonus income, housing and food allowances, and moonlighting income. They even offer partial benefits, and an “own occupation” definition.

It will never be enough to truly compensate them for their bravery and sacrifice, but the extra protection can help spread your military client’s paycheck a little further, making their family feel more secure. 

Put it in Practice:  Ask your active military physician and dentist clients if they have their protected their bonus income, housing and food allowances, or moonlighting income in the event of a disability. If not, Peterson International – and Ash Brokerage – can help. 


The Truth About Insurance for the Military


In honor of all the men and women who protect our land of the free, we’re sending out a #RedWhiteAndBlue salute the month of July, dedicated to our active military and veterans. We are eternally grateful for their selfless service!

In the life insurance industry, do you realize just how far we’ve come in providing viable coverage for our military? I bet several of you reading this have held on to some rather dated misconceptions you adopted over the years, possibly overlooking not only viable opportunities in this market, but more importantly, the potential to humbly serve those who have served us. 

In effort to help you retool your thoughts, let’s cover a few key topics we frequently see at Ash Brokerage:

Active Military/Reservist/Special Forces*

  • FALSE: Not insurable due to the risk of their duties and travel to hazardous areas  
  • TRUE: An increasing number of life insurance companies now give consideration with review of rank, grade, duties, etc., if they have not been alerted for active duty and/or do not have deployment orders; a smaller number of companies will even give case-by case consideration for those with current deployment orders and certain special forces personnel, who may qualify for coverage with an additional flat extra rating

Exclusion of Benefits Due to Military Ties

  • FALSE: All policies are issued with a war or military service exclusion clause, limiting the benefits of the life insurance contract
  • TRUE: Today, insurance companies address additional risk considerations and cost during the underwriting process, prior to granting coverage, unlike in past when the exclusionary clause was used to eliminated the insurance companies’ legal obligation to pay proceeds to the beneficiary in effort to control cost/manage risk exposure

Post-Traumatic Stress Disorder (PTSD) Diagnosis

  • FALSE: PTSD diagnosis will result in a decline for coverage
  • TRUE: PTSD diagnosis may be insurable with favorable features, such as a single medication/low-dose treatment, long duration/mild symptoms, no drug/alcohol habits, stable environment/occupation, family/social support, regular medical care and follow-up

Put it in Practice: Let Ash Brokerage assist you with your next military case. We leverage our experience, carrier relationships and resources to identify viable solutions based on your client’s individual circumstances and insurance needs. 

*Subject to formal underwriting to establish insurability along with all parts of the contract/process completed in the United States


military underwriting life insurance

The Gift of Life Insurance


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