Program Success November 2018 | Page 13

HOW VALUABLE IS LIFE INSURANCE

HOW VALUABLE IS LIFE INSURANCE

When we think of life Insurance most times the only perceived value is in the death benefit . Basically the insured has to take one for the team in order for the beneficiaries to benefit . This does not have to be the case . Life insurance of today isn ' t like your grand-ma and grand-daddy life insurance . Life policies of today have Living Benefits , can be used to supplement retirement income , and used for wealth transfer .
Living Benefits
Living Benefits are riders that can be added to a Life Insurance Policy that allow the insured access to cash from the policy during his or her lifetime . ( Not the cash Value ). Two main living benefit riders are Critical and Chronic Illness . Critical Illness pays the insured a lump sum amount for heart attack , Stroke , Cancer just to name a few . Usually these lump sum amounts range from $ 10,000 or a percentage of the policies death benefit . Chronic Illness pays the insured a monthly amount when two of the daily activities can ' t be performed such as bathing , dressing , and eating caused by a chronic illness . This benefit usually pays a monthly amount of 25 % of the death benefit annually .
Retirement Income
When properly structured and funded your life insurance can be the cornerstone or an addition to provide income during through your retirement years . On top of that funds can be withdrawn free of taxes . ( See IRS Code 7702 ) Another distinct advantage life insurance has over other traditional retirement vehicles such as a Roth IRA or 401 k is the death benefit life Insurance provides . So if death occurs before insureds retirement age , the beneficiaries would get the death benefit tax free . With other retirement vehicles the beneficiaries would get what ' s accumulated to that point minus taxes and lengthy probate . Also with life insurance there are no maximum contribution limits or required minimum withdrawals once age 70 ½ is reached . This is especially attractive to high income earners .
Wealth Transfer
Wealth Transfer is another powerful use for life insurance . This works by the insured purchasing a single premium whole life policy . This creates an instant increase to the insureds estate . Here is an example of how this works . A 65 year female healthy non-smoker has $ 50,000 in her CD account with the bank . This is money she plans to pass to her grandchildren once she passes . She uses the
$ 50,000 to purchase a single premium whole life policy . The policy is paid up requiring no further premiums and when she passes her grandchildren would receive $ 100,000 death benefit tax free . Once she purchases the policy it has instant cash value which grows along with the death benefit over the years . This is a very efficient way to transfer liquid assets to beneficiaries .
Your life insurance policy should be more than just a death benefit . It should be used to protect you against " Life ' s Uncertainties " and also help you cost through your golden years . And leaving a legacy for the next generation !
Clarence Kemp Insurance Solutions Jacksonville , Florida November 2018