“You know how generous people often give CDs, IRAs and mutual funds to their grandchildren, churches and charities? I help those people. I show them how life insurance is a wiser way to make charitable gifts. Do you know anyone like this?”
This answer sometimes ends with silent suspicion. They're scared I'll try to sell them something if they speak. Let's pretend this person is unafraid of a follow-up question! He says, “So you're an insurance salesman.” (accusative tone impossible to miss! :-)
“Absolutely Right! Though I prefer Your Legacy Advocate. I'm an advocate for those who can't speak for themselves, like your children, your spouse, your Church and charities. I'm your Legacy Advocate too– since YOU will leave a legacy. I help people super-size a more thoughtful legacy. You know people who want to do this don't you?”
Now, if I've talked too fast, or their mind drifted, they'll say something like, “Uh, do whut?” and I'll say “Do you know people who want to leave a wise legacy for their heirs?”
Of course, doesn't everyone? He's thinking, but he might not ask. “Why life insurance? What's life insurance got to do with my legacy?” Well the answer is...
Life Insurance is simply an amazing tool. It multiplies money like nothing else. What can take an average health 50 year old lady's $1,000,000 charitalbe gift, and turn into $3.2 million? By 70 her single premium of $1,000,000 more than doubles to $2.4 million -- and her death benefit is now $4.2 million.” Better health buys more, and a 2nd-to-die policy with husband, sister or child leverages that original $1 million far more.
Life Insurance is a wonderful multiplier for charitable gifts. CDs can't do this. Neither can bonds, mutual or money-market funds. Oh yeah, life insurance skips probate court delays, attorney fees and income taxes. Those other investments usually DON'T.
“There's much more to say, of course, but we'll stop here for now. My vision is to attract, inspire and serve generous charitable givers. Millions of assets sit parked in taxable CDs, money market and mutual funds generous people plan to give to their children, spouse and charities anyway. I want to stir them to action, inspire them with a bigger vision of what's possible, so they give more wisely! What a joy and blessing for their heirs and world. Until then – be generous. Give and it will be given to you.”
Email – agsteward@juno.com
Cell – 1-318-237-1229 (AT&T/Cingular free)
Friday, April 3, 2009
A Case for PERMANENT Insurance
(Self-Righteous Gurus are DEAD WRONG)
As Your Legacy Advocate I speak for those who often can't speak for themselves. Millions of widows, orphans and charities suffer because those they depend upon plan poorly. I speak for them. In this I've sold a ton of Level-Premium term insurance. It's the cheapest way to purchase bigpolicies when you're young, you're children are small, and your risk of lost income is highest.
But the odds are you will live -- you will not stay young. Yes you will likely live and grow old. If you're 29 and in good health, the probability is you will live far past age 59 when your thirty-year level term policy runs out. That's why most term policies never have a claim. People usually live after expiration. Nevertheless, since we don't know if or when we'll get sick and die, or be killed in an accident, we cover our risk cheaply with level term insurance. This is profitable for the insurance companies -- a fact financial gurus usually leave out. I've heard as high as 90% of term insurance policies expire with no death claim.
Nothing wrong, of course, with profit. All businesses seek to earn a profit -- Toyota, Microsoft, and your local hardware store. Remember that the next time a self-righteous gurus get all huffy, even mad, about Insurance companies making a profit on whole life insurance. Most everything for sell is designed for profit! That's why they're in business. 90% of term policies NEVER pay a death claim. That's pretty profitable -- no?
But I'm about to give you something you NEVER get from the popular financial gurus: Ten solid financial reason to buy Whole Life or Permanent Insurance! That's right! The whipping boy of the financial-gurus. The new generation of Permanent insurance products (like Single-Premium Equity-Indexed) have great usefulness in the right place.
Let's assume you do what 95% of your peers cannot do. You disciplined yourself for thirty years, and invest in growth-stock mutual funds the gurus always assume have high average returns for decades. They never assume anyone has to cash out in 20001, or Tuesday, October 14th, 2008 -- after great market declines! But let's be generous and assume you have $750k invested by age 59 (it could be alot more). What do you do now? Well, how about Single-Premium Universal Life Insurance. Here are ten solid reasons for you.
1) Nothing leverages or multiplies wealth like life insurance. A $750K single premium flexible life policy, at 59 immediately pays your heirs over $1,625,000. That's $875,734 (more than double the money) for your children, heirs and charitable causes. No mutual fund can do that. At 59, $750k in the right permanent policy, buys $1.4 million. By 89 (when you're more likely to die) -- it's grown to about $3.3 million! Of course, it might not be prudent to transfer all $750k to one life insurance policy. I'm just highlighting the leverage for you. At 59 you might be wise to transfer some of your "can't-loose-money" to a single premium whole life policy -- for life, no matter when you die. Term insurance premiums are a total loss and very expensive at older ages (IF you're still insurable and can buy it)! Nor do you know when you'll die.
2) Life insurance solves risk-tolerance concerns. Prudent Investors rules argue you're not wise to leave large parts of your wealth exposed to stock market risks after age59. As your Can't-Lose-Money grows it typically goes into bonds, CD or even money market accounts. High growth-stocks expose your wealth to volatile market-risks -- just when you have less time to recover big declines or losses. Can-Loose-Money is safe and leveraged in a good life insurance policy.
3) Estate Taxes simply aren't avoidable in some larger estates. The cash to pay estate taxes is far better paid with discounted life insurance dollars. Why take $350,000 -- much less $3,500,000 or even $9,500,000 off the top? These funds can be bought for a fraction with insurance premiums. Anyone with estate taxes to pay on a large estate in assets your heirs might not want to sell, should own permanent insurance. It's the cheapest insurance to buy for life -- unless you know you'll die before age 60.
4) Life insurance is paid to heirs income-tax free. Tax-deducted IRA and 401K contributions are income taxable to your heirs. Say your $750K is taxed at just 20% -- that's $150,000 loss to the government -- leaving you $600,000. (It could be 28% or a tax of $21o,000!) Which would your heirs and charitable causes prefer, $600,000 or $1.6 or $1.4 million?
5) Life insurance by-passes Probate Court. But the slightest problem or question to your Will easily throws a CD, IRA or 401K into probate court. Add another 3% charge for probate court costs -- and subtract $22,500 for Probate Court expenses. Oh, and a Probate Court appointed attorney costs a minimum 3% -- subtract another $22,500. Your $750K is now down to $550K.
6) Business Buy-Sell agreements are best funded with permanent life insurance -- unless you know you'll die young. Successful business owners seldom have spouses or heirs who both can and want to run the business after the founder/owner dies. Since this usually happen in their 70s or 80s, permanent life insurance will be there to provide the cash for the transfer. Term insurance simply doesn't insure risks well at these older ages -- or whatever age you might die.
7) Life insurance avoids estate taxes if owned correctly. Your IRAs or 401Ks will be taxed if you own them when you die. You could lose -- I mean your heirs could lose up to 70% of your IRAs and 401ks value.
8) CDs, IRAs and 401Ks often ruin heirs with huge lump-sum payments. Life insurance settlement options easily stream this out over 5-10-20 years. Don't ruin your heirs with giant lump sums they might easily squandered. The settlement options in life insurance encourage your heirs and charitable concerns to be more careful and responsible. It makes them less likely to squander wealth given in lump sums from bank CDs, IRAs and mutual funds.
9) Life insurance beneficiaries are not delayed in probate courts. CDs, 401ks and IRA often are -- causing months years or delay. How long do you want your wife and children to wait for a Probate Court to release what's left of their inheritance?
10) There is no good cheap-term insurance option at older ages. Nothing leverages and multiplies money, and avoids market risks like a single premium permanent life insurance policy. It has tremendous application -- for your children, charitable giving and estate tax concerns. More could be said about excellent liquidity or access. The gurus are dead wrong. Don't believe them. Follow their advice and you'll put your financial legacy at risk -- and you will greatly reduce the amount you could have generously left to your wife, children and charitable causes.
So, there you have it – ten reason why permanent life insurance (after all considerations are taken) is clearly the wisest option for many situations. As people live longer into their 80s, 90s, and beyond, it will be even more appropriate. So, while they might be right on the front end of life when you are young, poor and have young children – the gurus are dead wrong on the back end, when you've raise your family and have an estate to preserve for your children, heirs and charitable concerns.
Thank-you for reading . Of course, I'm happy to talk with you and help you think through which, level-term or permanent insurance, is most appropriate for your situation. Just call or email me.
Warmest Regards,
David E. Rockett agsteward@juno.com
318.237.1229
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