“Living Benefits”
What is wrong with life insurance?
Traditional life insurance has the drawback of covering only 1 emergency – your passing away. And with term insurance, the vast majority of policies will never be paid because they are outlived. But the leading causes of death in America are also the primary causes of disability, the need for long term care, and ultimately most cases of financial struggle.
Every 29 seconds someone suffers from a coronary event, and 45% of heart attack victims are under the age of 45.
Every 45 seconds someone suffers from a stroke.
The chance of developing cancer during your lifetime is 1 in 3 for women, and 1 in 2 for men.
Of all Americans who reach age 65, about 60% will eventually need some form of long term care.
There are so many challenges a family faces long before the worst possibility of losing a loved one. What is wrong with life insurance is that it doesn’t address all these risks.
What is wrong with disability insurance and long term care insurance?
Disability insurance is very important for the breadwinner of the family to have, for how many months can your family live without that income? And yet, disability insurance will never pay the full amount of the income, and often comes with waiting periods.
Long term care insurance is another valuable protection, because the costs of long term care are so high that it protects your assets from being depleted in the event you need this care. However, many people hesitate to get it because they don’t know for sure that they’ll use it. Or what if you have a heart attack or stroke, but recover enough that you do not trigger the long term care because you can still perform the activities of daily living?
A Comprehensive Solution
The solution to these shortcomings of traditional, separate insurance policies is to get one policy that will provide “Living Benefits” as well as death benefits.
It is now possible to get such a policy through a 150-year-old, A-rated mutual company. The one policy will pay in three ways:
· Acceleratd living benefits
· Retirement income benefit
· Death benefit.
We can design a policy to cover disability, chronic and terminal illness, and long term care. In addition, you will be able to access the value for retirement or other needs.
We all have multiple risks to insure against, and it is hard to know which one we will need first. A “Living Benefits” life insurance policy provides one combined, affordable solution to all of these needs.
Showing posts with label life insurance. Show all posts
Showing posts with label life insurance. Show all posts
Thursday, October 29, 2009
Thursday, October 1, 2009
A Tale of Two Startups
The Bust
Recently I got a call from a woman who needed to talk about health insurance for her family.
“My husband’s company is folding, so we are not going to have health insurance through the company anymore. It was a high-tech, mobile communications company, and he helped to start it. They have a great product, and they were doing well, but the economy just hit them hard.”
It turned out that she was not as worried as I thought she might be. He had been doing these types of ventures for 15 years, and she was used to the changes. Also, he knows a lot of people in the industry so she sounded confident that he would land on his feet somewhere.
However, we did have to do a bit of research to find a solution to their family’s health insurance. She needs certain prescription drugs, but to get a family plan that has a rich prescription drug coverage would cost double what she was budgeting to pay. We found out that she could order her medication from Canada at a fraction of the cost of covering it here, and her doctor confirmed that this would work fine. The important thing was that her family did not have a gap in coverage, so there won’t be any questions of pre-existing conditions.
The Boom
Soon after that, another call came in, from a friend involved in a new startup.
“Bengt, I volunteered to be the one in the group to take care of the health insurance. Can you look into it for me?” he asked.
“Sure,” I answered, “I’ll do the work for you. And it doesn’t cost you anything extra!”
These are six guys on the other end of the cycle, with a big idea, full of hope, some angel financing already in, and working out of the founder’s home. While some companies are cutting back on health insurance, they are setting it up before they had even turned a profit.
Their big idea is to help people maximize the profitability of their websites (check them out at http://www.bigdoor.com/ ). Since they already had become members of the Washington Technology Industry Association, I was able to get them a great deal for their health insurance through the employee benefit trust run by the WTIA. So now all these young guys have great health benefits and some life insurance as well.
With all the other challenges and changes they are facing to build their new startup, at least they have the peace of mind that having health and life insurance provides. I look forward to them doing great things in the near future!
Recently I got a call from a woman who needed to talk about health insurance for her family.
“My husband’s company is folding, so we are not going to have health insurance through the company anymore. It was a high-tech, mobile communications company, and he helped to start it. They have a great product, and they were doing well, but the economy just hit them hard.”
It turned out that she was not as worried as I thought she might be. He had been doing these types of ventures for 15 years, and she was used to the changes. Also, he knows a lot of people in the industry so she sounded confident that he would land on his feet somewhere.
However, we did have to do a bit of research to find a solution to their family’s health insurance. She needs certain prescription drugs, but to get a family plan that has a rich prescription drug coverage would cost double what she was budgeting to pay. We found out that she could order her medication from Canada at a fraction of the cost of covering it here, and her doctor confirmed that this would work fine. The important thing was that her family did not have a gap in coverage, so there won’t be any questions of pre-existing conditions.
The Boom
Soon after that, another call came in, from a friend involved in a new startup.
“Bengt, I volunteered to be the one in the group to take care of the health insurance. Can you look into it for me?” he asked.
“Sure,” I answered, “I’ll do the work for you. And it doesn’t cost you anything extra!”
These are six guys on the other end of the cycle, with a big idea, full of hope, some angel financing already in, and working out of the founder’s home. While some companies are cutting back on health insurance, they are setting it up before they had even turned a profit.
Their big idea is to help people maximize the profitability of their websites (check them out at http://www.bigdoor.com/ ). Since they already had become members of the Washington Technology Industry Association, I was able to get them a great deal for their health insurance through the employee benefit trust run by the WTIA. So now all these young guys have great health benefits and some life insurance as well.
With all the other challenges and changes they are facing to build their new startup, at least they have the peace of mind that having health and life insurance provides. I look forward to them doing great things in the near future!
Thursday, September 24, 2009
How Life Insurance Can Save your Business
A Casual Request
We were sitting in the second floor office, overlooking the water, discussing the company’s commercial insurance. At the end of a productive discussion, the one business partner said, “Oh, by the way, we are also going to need some key man insurance.”
The Surprising History
At the next visit, we learned that there had been three founding partners, and one of them had a sudden heart attack in his mid-fifties. The other two partners had to set up a payment plan to buy out the survivors of the deceased partner. As it turns out, they are still paying large amounts of money every quarter. “We have had a buy-sell agreement from the beginning,” they said. “And as you can see, we have had to use it. That determined how much each partner’s share of the company was worth. But now we want to fund it with life insurance, so it doesn’t become a huge operating expense.”
The Solution
They are now setting up cross-purchase life insurance to fund their buy-sell agreement. Each partner is the owner of a life insurance policy on the other one. If one partner were to die, the other would receive the death benefit, and would have to use that to buy out the family or estate of his partner. He would then own the business, and it could survive.
Final Piecees of the Puzzle
As it turns out, they decided to purchase key man and disability insurance as well. Key man insurance is a life policy taken out by the company on a key employee to help the company continue with normal operations in the event of their passing away. And disability is the most common cause of businesses and families alike running into serious trouble.
A Common Sense Investment in the Business
Life insurance is the most economical way to ensure a business can continue operating smoothly in the event that something happens to a key employee or partner. It is a small investment in the security and stability of a company, and to future thinking businessmen like my clients, it just makes sense.
We were sitting in the second floor office, overlooking the water, discussing the company’s commercial insurance. At the end of a productive discussion, the one business partner said, “Oh, by the way, we are also going to need some key man insurance.”
The Surprising History
At the next visit, we learned that there had been three founding partners, and one of them had a sudden heart attack in his mid-fifties. The other two partners had to set up a payment plan to buy out the survivors of the deceased partner. As it turns out, they are still paying large amounts of money every quarter. “We have had a buy-sell agreement from the beginning,” they said. “And as you can see, we have had to use it. That determined how much each partner’s share of the company was worth. But now we want to fund it with life insurance, so it doesn’t become a huge operating expense.”
The Solution
They are now setting up cross-purchase life insurance to fund their buy-sell agreement. Each partner is the owner of a life insurance policy on the other one. If one partner were to die, the other would receive the death benefit, and would have to use that to buy out the family or estate of his partner. He would then own the business, and it could survive.
Final Piecees of the Puzzle
As it turns out, they decided to purchase key man and disability insurance as well. Key man insurance is a life policy taken out by the company on a key employee to help the company continue with normal operations in the event of their passing away. And disability is the most common cause of businesses and families alike running into serious trouble.
A Common Sense Investment in the Business
Life insurance is the most economical way to ensure a business can continue operating smoothly in the event that something happens to a key employee or partner. It is a small investment in the security and stability of a company, and to future thinking businessmen like my clients, it just makes sense.
Tuesday, August 11, 2009
Charitable Giving
Leveraging Life Insurance for Charity
Are you aware you can donate your life insurance to charity? This can work with an existing policy, or can be accomplished with a new policy. The irrevocable gift of an existing policy puts the charitable organization in full possession of the life insurance policy. Or you can purchase a new life insurance policy, give the charity ownership of the policy and name the charity as your beneficiary.
Life insurance is an excellent choice for making a gift because it multiplies the amount you are able to give. When you are committed to giving an annual gift to your favorite charity, you can use this to fund an insurance policy. Then your contributions are leveraged – payments that add up to thousands of dollars get turned into a gift of hundreds of thousands or even millions of dollars to support your charity.
In addition, your annual premiums paid into the life insurance policy are tax-deductible.
Another solution provided by life insurance is to allow someone with wealth replacement. A person with land, stock, or other property that would be heavily taxed upon their death donates their property to the charity, and receives a tax deduction. At the same time, the donor purchases a life insurance policy equal to the gift, which would create an inheritance that is liquid and tax free, since life insurance benefits can be received income and estate tax free if properly structured.
Life insurance provides a gift that is flexible, free of market risk, and has no delay or transfer costs. It can be done without diluting your business or investments, and can be done in ways that enhance rather than subtract from the assets you leave to your heirs.
For anyone with a long-term perspective and an interest in philanthropy, life insurance provides a powerful tool that should be considered as a way to leave a serious legacy to a cause or organization that you believe in.
Are you aware you can donate your life insurance to charity? This can work with an existing policy, or can be accomplished with a new policy. The irrevocable gift of an existing policy puts the charitable organization in full possession of the life insurance policy. Or you can purchase a new life insurance policy, give the charity ownership of the policy and name the charity as your beneficiary.
Life insurance is an excellent choice for making a gift because it multiplies the amount you are able to give. When you are committed to giving an annual gift to your favorite charity, you can use this to fund an insurance policy. Then your contributions are leveraged – payments that add up to thousands of dollars get turned into a gift of hundreds of thousands or even millions of dollars to support your charity.
In addition, your annual premiums paid into the life insurance policy are tax-deductible.
Another solution provided by life insurance is to allow someone with wealth replacement. A person with land, stock, or other property that would be heavily taxed upon their death donates their property to the charity, and receives a tax deduction. At the same time, the donor purchases a life insurance policy equal to the gift, which would create an inheritance that is liquid and tax free, since life insurance benefits can be received income and estate tax free if properly structured.
Life insurance provides a gift that is flexible, free of market risk, and has no delay or transfer costs. It can be done without diluting your business or investments, and can be done in ways that enhance rather than subtract from the assets you leave to your heirs.
For anyone with a long-term perspective and an interest in philanthropy, life insurance provides a powerful tool that should be considered as a way to leave a serious legacy to a cause or organization that you believe in.
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