Life Insurance Strategies

Our unbiased beliefs and multi-disciplinary team of professionals can provide guidance and expertise on a wide range of advanced planning concepts and strategies

Overview

Life insurance is a unique asset in terms of its tax-advantaged status.

It is one of the only investments that can provide tax-deferred growth and (if structured properly) tax-free access to the policy’s cash value during life or a tax-free death benefit. Income and estate tax mitigation is a crucial aspect of any financial plan and life insurance can be a valuable tool to facilitate multiple objectives.

Our advisory-based practice is truly what sets us apart.

Life insurance is simply a tool for solving a specific set of objectives. Conversations need to start with if a need exists, not how much or what type. Assuming life insurance makes sense, we then utilize a multi-disciplinary approach to evaluate various options and scenarios to determine the right strategy to align to your macro-goals.

Strategies

Our multi-disciplinary and agnostic team has assisted our clients with all of the following strategies:

Premium Financing

Premium financing involves borrowing money from a financial institution to pay for the life insurance premiums. The borrower will then pay the interest on the loan. Often times, this can result in a cost savings over funding the policy outright. Any time leverage is added to a financial strategy, it becomes a magnifier for either positives or negatives outcomes; therefore, it becomes important to vet out the benefits and risks for this strategy.

Qualified Leverage Strategy (QLS)

QLS is a proprietary strategy that utilizes life insurance within a qualified plan to minimize taxes and maximize the amount of funds for your future retirement needs, your heirs or a philanthropic organization.

Private Placement Life Insurance (PPLI)

Private Placement offers the benefit of leveraging nearly any investment with an institutionally priced, tax-advantaged product. By paying insurance costs instead of paying taxes, you can protect more of your earnings and take advantage of the favorable tax rules that govern all life insurance policies. 

Estate Liquidity

Depending on an individual or family’s wealth, there may be estate taxes owed on the first or second death. With the ever-changing estate tax rules, the amount of estate taxes owed may be substantial and, depending on the total available liquidity, your beneficiaries may not have the capital to pay the estate taxes that are owed. An insurance policy can provide the necessary liquidity to cover those future estate taxes and maximize your net to heirs.

Buy/Sell Funding

In the event of an owner’s death, a business may want to have life insurance on the respective owners to fund their buy-sell agreement. This life insurance policy would provide the necessary liquidity to purchase the deceased owner’s interest.

Keyperson

For many businesses, there are certain key leaders and executives that are irreplaceable, and a sudden death could cause devastating harm to the company’s future success. In those scenarios, having life insurance on the keyperson can provide the business enough liquidity to recruit, hire and train the successor and ensure the business will remain successful into the future. 

Spousal Security / Income Replacement

For most families, if there was a sudden loss of a family member’s income, it could cause significant financial hardship. A life insurance policy can provide a lump sum benefit to the family to cover the lost income.

Retirement Planning

If designed properly, life insurance can be one of the most efficient investment vehicles for retirement planning. Life insurance is a unique asset with its ability to provide tax-deferred growth, tax-free access to the policy’s cash value via withdrawals and loans and a tax-free death benefit. With the current taxation of assets such as marketable securities, qualified retirement plans, real estate or business interests, life insurance can be an ideal investment to have when planning and investing for retirement. In addition, insurance carriers offer a wide range of products and an expansive number of investment options that can provide a diversified investment allocation as a part of a holistic financial plan.

Life/Long-term Care Combination

Certain life insurance products also provide coverage for long-term care expenses. These products can be an efficient use of family capital to provide coverage if the insured either passes away or becomes disabled.

Debt Repayment

In situations where a debt is personally guaranteed, life insurance can provide the capital to pay off the debt in the event of a premature passing. This can be personal debt (i.e. mortgage), business debt or estate planning related debt (i.e. to backstop a defective trust sale). 

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