Brian Gruss Licensed Insurance Planner

Appreciating the Value of Life Insurance

Whenever someone passes away there is usually an associated financial loss. Such loss could be the primary income for a family or the replacement value of someone responsible for the care of a child or disabled parent. It could also be a business executive in charge of sales or an employee who managed the operation when senior management was absent.

This potential financial loss is often referred to as a person’s human life value. The value itself is calculated based on the future loss of an income stream, the future cost of replacement, or the immediate impact to a company while it attempts to replace the key employee.

For most families, the potential loss of income is the primary reason to buy life insurance. Losing the paycheck of a working spouse will leave most families in a tenuous situation. Their normal lifestyle becomes vulnerable on a reduced income.

In years past, the primary breadwinner was usually the father. The mother tended to the house, while the father headed to the office. Mom was there to welcome the kids home from school and Dad brought home the paycheck. Times have changed and today women participate equally in the workforce. Despite what continues to be an income discrepancy between the sexes, the money Mom earns is essential to the financial well being of the family.

Additionally, it is no secret that consumer debt in the U.S. is on the rise. Government data shows that Americans literally have a negative savings rate (i.e. we spend more than we earn). As such, any reduction in take home pay can potentially devastate literally hundreds of thousands of families. While this scenario is harsh enough while both parties are alive and well, the reality of what happens at the death of either breadwinner is frightening.

Because of these reasons, life insurance continues to play an important role in any financial plan. In fact, it should be the primary asset for families that stand to experience severe lifestyle disruptions should a spouse pass away. Unfortunately, the value of life insurance is frequently misunderstood by those who need it the most.

There are many variations of life insurance products to consider, but that’s a topic for another day. The important message here relates to the extraordinary value of life insurance itself, not any particular policy type.

Indeed, there are very few, if any, recipients of a death claim who have asked their insurance agent about the type of coverage. The fact is the tax-free death benefit provided a welcomed amount of cash at precisely the time when money was needed the most.

Tags: Breadwinner, Business Executive, Buy Insurance, Consumer Debt, Dad, Discrepancy, Government Data, Hundreds Of Thousands, Income Stream, Insurance, Insurance Life, Life Insurance, Lifestyle, Mom, Money, Paycheck, Reason, Senior Management, Sexes, Workforce

Single Premium Whole Life: A Powerful Legacy Tool

As you grow older and join the “seniors” club, you may start thinking about what you want to leave behind once you’re gone—particularly if you’ve accumulated a significant amount of money over the years. Like most seniors, you’ll probably want to pass along some of this hard-earned money to your children, grandchildren, your church or even a favorite charity.

Luckily, there is an effective life insurance product designed to help seniors leave behind a legacy. It’s called single premium whole life (SPWL) insurance. A SPWL policy allows you to increase your estate value and provide your beneficiaries with an inheritance that’s potentially immune to federal taxes.

Countless advantages

Because of the many benefits SPWL policies have to offer, this type of insurance is growing increasingly popular among seniors. By simply placing a portion of your invested assets into a SPWL policy, you can reap the following rewards:

• Immediately increase the value of your estate
• Easily pass money directly to your beneficiaries, allowing them to avoid probate courts
• Provide an inheritance to beneficiaries that may be free of taxation
• Create a guaranteed lifetime death benefit
• Have the ability to receive the SPWL death benefit in the event of a catastrophic illness
• Avoid risk, even within a volatile market
• Pay a one-time premium without the need for renewals
• Access guaranteed cash values without penalty after the first policy for financial emergencies (Depending upon the policy provisions)

Are you an ideal candidate?

If you want to leave an inheritance to your loved ones or a charity, and you’ve already designated a portion of your assets to do so, you’re the ideal candidate for a SPWL policy. Obviously, you should never use any funds that are necessary for daily living expenses to buy a SPWL policy. However, you may want to tap into liquid assets, such as CDs, money market accounts and treasury securities, which are ideal for purchasing a policy.

Incredible tax savings

If you invest in mutual funds, stocks or even CDs, savings bonds and money market funds, the growth of your assets is subject to taxes. However, transferring your assets to a SPWL allows you to set up an inheritance that’s potentially free from federal income tax. That’s because death benefits from life insurance policies are generally not taxable.

Plus, as long as you properly designate beneficiaries on the SPWL policy, your heirs will avoid probate court. Obviously, you’ll want to work closely with Brian Gruss to ensure that your beneficiary designations are set up correctly.

A case study

Here’s an example of how a SPWL policy can greatly benefit both you and your beneficiaries: Let’s say 65-year-old Betty, who is a non-tobacco user, plans to leave a CD worth $50,000 to her grandchildren when she dies. When she decides to transfer this $50,000 from the CD to a SPWL policy, she’s able to purchase a guaranteed life death benefit worth $98,814. In other words, Betty has just increased this portion of her estate by nearly 50%, doubling the inheritance for her grandchildren.

Additionally, the death benefit will likely be free of income taxes for her grandchildren. On top of that, Betty no longer has to pay tax on the interest earned for the CD.

An effective legacy tool

Considering these countless advantages, it’s clear that a SPWL policy is an effective way to leave a legacy behind. If you want to protect your assets from taxes and increase your inheritance values, ask Brian Gruss about SPWL insurance.

Tags: Amount Of Money, Beneficiaries, Cash Values, Catastrophic Illness, Death Benefit, Federal Taxes, Financial Emergencies, Grandchildren, Hard Earned Money, Inheritance, Life Insurance Product, Liquid Assets, Living Expenses, Money Market Accounts, Policy Provisions, Probate Courts, Seniors Club, Treasury Securities, Volatile Market, Whole Life

Finding the Middle Ground with Return of Premium Term Insurance

Anyone who has ever shopped for life insurance has faced the difficult task of choosing between a term and permanent policy. The choice isn’t as clear-cut as it may seem: while term insurance may be less costly in the short run, permanent insurance features an attractive cash benefit. Not surprisingly, having to choose between these two types of coverages intimidates many prospective policyholders. In fact, some consumers are so baffled by this decision that they don’t purchase any coverage.

Fortunately, there is a new type of coverage for those consumers who just can’t decide what policy to buy. Return of premium term insurance (ROP) is a hybrid product that provides term coverage with a twist: policyholders get all of their paid premiums back if they are still alive at the end of the term.

To understand how ROP combines the best traits of term and permanent insurance, lets compare them side-by-side. If you purchase term insurance, you pay a set premium for a fixed term, usually between ten and thirty years. Term rates are low, especially if you are young and healthy. However, your money only buys you a death benefit: if you are still alive at the end of the term, you receive nothing.

Permanent insurance, on the other hand, provides the same death benefit protection, but also allows you to build cash value within your policy. This balance is handy if you need money for emergencies, college tuition, etc. The downside is that you can expect to pay for this benefit through significantly higher premiums.

ROP gives the consumer the best of both worlds by providing the protection of insurance along with the savings component. With such a policy, if you die, your beneficiary receives a lump sum death benefit. But if you live through the term, the insurance company returns all of your premiums. While ROP is an appealing choice for all kinds of individuals, it is especially useful for purchasers who need to fill a temporary need, such as:

-Insurance coverage for a key employee

-Individuals who are planning to refinance their homes

-Divorcees who are required to purchase insurance as part of their divorce decree

While ROP has many advantages, consumers should keep in mind that the cost of this coverage is somewhat higher than a typical term policy. And if you need to extend your policy past the initial term period, expect to pay significantly higher rates. The best strategy is to examine all options, carefully weigh the costs and benefits of each, and pick the one that can do the most for you.

Tags: Beneficiary, Best Of Both Worlds, Buy Insurance, Cash Benefit, College Tuition, Consumers, Death Benefit, Downside, Emergencies, Hybrid Product, Insurance Company, Life Insurance, Lump Sum, Permanent Insurance, Policyholders, Premiums, Return Of Premium Term Insurance, Rop, Term Coverage, Thirty Years