Most insurance companies will only write whole life & universal life insurance on kids under the age of 18. When purchasing life insurance for a child or grandchild, always remember to include a guaranteed insurability rider & waiver of premium for disability rider.

I most often recommend 20-30 year level premium, level coverage convertible term life insurance for clients that are between the ages of 18 & 40. This will allow them to purchase the amount of coverage needed at a very low cost at a time when they are raising children & paying off mortgages.

Depending on how financially stable a client is, I generally recommend a combination of term and “No Lapse” coverage for clients age 41 and above. The older a client is, the more important it is for them to have an affordable policy that they can’t outlive. Many of my clients, age 65-75 whom had previously thought that all they wanted was term life insurance will change to a permanent plan if at all possible. They do this even if they have no debt and have cash in the bank. It appears that they finally realize their own mortality. The younger you are when you purchase a guaranteed level premium permanent plan, the less it will cost you.

Even though term life insurance serves a very important purpose by providing a large amount of coverage at relatively low price for a specific period of time, it’s like renting and there will come a time when it’s not affordable. Because most people outlive them, only 5% of all term life insurance policies ever result in a death claim.

For my clients that want to buy life insurance for estate tax liquidity, I recommend a 2nd to die “No Lapse” Universal Life. If a married couple’s affairs are arranged properly, there are generally no federal estate taxes until the second death. It’s much more cost effective when 2 lives are insured and death proceeds are only paid at the second death. In most cases I will need to work closely with your tax attorney and or CPA. An irrevocable life insurance trust or adult children should be the owner & beneficiary of this type of policy in order to keep the proceeds from being taxable for estate tax purposes. If an insured has an incidence of ownership, the face amount of the policy will be included in their estate & could be taxable. That would defeat the purpose of buying the policy. Currently, there is a $5,000,000 (adjusted for inflation) exemption prior to estate taxes being an issue. Thus, if a married couple has their property ownership, life insurance ownership and wills set up properly, up to $10,000,000 (adjusted for inflation) could be passed on to their heirs without federal estate tax problems. Even though there may be no taxes due at the death of first spouse, a federal estate tax return needs to be filed. Otherwise, you may forfeit $5,000,000 of exemptions. Consult your CPA and tax attorney.

Some companies such as Lincoln National and Prudential will allow one that chews tobacco or smokes cigars to get a standard non tobacco rate.  Also, Lincoln National will give a standard rate on permanent life insurance to someone under age 75 that should have been rated table “C”, 75% rate increase.

With rare exceptions, most all death proceeds received from life insurance claims are income tax free.  Life insurance proceeds could be taxable as income if the owner, insured and beneficiary are all 3 different people.

If the owner is not the insured, the beneficiary needs to be the owner.

If the owner is the insured, anyone desired could be the beneficiary.

Some of my clients have had previous health issues that make it difficult to get life insurance. In cases like this, I take a trial application and ship it to as many as 50 insurance companies to review prior to a medical exam in order to see what company will make the best tentative offer. In a couple of extremely large cases, I was able to place the coverage because only one of those companies offered an acceptable rate.

Life Settlements are something that most people are not aware of. This concept allows one to sell his or her life insurance policies to an institutional investor. Thus, if you have old permanent or term life insurance policies that you no longer need or can afford, a life settlement may benefit you. The best client profile for a life settlement is someone over age 65 with a life expectancy of 12 years or less. The lower the life expectancy & more cash value available, the greater the offer.

Example: I had a 75 year old client that had a stroke at age 69. Since the stroke, he has gotten to where he could play 9 holes of golf a day. He had a $300,000 term life insurance policy that was coming up for renewal and the premium was not affordable. Therefore, he was going to let the policy lapse. I presented him with the idea of selling the policy thru the Life Settlement market and was able to give him a check for $20,000. That was more than the total premium he had paid for the term insurance over the past 10 years.

Example: I had a 58 year old man that was offered $175,000 for a $450,000 UL policy and a $1,200,000 term policy.  This money will allow him to pay off debt and assist with his ongoing medical expenses.

Example: I had a 62 year old man that got $30,000 for a $300,000 term policy.

Even though most life insurance policies allow people that are terminally ill to receive a portion of the death benefit while living, many policies now also allow access to some of the death benefit while living for critical and/or chronic illness.  This feature could reduce the amount of long term care insurance that one may need to purchase.

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