Life Insurance: An Asset Class Like No Other
Purchasing life insurance is often reduced to being just one more financially responsible “thing to do.” Though we’re vigilant about reviewing our investments and other financial holdings on a regular basis, insurance policies often languish with barely a second thought. But, in fact, life insurance is an asset class like no other. Life insurance can and should be incorporated into the strategy that guides your tax planning, legacy, and philanthropic goals. Not doing so is a missed opportunity.
Traditionally, the decision to buy a particular policy is often based on price. But when we consider life insurance as a key financial asset – one that can be strategically integrated into our overall life and legacy planning – we’ve moved to a more progressive perspective. It’s seeing life insurance not as a bill we are trying to minimize, but an asset we are trying to optimize.
You often hear the advice to “buy life insurance to pay estate taxes,” usually through some form of annual gifting program to an irrevocable life insurance trust. But this simplistic approach misses the real opportunity to create a different kind of zero estate tax plan – one that is about more than just death and taxes. Instead, a more sophisticated and holistic approach to planning incorporates a thoughtful life insurance design – one that seeks to take strategic advantage of the income tax and estate tax-free nature of the life insurance death benefit. It also recognizes the inherent leverage the death benefit provides in relationship to premiums that have been paid, to exponentially support whatever you personally care about most through a family or charitable legacy. When utilized strategically, life insurance offers multiple layers of financial protection that can better ensure your personal, family, and charitable intentions are fulfilled.
We promote this value-based, client-centered approach to life insurance through Life Assurance 360™. We design an insurance plan to meet specific financial, estate, and legacy objectives and then conduct an independent analysis – not only of cost, but also of the safety, flexibility, and liquidity of various policy options. Because we’re not affiliated with any one specific insurance company, we are able to objectively design optimal plans with the very best carrier for a given situation. Our goal is to integrate our clients’ life insurance policies – as distinct financial assets – into their overall plan while achieving the best value for them. This process is not only prudent, but also much more in keeping with what a fiduciary is expected to do on behalf of the beneficiaries that he or she serves.
We’ve added Life Assurance 360™ to our suite of services because it’s a natural addition to our Life & Legacy Planning™ process. And each year, during our annual refinement meetings with clients, their life insurance policies receive the same careful review as their other financial assets do.
If you have not had the benefit of evaluating life insurance in the manner we have described, or perhaps already have an existing life insurance program with one or more policies owned inside an irrevocable trust, we encourage you to seek the assistance of a life insurance professional who can help you take this area of your planning to the next level. Not doing this could, quite frankly, result in some unfortunate potential outcomes. These might include: creating substantially less financial legacy than you could have for the people, causes, and organizations you care most about; a policy that “crashes” before you do, resulting in both the loss of all the premiums you’ve paid in over the years and the death benefit you purchased; and potential personal liability for your trustee, as a result of his or her negligently monitoring, maintaining, and managing the trust’s valuable life insurance asset.
If you would like to discuss the Life Assurance 360™ process with a Wealth Impact Partners personal legacy advisor, please contact us today.
The material contained herein is for informational purposes only and is not intended to provide specific advice or recommendations for any individual nor does it take into account the particular investment objectives, financial situation or needs of individual investors. Any tax advice contained herein is of a general nature and is not intended for public dissemination. Further, you should seek specific tax advice from your tax professional before pursuing any idea contemplated herein. This advice is being provided solely as an incidental service to our business as insurance professionals and investment advisors.
Neither Wealth Impact Partners, Valmark Securities nor its affiliates and/or its employees/agents/registered representatives offer legal or tax advice. Please seek independent advice, specific to your situation, from a qualified legal/tax professional.
Securities offered through Valmark Securities, Inc. Member FINRA/SIPC. Investment advisory services offered through Valmark Advisers, Inc., a SEC Registered Investment Advisor. 130 Springside Drive, Suite 300 Akron, Ohio 44333. (800) 765-5201. Wealth Impact Partners is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc. BSW Inner Circle and AES Nation LLC are separate entities from Valmark Securities and Valmark Advisors.