Most of our clients who have life insurance typically have some form of term life insurance. We generally find term life helps execute most financial plans at the lowest cost.
However, at times we find the combination of higher net worth, advanced tax planning and legacy objectives may call for alternative insurance choices. Below is a little excerpt on one such option. If you feel the need, or have not had your insurance reviewed by us lately please give us a call.
Coverage for Two
Survivorship life insures the lives of two people, typically a married couple, and pays a death benefit after the death of the last-surviving covered person. For this reason, it is sometimes called second-to-die insurance. Because only one death benefit is paid and premiums are based on the life expectancies of both insured individuals, the cost is usually less than premiums for a policy covering either life alone. And it may be possible to obtain coverage for a spouse who has been rejected for an individual policy. Survivorship policies are also used to insure business partners, and options may be available to insure more than two people.
Survivorship policies are typically permanent life insurance, which offers lifetime coverage and stays in force as long as you pay the premiums. The death benefit of a survivorship policy could be used to leave a legacy for your heirs, pay taxes, settle an estate, and pay other end-of-life expenses.
A portion of the premium goes into a cash-value account, which accumulates on a tax-deferred basis throughout the life of the policy. Any cash value accumulated at the time the first spouse dies might be used to help support the surviving spouse. Of course, loans and withdrawals will reduce the policy’s cash value and death benefit. Withdrawals of the accumulated cash value, up to the amount of the premiums paid, are not subject to income tax. Loans are also free of income tax as long as they are repaid.
As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company.
Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable.
Evergreen Wealth Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2018 Broadridge Investor Communication Solutions, Inc.