Insurance Planning
You
got where you are today by working hard and working smart. This means using
all your resources to their maximum. Your time, talent, and resources are on
the line and at risk. It is imperative that your financial and estate plan
takes into consideration the risks that you, your family and your business
cannot afford to take.
In
a portfolio, you diversify risk, but when it comes to protecting your ability
to think, earn money, plan and create, how do you react? To protect your
family, business and assets, the risk to your abilities also must be
diversified. The least expensive and most intelligent method is through
Insurance. We at
are professionals in helping those we serve, protect what they care
about:
Without the proper amount of coverage, a financial or estate plan may fail,
leaving you and your family with many unmet dreams and goals. Potentially
causing financial devastation!
Life insurance is a unique property.
It can create an estate with low premiums in comparison to the total death
benefit. It also enjoys many tax advantages, and may be an ideal product for
your financial plan. Uses include:
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Providing liquidity to pay death taxes and estate costs, thus avoiding the
necessity of liquidating valuable assets to pay these expenses. Note that
Federal Estate Taxes are due only 9 months after death.
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Providing funds to pay off a mortgage at death.
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Providing spouse insurance. In making an insurance need analysis, we often
forget or underestimate the dollar value of work done in the home by both
husband and wife.
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Provide funds for college education. Either at death, or, during life,
policy cash values can help pay college costs. *
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Guaranteeing funds to repay loans or other debts owed by the decedent. Life
insurance proceeds provide cash to pay estate obligations and help provide
the survivors with a debt free start.
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Supplementing retirement income needs. The policy cash values can be used to
supplement pensions, Social Security and other retirement income.
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Providing funds for an orderly transfer of a business interest at death.
Business owners may have an agreement to buy the interest owned by a
decedent, but lack the cash to pay for the decedent's share of the business.
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Providing funds for a business at the death of a key employee. Insurance
proceeds can be used to recruit, hire and train a replacement. The proceeds
can also provide working capital to help offset financial losses due to the
loss of the key person's services.
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Providing funds for Charitable Giving. Life insurance death benefits payable
to an organized charity can help provide funds for the charity's work, and
may provide tax benefits as well.
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Helping equalize inheritances. For example, a decedent could leave a
business interest to the children who are active in the business, and
provide benefits of equal value to other children through insurance
proceeds.
*Life insurance policy cash values are accessed through withdrawals and/or
policy loans. Loans are generally not taxable. Withdrawals may be taxable
under some circumstances. Unpaid loans and/or withdrawals will cause a
reduction in the policy cash values and death benefits. Please consult with
your tax advisor for advice regarding your particular situation.
**Note: Life insurance policies and contracts contain exclusions, limitations,
reductions of benefits and terms for keeping them enforce. Your licensed
financial professional can provide you with the cost and complete details.
Availability varies by insurance carrier and by state.
Disability - Sources of Income:
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Savings - If you save 10% annually, one year of disability may wipe out 10
years of savings.
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Social Security- Almost 70% of applicants are rejected.*
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Sell investments - Will you get the true value?
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Loan - Without an income, who will lend you money?
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Family, friends and charity - Do you want to depend on them?
What are the sources of income when someone becomes disabled and can no longer
earn a living? Note the options shown above. When disability occurs, most
other options, except insured income replacement, may be unsatisfactory or
quickly exhausted.
Disability is bad enough - disability without income is even worse. Disability
income replacement insurance is a long-term solution to a long- term
disability. *Source: Social Security Administration
**Note: This information provides only a brief explanation of coverage. It is
not a contract. Modifications of types of coverage may be applicable in some
states. Coverage may not be available in all states. Exclusions and
limitations may apply. A complete statement of any coverage, applicable terms
will only be found in the statement of coverage found in an individual policy.
Renewal premiums may increase periodically depending on your location.
Policies may or may not be renewable. Details on available coverage and cost
may be obtained from your licensed insurance agent. Combinations of coverage
may be subject to underwriting guidelines, benefit periods chosen and
occupational classes.
Long-Term Care
to the medical and/or personal care services required by a person with a
chronic disability or illness. The Health Insurance Association of America
estimated in 1998 that at least 40% of the population over age 65 would enter
a nursing home before they die. Half of those requiring care are released
within six months. Of those remaining, the average stay is 2 ½ years. The
average cost is about $41,000 a year. By the year 2030, the average annual
cost of a nursing home stay is expected to increase care due to accidents,
cancer, strokes, etc. Approximately 7 million men and women were living in
nursing homes in 1997, and some stays have exceeded 20 years.
Who
pays the cost of Long-Term Care?
The patient or family pays for nursing home care costs not paid by Medical or
Medicaid. Only about 8% of nursing home costs are paid by Medicare, which
offers limited coverage for the first 100 days in a skilled care facility, and
no coverage for the intermediate or custodial care that the vast majority of
nursing home residents require. In 1997, Medicaid paid more than 50% of the
total nursing home bills. To qualify for Medicaid the patient must be
impoverished under the state's definition. In most states the patient must not
have income greater than the cost of the nursing home facility. Other states
have "income caps" to limit eligibility for Medicaid, for example, "income
cannot exceed 3 times the Federal Social Security Income benefit level for
that year." For the most part, the people who need the care, or their
families, pay the bill. The most intelligent method to cover Long Term Care is
Insurance. This may protect assets from confiscation by the State pay for
care.
The
Need.
Some people may require daily medical attention while others may simply need
help with the basic activities of daily living (ADL) such as bathing,
dressing, taking medication, eating, using the toilet, getting in or out of
bed, or walking. A typical nursing home stay commonly falls into 2 categories:
short term stays (1-3 months), which involve skilled nursing care, and
typically follow a hospital confinement; and lengthy stays that comprise
mostly maintenance and custodial care and that average 2.5 years.
Levels of Care
Skilled care.
Refers to a patient who needs daily nursing care, physical therapy, etc.,
provided or supervised by professional nurses and/or therapist under
physician's orders. Intermediate care. Patient requires only intermittent or
occasional rehabilitative care or nursing.
Custodial care.
Patient needs help with activities of daily living (ADL). Does not require a
registered nurse or a therapist, but need for such care is based on
physician's orders.
Long-Term Care Insurance.
Policy may be issued on an individual or a group basis. The Health Insurance
Association of America has prepared a list of "typical coverage" offered by
leading sellers of Long-Term Care insurance. *
Long Term Care insurance may provide for:
**
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Services covered. Skilled, intermediate and custodial care, home health
care, adult day care (often covered in the policy)
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Daily benefit: $40-300/day nursing home. $40-300/day home health care
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Benefit eligibility: Physician certifies that benefit is medically necessary
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Benefit period: 2 years, 3 years, 5 years or life
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Alzheimer coverage: Yes (If not preexisting condition)
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Deductible periods: 0-180
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Renewability: Guaranteed
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Pre-existing condition: 6 months
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Inflation consideration: Yes (often 5% annual increase in daily benefit
amount)
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Age limits for issuance : 50-84
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Waiver of premium: Yes
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Free look: 30 days
*Note: Of course, the more benefits included in the policy, the larger the
premium. Since every policy may be different, the terms, conditions and
limitations of the policy must be carefully reviewed before making a purchase.
**This coverage contains benefits, exclusions, limitations, eligibility
requirements and specific terms andd provisions under which the coverage may
be continued in force or discontinued. Policies MAY NOT BE AVAILABLE IN YOUR
STATE or variations may not apply.
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