Integrity Now Insurance Brokers specializes in life insurance in the Long Beach California area. There are several types of life insurance products that you can choose from depending on what your goals and objects are.
Most people have heard of Term Life Insurance Insurance. We life to describe this type of policy as one you rent for a specific perior of time 5 Years, 10 years, 20 Years or 30 year term policy. After the Term Life Insurance Policy is over it is no longer providing protection to you or your family.
Another type of Life Insurance policy is a Index Universal Life Insurance policy. There became popular a number of years ago as they are not as expensive as a Whole Life policy but offer you protection in a similar way. Index Universal Life Insurance policies continue to provide you life insurance protection for your entire life.
Whole Life Insurance policies are considered by many as overpriced and to avoid at all cost. While these are very expensive, they do offer coverages that are very unique to them and are typically designed for individuals who have a high net worth. They are not designed for the average person and unfortunately some Agents do sell them to these individuals because of their high commission.
Each of these products have their purpose and benefits. It is our job as your Life Insurance Agent / Broker to understand what your goals are so we can put together a life insurance product that meets your individual needs.
This is one common question we receive from individuals who are looking to obtain life insurance. From our experience most people are looking for life insurance protection that will cover them for a specific time period. For these individuals we would recommend a Term Life Insurance Policy.
Here is a common example. A couple who lives in Long Beach, CA recently bought a new home. They took out a mortgage for $650,000 and both couples are concerned if their spouse passes away unexpectedly that the surviving spouse would not be able to make the mortgage payment. In this case would could write 2 30 year Term Life Insurance policies (one for each spouses) in an amount of $650,000.
Now that we have covered the house expense they might also be concerned about other debts or expenses. So it could be worth making each of these policies worth $1,000,000 or more. This would be a discussion would. would have to make sure we are making the right decision that is best for each of them.
Another option for this couple would be to obtain a $650,000 thirty year term life insurance policy and then add a $350,000 Index Universal Life Insurance policy. This way their forever policy will have a much lower insurance premium but also will provide additional protection to each of them for any future needs they might have once the 30 year term insurance policy ends.
Term Life Insurance products offer an affordable solution for those individuals who are looking to provide short term or even long term financial protection.
As mentioned you can obtain a term life insurance policy that can be as short as 5 years and as long as 40 years. It is important to mention that most term life insurance carriers will only go up to 30 years which means there is very little competition to keep the price down.
We find a term life insurance policy to be a fantastic solution for many life insurance buyers. Just remember these types of policies are what we call a renters policy as they will eventually disappear.
Indexed Universal Life Insurance (IUL) policies are getting a lot of attention by consumers and insurance agents. This is due to the flexibility that can be offered through them. IUL policies allow you to participate in a conservative investment through the S&P 500 to obtain additional growth in your cash value.
IUL, also known as equity-indexed universal life insurance, is something of a hybrid vehicle.
An IUL is another type of whole life insurance product, as it does not have an expiration date like a Term Insurance Policy. An IUL provides a guaranteed payout upon death of the owner so long as the life insurance premium is paid. In addition a Indexed Universal Life Insurance policy accumulates cash value which can produce tax saving benefits when you decide to withdraw from it.
One recommendation we suggest to our clients is to create a product called a max funded IUL. This product produces a death benefit but maximises the investment portion.
A max funded IUL is a great investment plan for our high net worth clients. If you exceed the allowable income to contribute towards a Roth IRA, and your are contributing above your company matched 401K you will want to consider this as an alternative.
The goal of this product is to establish the smallest amount of life insurance and contribute the maximum allowable amount towards the investment. As you continue to contribute towards this investment your death benefit will also increase. What is the benefit of splitting up your 401K contributions into one of these accounts? Lets dive in.
If you make $350,000 a year and you contribute 9% towards your 401K account. Your company matches 3% which equals $10,500 in matching funds for a total of $31,500 + $10,500 = $42,000 invested each year into your 401K. Let’s say this account grows to $7,500,000 at retirement. At age 72 you would be required to withdraw $293,250 from your account. If your spouse has $5,000,000 in their account they would have to take $195,500 for a total of $488,750.
Considering your combined income you fall into a very high tax bracket. In addition you will be require to pay one of the highest Medicare Part B and Part D rates. Your individual Part D prescription drug cost would increase by an additional $70.70 per month and your Part B premium would increase by an additional $318.15 per month (2020 surcharge schedule) because of your income. This is in addition to their normal monthly charges.
We would recommend taking the 6% that is not being companied matched and divert that into a max funded IUL. By putting your money in a max funded indexed life insurance policy, you will not only have a life insurance policy but your will grow tax free. Because this is a life insurance product, you will not be required to take a withdrawal at a specific age and if and when you do take a withdrawal it can be done on a tax free basis.
Not only will you save on income taxes, you will also save on your Medicare Part B and Medicare Part D premiums. This assumes we keep your annual taxable income of you and your spouse below $174,000 in joint income based on today’s Medicare income guidelines.
This is just one strategy we use for putting in place this type of life insurance product.
We would love to hear from you so we can help you put together a life insurance product that best meets your needs.