How financially vulnerable are you? According to a 2010 LIMRA report “Facts About Life 2010,” more than 40% of Americans say the reason they don’t have more life insurance is because of other financial priorities, like saving for retirement. Furthermore, nearly 70% of American households with children under 18 would be in financial jeopardy if the primary breadwinner died. Even if you feel financially secure today, there are factors outside your control that could impact that security tomorrow. Become more proactive and purposefully begin a plan that will provide protection, growth and security in spite of uncontrollable life events.
The following are some common questions that require definitive answers to establish solid plans for those “what if” events.
- If I or a family member died prematurely, how would my family have the financial assets to continue their current lifestyle?
- How would my loved ones be able to keep our home and assets or have funds available to attend college or cover my funeral expenses?
- How will my estate taxes be covered at the time of my death?
- How will I protect and grow my assets to ensure a comfortable retirement?
- How will tomorrow’s economy affect the value of those assets?
- How will my income and retirement account keep pace with inflation so I won’t outlive my money?
- What will happen to my assets if I extract a terminal or chronic illness?
If you own a business there are even more concerns.
- What would happen if I lost a key employee?
- How can I provide protection and growth for my company’s employee retirement plan?
- How can my company improve its retention plan of key executives and employees?
Did you know that all these questions can be answered by purchasing a fantastic financial vehicle called Fixed Index Universal Life insurance (FIUL)? The primary reason for purchasing a policy has been and still is for the tax-free death benefit for beneficiaries. However, the potential to build cash value with guaranteed interest rates and potential market gain without the risk of market loss is making the purchase of such a vehicle far more attractive as we consider the precarious future of social security and inevitable increased tax rates. Here are some basic attributes about FIULs to aid you on your journey to wealth, wellness and wisdom.
While most FIULs are geared toward protection, growth and safety, not all FIULs are alike. They are designed to fulfill different policy owner needs and goals: long term death benefit protection, long term cash value, supplemental retirement income, legacy building, early cash value, business insurance needs, or estate planning. There are different market indexes and interest crediting methods used. Loans (standard, net zero-cost, and variable) will reduce your available cash value and death benefit. Make sure your policy includes a guarantee to prevent the possibility of lapsing. Also keep in mind that most FIUL policies require health underwriting, and in come cases, financial underwriting. Be clear about your financial goals so that your financial professional will help you determine what if any riders to include in designing the policy that best fits your needs. Some FIUL policies are better than others at providing optimum tax-free loans to use for financial needs like college funding and retirement. Most FIULs provide for terminal, critical or chronic care illness benefits (with or without extra charges) known as accelerated death benefit riders. Make sure to determine which policy will provide you both “living” and death benefits and adequate coverage to fulfill your goals.
Most insurance policies have two types of charges: premium charges and monthly deductions. A premium charge is deducted from the premium when paid. Monthly deductions are taken from the policy at the beginning of each policy month. In addition, if you fully surrender or cancel the policy during the surrender period, surrender charges will apply. Policy charges offset various expenses the insurance company incurs in connection with a policy, including but not limited to the expenses of underwriting, issuing and administering the policy, agent compensation, and compensating the company for the mortality risks it assumes.
So little time, so many questions. Make it a priority over the next 30 days to find the answers to these questions and you will enjoy the feeling of relief that comes from being reassured about your financial security. The knowledge that your assets are secure and your family is financially protected, will bring more meaning to your experience of wealth and wellness.
Filomena T. Day is a Wealth & Wellness Coach, Reiki Master and EFT practitioner, motivational speaker, published author and Certified Identity Theft Risk Management Specialist. As a former CPA, Filomena helped people balance their financial life. Now as a prosperity achievement coach (PAC), she helps people balance their WHOLE life. Her clients prepare for their life-changing events through customized coaching and financial programs and tax-free strategies. She can be reached at firstname.lastname@example.org or by calling (207) 777-3232.