Life Insurance

Life insurance is a key financial asset that serves a wide variety of purposes, providing financial support to heirs and charitable organizations, indemnification against the loss of a key person of a business, funding of a business continuation plan, and as a benefit for executives and employees. Additionally, life insurance offers a unique combination of liquidity, leverage, and flexibility, with the ability to fund future obligations.  

 

The applications of life insurance extend far beyond providing a death benefit to heirs.  Life insurance can be used to fund estate taxes, minimize income taxes, diversify asset portfolios, cover liabilities/debt (e.g., home mortgage) in the event of an untimely death, and facilitate the transfer of a closely-held business and/or support the continuity of a business upon the death of a key employee.

 

Life insurance is also commonly used for retirement planning, asset protection, and efficiently transferring wealth to children, grandchildren, and charitable organizations. In addition, as employers continually look for ways to recruit, retain, reward, and assist key employees in supplementing their retirement savings on a selective basis, Nonqualified Deferred Compensation (NQDC) programs have become increasingly important. Life insurance can be a flexible, efficient, and economical means for an employer to informally fund a deferred compensation plan, providing the ability to accumulate cash value on a tax-deferred basis.

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Please note: The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges; if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage, and will reduce the death benefit and policy values. You should consult a qualified tax professional for tax advice on your own personal situation as additional rules may apply. All guarantees are based upon the claims-paying ability of the issuer.