OUR SERVICES
Life Insurance
Disability Insurance
Long-Term Care
Business Planning
Estate Planning
Retirement Planning
Health Insurance
Life Settlements
Annuities
Life Insurance
There are many different types of life insurance. By understanding the client's insurance needs, we are able to recommend the appropriate product.
Types of Life Insurance:
Term Insurance
Term life insurance is a good fit for short-term needs or those that have a specific end point. Simply choose a term policy duration to meet those needs. For example, to help ensure your family will be able to pay a 20-year mortgage, you can choose a 20-year term policy. You can choose the length of coverage you need, such as 10, 15, 20, or even 30 years. During this period, called the level-premium period, your premiums are guaranteed not to change. After this period, however, premiums will increase each year until the policy ends (usually at age 95) and may not be guaranteed. All of our term policies offer:
Premiums that are guaranteed to stay the same during the level-premium period.
The option to convert the policy, which means you can convert your term policy to a permanent policy without having to take a new medical exam.
Permanent Life Insurance
Permanent life insurance products are designed to provide protection while building cash value. Borrowing from the cash value gives you the opportunity to help meet future goals. When permanent life insurance is the central part of a sound financial plan, it provides protection plus cash value that can help people do more throughout their lives.
Types of Permanent Life Insurance
While all permanent policies are designed to provide a safety net with death benefit protection while accumulating cash value, there are different types that are suited to meet different needs. We can help you determine which type of permanent life insurance can help you build a strong “center” for your financial plan and create a world of possibilities for you and your family.
Whole Life
“Keep it Safe”
Guaranteed death benefit and cash value accumulation
Maximum guarantees and predicable payments
Long-term, low risk tolerance
Universal Life (UL)
“Provides Flexibility”
Low cost with flexible payments, yet adjustable
Protection guarantees with cash value linked to company’s current interest rate
Low to medium, risk tolerance
Indexed Universal Life (IUL)
“Add a Boost”
Equal desire for protection and cash value accumulation
Upside potential with cash value linked to market index
Strong downside protection
Medium risk tolerance
Variable Universal Life (VUL)
“Max My Upside”
Strong desire for cash value accumulation
Upside potential with cash value linked to investment account performance
Limited downside protection
Higher risk tolerance
Disability Insurance
Disability insurance provides a monthly benefit (that can exist for life) in the event that the insured is sick, hurt or unable to work in their regular occupation. We help our clients determine which policy has the protection and benefits they need.
The statistics are alarming. Nearly one in four Americans will become disabled before they retire. It’s enough to have you looking twice for discarded banana peels and open manhole covers before you walk down the sidewalk. But it wouldn’t do you much good. The reality is accidents don’t cause most disabilities. Instead, back injuries, cancer, heart disease and other illnesses are usually to blame. And that’s precisely why disability insurance should be a core component of your financial life.
Things to consider when evaluating disability income coverage:
How much income replacement will I need?
Evaluate your monthly expenses to determine your risk. As a general rule, you may be eligible for a monthly benefit equal to about 60% of net salary or business income.
Can I also protect any future income increases I may receive?
Any policy issued should include a monthly benefit amount based on your current financial and occupational information. Most policies also offer a future insurability feature that allows for the purchase of additional coverage without the need to provide future evidence of good health.
When will I be eligible for benefits?
The language in the policy determines the conditions under which you become eligible for benefits.
Will my benefits keep pace with inflation?
Most policies offer riders to help your benefits keep pace with inflation during a disability. A cost of living adjustment (COLA) rider will adjust benefits each year while you remain disabled and eligible for benefits. COLA riders can be vital to maintaining your standard of living during an extended disability.
Long Term Care
Why consider long term care insurance?
Long term care can be expensive, and a least 70% of people over 65 will need long term care services and support at some point in their lives. Having a plan for long term care can help you find practical and affordable ways to help pay the high costs of long term care services.
What is long term care?
Many of us worry about who would take care of us if something happens, and no one wants to be a burden. Long term care is the assistance or supervision you may need when you are not able to do some of the basic activities of daily living such as:
– Bathing
– Dressing
– Eating
– Continence
– Toileting
– Moving in and out of bed
A need for long term care may result from:
– Accidents
– Illness
– Advanced aging
– Stroke
– Other chronic conditions
Providing long term care can be time consuming, expensive and exhausting. Help protect your family and get the information you need to see if long term care insurance should be a part of your plan.
Business Planning
Buy-Sell Planning
A business continuation agreement is an arrangement for the disposition of a business interest in the event of the owner’s death, disability, retirement, or upon withdrawal from the business at some earlier time. Business continuation agreements can take a number of forms:
An agreement between the business itself and the individual owners (either a corporate stock redemption agreement or partnership liquidation agreement), frequently called an “entity” plan;
An agreement between the individual owners (a cross-purchase or “criss-cross” agreement);
An agreement between the individual owners and key person, family member, or outside individual (a “third-party” business buy-out agreement); or
A combination of the foregoing.
In the case of corporations, the most common types of business continuation agreements are stock redemption plans (often called stock retirement plans), or shareholder cross-purchase plans. The distinguishing feature of the redemption agreement is that the corporation itself agrees to purchase (redeem) the stock of the withdrawing or deceased shareholder. In a cross-purchase plan the individuals agree between or among themselves to purchase the interest of a withdrawing or deceased shareholder.
In the case of a partnership, an agreement similar to the corporate stock redemption plan is the partnership liquidation agreement, where the partnership in effect purchases the interest of the deceased or withdrawing shareholder by distributing assets in liquidation of his or her interest or the partners agree to cross-purchase similar to the corporate cross-purchase plan.
When is the use of such a device indicated:
When a guaranteed market must be created for the sale of a business interest in the event of death, disability, or retirement.
When it is necessary or desirable to “peg” the value of the business for federal and state death tax purposes.
When a shareholder or partner would be unable or unwilling to continue running the business with the family of a deceased co-owner.
When the business involves a high amount of financial risk for the family of a deceased owner and it is desirable to convert the business interest into cash as his or her death.
When it is necessary or desirable to prevent all or part of the business from falling into the hands of “outsiders”. This could include a buyout of an owner’s interest in the event of a divorce, disability, or insolvency, if there is a danger a business interest would be transferred to a former spouse or creditors.
Where it is desirable to lend certainty to the disposition of a family closely-held business.
Key Person Insurance
When taking inventory of assets, companies include buildings, computer equipment, and phones. In other words, companies value their tangible items- items that can be replaced if lost in a fire or some other type of disaster. One asset that is often overlooked is the human capital of the company. Each business, regardless of its size, has an individual or group of individuals who contribute to its success and without them the business would have a difficult time surviving. Like tangible assets, insurance protection can be purchased for those key employees.
What is it?
You can protect your business from the loss of a key person by implementing a key person insurance plan in which your company purchases and owns a life insurance policy on the life of a key employee. The life insurance policy will provide the company the liquidity needed to keep the business running in the event of the key employee’s premature death. The plan provides the cash needed to hire a qualified replacement and/or to purchase the additional human capital or assets necessary to keep the business operating. The plan may also help to replace lost profits as a result of the loss.
While the main purpose of key person insurance is to provide a death benefit to the business in the event of an unexpected or sudden death of an essential employee, it can also be used as a way to provide the key person with retirement benefits.
Key person life insurance is simple to implement. It does not need IRS approval and may include many people. With key person life insurance, the business has death benefit protection in case of a sudden and unexpected death, and is able to access the potential cash values of the life insurance policies for cash flow, retirement benefits, or for unanticipated expenses.
Restricted Property Trust
What is a Restricted Property Trust (RPT)? What are the objectives of an RPT?
The RPT is an employer sponsored plan for owners and/or key executives. The primary objective of an RPT is to provide tax favored long-term cash accumulation and tax free income distribution in a conservative vehicle. An RPT can provide better results than an alternate investment earning 8%.
What are the tax characteristics of an RPT?
Each annual contribution is fully deductible by the employer and only partially taxable to the participant. Asset growth is in the cash value of a life insurance policy and therefore is tax-deferred. The policy is distributed to the participant at plan termination, at which time a portion of the cash value is taxable.
How does an RPT achieve these results?
Fully tax deductible contributions are made by the business to an RPT for a select group of participants. Of this, a portion is considered current taxable income to the participant. The remaining contribution funds the life insurance and is not considered taxable income to the participant.
The RPT tax treatment depends in part on provisions of the life insurance contract and in part of the provisions of the trust. One key trust provision is that the employer must make the selected annual contribution each year for the restricted period. Failure to make the annual contribution causes both the policy to lapse and the surrender proceeds to be given to a pre-selected charity. This creates a critical “risk of forfeiture.” After the policy is distributed, the participant can maintain it for the death benefit, use it to generate non-taxable cash flow, exchange it for a larger income stream (annuity) or potentially exchange it for a larger, guaranteed death benefit.
Who can participate in an RPT? Are there limits on participation?
The plan is available to anyone with earned income, whether from a C Corp, an S Corp, partnership or other business entity. An RPT is not Qualified Plan, so participation limits and test do not apply, and contributions to an RPT do not impact any Qualified Plan contributions. Participants in an RPT can each select their own level of contribution regardless of what other participants contribute.
Estate Planning
What is Estate Planning?
A. The process of planning the accumulation, conservation, and distribution of an estate in the manner which most efficiently and effectively accomplishes your personal tax and nontax objectives. Every estate is planned – either by you or by the state and federal governments.
B. “Controlled estate planning” is a systematic process for uncovering problems and providing solutions in clients’ L.I.V.E.S.: Planners should use this L.I.V.E.S. acronym to illustrate the seven major areas of estate planning and emphasize the significance and urgency of action to solve them.
Lack of liquidity: Insufficient cash to pay administrative costs, taxes and other estate settlement expenses. A lack of liquidity can trigger a forced sale and result in the loss of an estate’s most precious assets at pennies on the dollar.
Improper disposition of assets: When the wrong asset goes at the wrong time to the wrong person in the wrong manner, the result is often disaster. For example, picture the proceeds of $100,000 of group insurance or a $500,000 pension plan being paid to a 21 year old child.
Inflation (need to diversify and “inflation-proof” portfolio): Many individuals have placed all their financial eggs in one basket or have not considered the diminished and diminishing purchasing power of life insurance adequate only four or five years ago. The ravages of inflation and risk of placing all of a client’s family financial security in one investment (or business) must be factored into the estate plan.
Inadequate income or capital at retirement/death/disability: Planners and clients often forget that cash demands for survivors’ food, clothing, shelter, and schooling often will exhaust the funds that would otherwise be available for estate liquidity needs – and vice versa.
Value – need to stabilize and maximize value of business and other assets: Clients who own businesses should build key employee protection into their plans, establish “golden handcuffs” to retain key employees and attract new ones, and use their businesses to solve personal financial problems.
Excessive transfer costs: Simply put, many clients’ families will pay a severe- and needless price- for the inaction of senior family members.
Special problems: Clients must not overlook the extreme importance of planning for the spouse or child who can not, should not, or does not want to handle a family business or large investment portfolio, or for a handicapped spouse or child. The desire to give back to, enrich, and support charity is also a strong planning need.
Retirement Planning.
There are two different types of pension plans. The first is known as a fixed or defined benefit plan. Here, definitely determinable retirement benefits are computed using a predetermined benefit formula established when the plan is created. Each employee is promised a specific amount of retirement benefits. The employer’s contribution to provide the benefit is based on an actuarial determination of the cost of benefits planned. In other words, contributions are based on benefits and the limits on contributions are based on the benefit they will produce.
A money purchase pension plan, which is a type of defined contribution plan, bases the retirement benefit upon an employer’s commitment to make an annual contribution. Benefits are directly dependent upon the length of time an employee participates in the plan and the amount of money contributed on his behalf each year (plus interest and appreciation on such funds). In a money purchase pension plan, therefore, the employer is not obligated to provide a specific amount of retirement benefits.
A profit-sharing plan is an arrangement by which an employer shares a portion of corporate profits with employees. Contributions can be made even if there are no profits. It is a type of defined contribution plan. For all defined contribution plans, the limits on annual contributions to the plans are based on a percentage of salary, which directly limits the contributions. There is no limit to the benefits produced by the plan.
A 401(k) plan may stand on its own (e.g., permit only elective contributions) or it may permit other types of employer contributions and/or employee contributions. Under this type of arrangement, an employee can elect to have the employer make an elective contribution on his behalf in the form of a compensation reduction agreement under which the employee elects to reduce cash compensation and to have the employer contribute such amount to the plan on the employee’s behalf. In some cases the employer may agree to make a contribution based on the employee’s contributions (e.g. 50 cents from the employer for every dollar put in by the employee from his or her compensation)
When is the use of such a devise indicated?
When you would like to be sure of a steady, adequate, and secure personal retirement income.
When you would like to set aside money for retirement on a tax deductible basis.
When you want to reward long-service employees and provide for their economic welfare after retirement.
When you would like to put your business in a better competitive position for attracting, retaining, and eventually retiring personnel.
When your corporation is about to run into an accumulated earnings tax problem. The corporation would like to “siphon off” some of its earnings and profits and reduce or eliminate the threat of a penalty tax on unreasonably accumulated earnings.
When you have employees who would like to defer compensation on an elective, pre-tax basis to a qualified retirement plan.
Health Insurance
We design and implement plans for hospitalization, medical and dental care for individuals and businesses, small and large.
Life Settlements
If an insured (age 70+) no longer wants or needs their life insurance policy, it may be possible to sell the policy to a third party and obtain more than the cash surrender value as a fee.
What is a life settlement?
A life settlement is a transition in which you sell a life policy that you own to a third party. You receive an immediate cash payment for selling your policy. The purchaser becomes the new owner of the policy, and is responsible for future premium payments. When the insured (which may be someone other than you) dies, the purchaser receives the policy’s benefit. Typically the purchaser is an experienced institutional investor, and policies will have face amounts in excess of $250,000.
Why would I want to sell my policy?
If you would prefer to have more money now rather than a future death benefit, you should consider a life settlement. There are many reasons why your policy may no longer meet your needs, including changes in your family, in financial circumstances, in tax law, and in your policy’s performance. A life settlement can give you far more cash for your policy than you would receive from surrendering it to the insurance company.
How can a life settlement get me more money than surrender?
If you surrender your policy to the insurer, they will cancel your policy and return any cash value to you. That cash value does not take into account the value of the death benefit you are giving up. A life settlement pays you the cash value plus a portion of your death benefit’s value.
Annuities
An annuity is a long-term contract you purchase from an insurance company. It is designed to help accumulate assets to provide income for retirement. Annuities do have limitations. If early withdrawals occur, penalties may apply and earnings are taxable as ordinary income and may be subject to a 10% federal tax penalty if withdrawn prior to age 59 ½ . They are designed to help protect you from the risk of outliving your income. Through annuitization, your purchase payments (what you contribute) are converted into periodic payments that can last for life.
Tax-deferred annuities: for retirement savings
Deferred annuities can be a good way to boost your retirement savings once you’ve made the maximum allowable contributions to your 401(k) or IRA. Like any tax-deferred investment, earnings compound over time, providing growth opportunities that taxable accounts lack. Deferred annuities have no IRS contribution limits, so you can invest as much as you want for retirement. You can also use your savings to create a guaranteed stream of income for retirement.
Annuities are flexible so you can choose one that enables you to:
Invest a lump sum or invest over a period of time
Start receiving payments immediately or at some later date
Select a fixed, variable or indexed rate of return
Investing involves risk and may lose value. All guarantees and protections are subject to the claims paying ability of the issuing company, but the guarantees do not apply to any variable accounts which involve investment risk and possible loss of principal.