Life Insurance

The value of life insurance

Life insurance has many unique characteristics that can make it an appropriate solution for a variety of uses. Some of these include:

  • Life insurance provides payment at the death of the insured.
  • Policy death benefits are received income-tax free when structured properly.
  • Policy cash values accumulate on a tax-deferred basis.
  • Policy cash values may be accessed on a tax-advantaged basis.

Life insurance is used in many personal, business and philanthropic contexts. For example:

Business

  • Key Person: provides funds to aid in the search for a replacement in the event of death of a key employee.
  • Executive Recruitment and Retention: used to provide a variety of non-qualified benefit programs to help attract and retain key employees.
  • Business Continuation: provides funds to aid in the continuation of business in the event of death of a key revenue generator.
  • Succession Planning: provides liquidity to purchase the ownership interest of a deceased owner.
  • Debt Protection: creates a pool of money that can be used to pay off lines of credit.

Personal

  • Family Protection: provides a source of cash for surviving family members’ living expenses.
  • College Funding: provides a funding source for college education of children or grandchildren.
  • Debt Protection: generates cash to pay off an existing mortgage or other personal debt.
  • Wealth Creation: provides funds to leave as an inheritance or to equalize inheritances among family members.
  • Estate Tax Liquidity: creates liquidity to pay estate taxes rather than requiring liquidation of existing estate assets.
  • Gifting Leverage: leverages the use of the annual gift tax exclusion, the applicable exclusion and/or Generation Skipping Transfer Tax exemption.

Philanthropy

  • Wealth Replacement: used with many charitable gifting programs to replace for heirs the value of estate assets that were gifted to charity.
  • Gift Creation: used to create a significant donation to charity at death.
  • Gift Leverage: used to maximize the eventual charitable donation at the death of the insured.