The firm of Steven H. Kobrin, LUTCF
I am second generation in the life insurance business, and have brought our local general agency on to the national stage. In doing so, my team and I have created an independent brokerage with a truly unique platform of services, for both consumers and their advisors. These include:
* A policy for virtually every applicant, from preferred risk to high-risk.
* Applications approved at the rate quoted
* Complementary policy audits for all clients to ensure optimum product performance.
When I am away from my desk, I am spending time with my family, especially my darling granddaughter. I am a serious martial arts practitioner, as well as a student of philosophy, religion, and psychology.
BA in Liberal Arts
I am licensed to sell life insurance in every state except Alaska and Hawaii.
Here's why you might want to do this:
Life insurance provides great value. Every dollar of benefit literally costs pennies in premium. So, it's very economical way of making a gift.
Life insurance provides very strong guarantees. You can structure a policy so that both the premium and the death benefit are guaranteed for your lifetime. This helps you do some pretty precise planning.
Life insurance is very secure. When companies have had financial difficulty, other companies have stepped in to honor their obligations.
The carrier that would be most competitive for you should be identified during prequalification. Each carrier varies in how they underwrite different mortality risks. Some are good for super healthy people, others are good for diabetics, yet others good for mountain climbers. Make sure you work with a broker who will quote you a rate that is both competitive and reliable, and can truthfully say that is the best rate the market has to offer. Then you can apply confident you have selected the right company.
I was in the same position as you. My mother was the same age, had three annuities, and I was the power of attorney. She was actually the one who wanted to buy the annuities, and since I sell only life insurance, I brought in an annuity expert.
The specialist explained everything to all involved. Even though the products sounded complicated, he was able to get to the bottom line pretty quickly. There really weren't any hidden costs or expenses that would come back to haunt us. He and I worked on a little chart that laid everything out: interest rates, fees, distribution requirements, etc. It really was just a one pager. My mother was very glad that I provided her with a cheat-sheet to explain in simple terms where her money was, and how she could get it. It helped put my mind at ease too.
Somebody who knows the product and the marketplace can help you feel comfortable with your portfolio. Ask the carriers for a referral to an agent in your area. Or, find an advisor who really knows the product and could give you a briefing. You are probably in very good shape, but just need to see it in black and white.
The idea of a “wash” is kind of misleading. When you take out a loan from your life insurance policy, you really are not using your money. You are using the company’s money, and they are using your cash value as collateral. This is important to know, because since that money is tied up as collateral, it is not growing for you inside the policy. For example, if you have $300,000 of cash surrender value, and then borrow $100,000, you will have only $200,000 growing for you. If you had been counting on the full $300,000 to be there for you, you need to change of plans - or not take out the loan.
To understand this better, think of a home-equity loan. If your home is worth $300,000, and you take out a $100,000 loan, then you have only $200,000 of equity left.
There are other ramifications of borrowing money from life insurance, not the least of which is that if the insured dies with a loan plus interest outstanding, the survivor benefit is reduced accordingly. You can see that a number of factors have to be considered when making this move.
You can borrow money from life insurance, that has a cash account for use, while the insured is alive. But you need to make sure you understand how these products work so that doing so doesn't backfire on you. Here are three pitfalls to avoid when you take cash out of life insurance:
1) Don't reduce the death benefit
Remember, life insurance is first and foremost a sum of money to take care of your heirs, estate, business, favorite charity, and all others who will carry on your legacy.
Taking money out of the life insurance policy while you are alive could very well reduce the survivor benefit. You don't want to short-change the beneficiary.
2) Don't tamper with the guarantee
Permanent insurance can have the unique feature of guaranteeing your coverage for the rest of your life. These guarantees are based on certain assumptions. Chief among these are that you will stick to a premium-paying schedule, and will keep the cash accumulating at a certain level.
If you take cash out of the policy, you may deplete the cash needed in the policy to ensure the guarantee. The coverage may not last as long as you want.
3) Don't force yourself to pay additional money
Some permanent policies will even ensure the guarantee when you take out cash. But the cost of providing you that guarantee will have to be covered somehow. They very well could ask you for additional premium payments to pick up the difference.
If they do this, then you will be paying more money into the policy than expected.
The moral of the story is this: get an understanding of what you want to use life insurance for – both the living and the death benefit – and make sure you are informed about the ramifications of tinkering with that strategy.
Please feel free to reach out to me with any additional questions.
This is a very common question among business owners applying for a bank loan. Let's look at an example.
Bob wants to borrow $2 million from his local bank, to expand his business. His banker agrees to lend him the money, but wants to have life insurance in place on Bob's life. Why? Because if Bob tragically dies before the loan is paid off, his banker doesn't want to have to chase his wife or his estate for the money.
So, the race is on for Bob to get a policy. He wants that coverage quickly so he can close the loan and get his money. He gets prequalified for coverage, finds a company that will give him good underwriting, and submits an application. The application is approved, the policy is delivered, he pays for it, and the coverage is put into force.
Now he is ready to execute a collateral assignment. He gets a form from his bank, or from the insurance company – whichever the bank prefers – and completes it. His wife is the beneficiary, and the bank is the assignee. He gets the money from the bank and sinks it into his business.
Now let's suppose he unfortunately meets his demise a year later. His wife files a claim. The claims department of the insurance company pulls the file and notices that the benefit has been collaterally assigned to the bank. They contact the bank and ask for documentation of any outstanding balance on the loan. The bank provides this, gets paid, and then Bob's wife gets the rest of the death benefit.
The use of a collateral assignment makes sure the lender gets paid only what they are due. If the bank had been made the beneficiary, they would've been given the full death benefit, even if some of the loan had already been paid off. They would've been overpaid, and Bob's wife would've been given nothing.
If you are applying for life insurance to secure your own business loan, remember that there is no reason to make the lender the beneficiary. Use a collateral assignment and make sure your broker walks you through its execution.
Please feel free to contact me with additional questions.