The firm of Steven H. Kobrin, LUTCF
In 1991, I entered the life insurance business full-time, and soon formed my own national brokerage. Throughout my career, I have been dedicated to mastering the craft of selling life insurance, and am an expert in helping people get a policy who represent a “higher risk” due to health, lifestyle, or other personal issues. Along the way, I have developed a huge network of industry contacts that enables me to serve as a primary resource for all the insurance needs of my individual and corporate clients.
I now help brokers, advisers, and financial firms across the country utilize my organization and become a primary resource for the insurance needs of their own clients. They form strategic partnerships with my providers so they can stay within their own area of specialization, yet help their clients purchase the other products they need from professionals in those marketplaces. It's a winning formula for all concerned.
My firm runs a Global Insurance Portal through which consumers, brokers, consulting firms, and agencies can gain access to the insurance resources they need, on a global basis. http://planrisklive.com/global-insurance-portal/
On the personal side, I am a religious Jew and avid practitioner of kung fu. I have studied spiritual disciplines and personal development all my adult life. I am a conservative in my political and economic views, and a liberal when it comes to keeping an open mind and a willingness to work with people of all persuasions.
BA in Liberal Arts
I am licensed to sell life insurance. Here's my interview with financial educator and consultant George Bailey:
What you have is probably the best product in the marketplace to grow cash on a guaranteed basis. Can you honestly find another vehicle that will give you the same guaranteed interest rate? Has anybody shown you a schedule of values over the next 10, 20 or 30 years that grows as much cash on a guaranteed basis, as this product? Plus, you have nonguaranteed values in the form of dividends. Have you come across conservative investments that historically match the dividend paying history of this carrier?
And, you have the death benefit on both a guaranteed and on a scheduled basis.
As far as I'm concerned, this is the primary value of whole life insurance. Give some hard thought as to whether you want to incorporate these financial benefits in your portfolio. If so, then stay put. If not – if you find that you really don't want these benefits – then you should cut your losses now.
I think a commonsense rule of thumb is to take care of yourself first. Take a look at both options and determine the monthly income you will get from each. Which one would best help you pay your bills and sustain the quality of life you want? That's the one you should choose. If there's anything left over for your beneficiaries, so much the better.
Now, if you are saying that you don't really need the income from that annuity, and are primarily concerned with leaving money to your beneficiaries, then I have a suggestion: explore the possibility of leaving a life insurance benefit to those family members. You could probably leave a lot more money through that policy then you could through an annuity. You could look at using the income from the annuity to pay the insurance premium. It would be the lifetime annuity, because you would want to make sure you have the money needed to pay premiums as long as you live.
Of course, you would have to get prequalified for coverage to know what the policy would cost. Do this before you commit to any product. But this might be the way to leave more money than you dreamed of to your family members, without having any out of pocket expense at all!
You get taxed on the difference between what you put in, and what you took out. The insurance carrier can provide you with the cost basis – the amount of money you have paid into the contract. How much tax would be assessed is up to your tax bracket, so you should ask your accountant about that.
Of course, this money is taxed only if you take it out of the policy and put it into your pocket. If you transferred into another policy, it doesn't have to be taxed. So I assume you have given some thought as to your need for life insurance going forward.
If whole life insurance isn't your cup of tea, there still may be a permanent cash product that is suitable, that can accommodate the cash from the whole life policy and let you avoid taxation entirely.
One other point: be mindful of any outstanding loans on the policy. If there are, the carrier will want you to make them whole before releasing any money.
Clearly, there are a number of basis to cover here before you make a final decision.
Unless you guys are capital-rich, I can’t see how you would be able to put in enough money now to compensate for having insufficient life insurance.
Bear in mind that you could probably get additional or new policies in just a few weeks, if your broker will expedite the prequalification and underwriting processes.
He should also be able to give you an informal business valuation to get the carrier to buy into the new face amount, as well as auditing your buy-sell agreement to make sure it is bulletproof.
Don't put off the purchase of this coverage – you can't count on your eligibility for attractive pricing lasting forever.
Term insurance can be a cost-effective way of meeting a single need for coverage. If all you need a policy for is to pay off the mortgage, then term should be the way to go. But there are a few other factors to consider.
First of all, insurability. Depending on what underwriting challenges you pose, you might get better underwriting from a universal life product. These products can have underwriting concessions available that term products don’t.
Secondly, the duration of the mortgage. At your age, you may not qualify for a term product that would keep the premium guaranteed for as long as you have that debt. You may have to go for a universal life product with a guarantee dialed-in to match the mortgage. Remember that you can design this product to be a kind of “extended term” product, with the objective of giving you the lowest guaranteed premium, and without paying extra for cash accumulation.
Lastly, double check your need for life insurance in other areas. Any other debt? Estate taxes? Elder parents who are financially dependent on you? Business interests that need to be protected? Legacy to pass on to the next generation? Charitable gifts? Give this all some thought before you conclude that all you need life insurance for is mortgage protection. You don't want to have to keep buying new policies every time it occurs to you that you need coverage.