Do you have clients that have worked hard, saved and are doing pretty well for themselves? Perhaps your clients are thinking about leaving a legacy with the money they don’t really need for retirement. The hope and dream to have enough money to leave their children and especially their grandchildren a bit better off.
But there are challenges with their dream that could reduce or even deplete your client assets, leaving little or nothing behind.
There is some good news, your clients can make sure their dream comes true. How? You might ask. Life insurance might just be what they need to help mitigate or avoid some of the risks that could undermine their financial goals and shatter their dreams!
Let’s look at some of the threats that may impact their dream.
1. Tax erosion. If your client passes tax-deferred assets, such as an IRA or annuity, on to their beneficiaries, their heirs will be required to pay income taxes when they are distributed, which can erode the value of these assets. This graph shows how your client’s assets can be reduced by taxes.
2.What about a chronic illness? Did you know that 70% of people turning age 65 can expect to use some form of long-term care during their lives?₁
Well, that won’t happen to me!! We hope not but chronic illness can be just the unexpected financial burden your family does not need. Many people underestimate how a chronic illness can impact their financial plans and the ability to leave any type of legacy to their family. There are basically three ways to cover the risk of a chronic illness:
- Self insure
- Traditional Long-Term care insurance
- Life insurance with a chronic illness or long-term care rider
3.Then there is market volatility! An uncertain economic environment could put the value of your client’s portfolio at risk or cause dramatic fluctuation over time. Even if your clients could tolerate risk when the market was booming they may not be as willing now.
So what is the best strategy? One good option is with the use of cash value life insurance. Of course it offers tax deferred growth and can provide tax free income with policy loans, provided the policy stays inforce. Life insurance provides a tax free death benefit that can help counter losses or volatility in other assets at death following an economic downturn, preserving or potentially increasing the net value to the heirs. Plus, offering an optional chronic illness rider can offer your clients options for coping with the unexpected expenses of having a chronic, long term health issue.
Help your clients take the next step to following their dream. Talk to your clients about the threats and show them how life insurance can help. BBA Life Brokerage is here to guide you along the way, give us a call anytime!!
₁http://longtermcare.gov/the-basics/who-needs-care/ accessed 3/19/2014