You’ve gotten older, your children moved out, you acquired new work responsibilities – these are just a few of the life circumstances that have probably changed since you purchased your life insurance policy. For nine out of every ten clients, we identify ways to better match your coverage to your needs now. As we did for this happy client
The Previous Coverage: A client in his 60s had purchased several whole life policies when he was in his 30s to provide income to his wife while his children were in the house. He no longer needed the policies for death benefits but instead needed to provide retirement income.
Our Audit: The policies had accumulated a substantial cash value. We discovered that surrendering the policies would cause significant tax problems: the IRS would view the $280,000 cash value as a capital gain and tax it as income. Further, loan terms would cost the client eight percent if he chose to borrow money from the existing policies rather than surrendering them.
A Better Solution: Our solution helped this client avoid income tax and reap the highest possible amount of tax-free income. On our advice, he made a tax-free exchange of the old policies into new policies that allowed him to withdraw or borrow money without tax or loan costs. He will receive a new stream of tax-free retirement income at zero percent interest.
Does your life insurance fit?