Life Insurance

Zey Insurance Group specializes in all aspects of life insurance.  From estate and succession planning, charitable strategies, key person and other business uses of life insurance, income distribution, Zey Insurance Group understands the complexities of each technique. 


Using Life Insurance in Estate and Succession Planning



  • Estate liquidity and/or preservation

  • Income distribution strategies – such as annuity straddle, IRA Distributions, Financed Annuity/Life arbitrage or CRT/CLT Annuity/Life Arbitrage

  • Capital transfer technique


Life Insurance and Charitable Strategies

Americans are the wealthiest and most charitably inclined people in the world.  There are numerous philanthropic tools that will assist you and your favorite charity.  

Financial Uses of Charitable Techniques:



  • Generate personal income

  • Hold and potentially grow philanthropic assets in a tax-favored environment

  • Reduce or eliminate taxes on personal assets

  • Ability to direct philanthropic capital to private charity to benefit family as well as community

  • Financial support of charities that reflect the donor’s personal values and ideals


Life Insurance and Divorce

Life Insurance is an asset class. There are numerous overlapping complexities regarding life insurance issues in the areas of taxation, economics, emotional impact, and risk management.  Zey Insurance Group understands the modern life insurance environment and the specific issues with relationship to divorce situations, such as unique QDRO issues, Sec 72(t) in QDRO, beneficiary and ownership designations in divorce, premium financing and life settlements. 

 


TERM INSURANCE


Annual renewable term (ART or YRT)



  • Classic term insurance, benefit stays level but the premium increases every year, policy remains in force as long as policyowner pays the premium, current premium vs. maximum guaranteed premium


Level premium term



  • Premiums are level for 10, 15, 20 or 30 years, current premium is guarantee period, the insured will typically have some options for continuing the coverage under that policy


Return of premium (ROP) term



  • Level term product with carrier’s guarantee that if the claim has not been paid by the end of the term, policyholder gets the premiums back, there is a “premium” for the ROP feature, prospective purchaser needs to determine rate of return on the difference between the premiums to evaluate merits of ROP product. Usually makes no sense.


Roles of term insurance in estate planning



  • Provides cost-effective, temporary coverage

  • Convertibility removes concern about insurability

  •  Appropriate where client is constrained by either cash flow or gift tax implications

  • Also appropriate when planning will eliminate liquidity need within “reasonable” number of years

  • Consider term to get coverage in place (in an ILIT) and buy time while client funds the ILIT with income-producing property

  • Once ILIT funded and can contribute to the premiums, convert the term to cash value product


WHOLE LIFE



  • Premiums payable for insured’s whole life…maybe

  • Guaranteed cash value will equal initial face amount at policy maturity

  • As long as premium is paid, insurer has the risk

  • No flexibility to alter the premium

  • Participating whole life may pay dividends


Role of whole life in planning



  • Appropriate where flexibility, particularly premium flexibility, isn’t needed


UNIVERSAL LIFE (CURRENT ASSUMPTION) 



  • Flexible premium product

  • Buy term and invest the rest within the same policy

  • Within limits, can increase/decrease premium at any time without evidence of insurability

  • Policy construct

  • Insurer guarantees minimum interest and maximum COI

  • Insurer credits current rate of interest and charges current COI, i.e., the current assumptions

  • Can select level or increasing death benefit

  • Many policies can blend term rider for efficiency

  • Product design -  Can set premium to endow or to simply maintain death benefit to age 100 at current assumptions, Can start with low premium and increase over time without evidence of insurability


Role in planning



  • Product’s flexibility makes UL a good choice where plan calls for premium flexibility

  • Eternal vigilance is the price of using a “minimally funded” flexible premium product


VARIABLE UNIVERSAL LIFE



  • Flexible premium product

  • Like CAUL

  • Same concept of current vs. guaranteed COI’s

  • Can invest the cash value among accounts that are much like mutual funds

  • Can reallocate among the funds like in a 401(k)

  • Cash value not part of the insurer’s general account

  • Beware illustrations that assume steady 8% or 9% return

  • Understand the impact of low (or negative returns) on net amount at risk and COI’s


Role of VUL in planning



  • Fits when client wants flexible premium structure and ability “control” the investment of the cash value

  • Must fund it to MAX, pay attention to asset allocation and monitor the policy regularly