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Schulfer & Associates, LLC

Your Last Gift

In my last article, I wrote about risk management and how for most of us life Insurance is a remarkable tool to manage what may likely be your family’s greatest risk.  Not everyone “needs” life insurance; maybe your family doesn’t actually need your income or you’ve saved sufficiently to cover the risk of your death to them.  After all, life insurance is not for the person who is insured, it’s for their chosen beneficiaries.  Sounds obvious, but some people just can’t get past this and feel that if they die prematurely, their spouse or children will do fine or don’t need to be taken care of financially, as if they were still alive.  But there are husbands, wives, and parents who do wish for their family’s lifestyle and goals to carry on despite their unexpected death.  With the proper amount of life insurance in place for the proper amount of time, your life insurance policy will be there to meet financial needs when you are not.  That is an awesome gift to your family. 

Why is life insurance the preferred tool for the job for many people?  There are compelling characteristics that life insurance has that simply cannot be matched.  Here are four of my favorites.  Multiplication of your dollars.  Especially true in permanent life insurance, your premium payments (the money you put in to the life insurance policy) are an investment.  In all of the permanent life insurance policies that I have placed, as long as the policy owner holds up his or her end of the deal by paying premiums, contractually the life insurance company will pay their beneficiaries a death benefit that is significantly more than the premium dollars put in, even if the insured lives to age 100.  There simply is not another investment that I can offer that has this magnitude of guarantee by contract, where the dollars that one has invested, in this case as a premium payment will be returned multi-fold.  Simply put, keep the policy in force and someone of your choice will get more out of it than you’ve put in.  Income Tax Free.  Most people feel they’ve shared enough of their money with the government already.  Life Insurance death benefit is paid to your beneficiaries income tax free (in the majority of policy circumstances.   Consult your tax advisor for tax treatment and advice that is specific to you).  Do the math on the outcome of the dollars that actually reach your beneficiaries’ pockets versus taxable accounts such as an IRA inherited by a non-spouse.  Control.  As policy owner, you retain complete control of the policy including who your beneficiaries are.  Only you as the policy owner, can make changes (the insured, if a different person cannot).  A life insurance contract has three parties:  the owner, the insured and the beneficiaries.  Let’s say you put a life insurance policy in place on your son (you are the owner, he is the insured).  You do not have to transfer ownership until you are ready, if ever at all.  This could be far after he has reached adulthood.   Later, he gets married and has three gorgeous children.  You love his wife too, but feel she’s not the greatest when it comes to financial decisions.  As the owner of the life insurance policy you’ve set up, you control the policy including who the beneficiaries are.  If you keep yourself as the beneficiary and he passes away, you can set up the accounts from the proceeds of the policy to benefit his children as you see fit.  Even though he was married at the time of his death, his wife would not have a say in how the proceeds are used, unless you wanted her to.  She would not even have to be aware of the policy.  Immediate Liquidity.  Upon sufficient proof of death to the insurance company, proceeds are paid out immediately to the beneficiaries.  This becomes important for most survivors, as final expenses commonly include medical care and funeral bills that mount quickly.  It is customary for funeral homes and others who you owe this money to, to begin charging interest on outstanding balances as early as 30 days after the expenses have been incurred.   Without life insurance, this may add to your family’s debt.  The timing of death can be very difficult to plan for and often takes us by surprise.  When death occurs, there is so much we have to do and pay for, it can feel like a tidal wave at one of life’s most difficult times.  Money does not solve all of the issues, but having a source of immediate liquidity to wipe out the bills is peace of mind that allows your family one less significant source of stress. 

Helping people financially plan for their families or businesses for the lasting impacts that their death will have, has been of paramount importance to me for years.  I’ve personally experienced the premature death of a family member and its lasting impacts.  I’ve looked into the crying eyes of dear friends and clients, sharing their pain when they have lost family members too early.  One thing for certain, we can’t bring our loved ones back.  But with proper planning, everything does not have to change for your family.  To those you love without end, what will be Your Last Gift?

 All guarantees, including death benefits, are subject to the claims-paying ability of the issuing insurance company.  Loans and partial withdrawals will decrease the death benefit and cash value and may be subject to the policy limitations and income tax.


(Author’s note:  Due to industry regulations, I am prohibited from responding to any online comments. I welcome you to contact me via e-mail or phone, including suggestions for article topics).

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Financial Professionals and can be reached at (715) 343-9600 or  Visit | blog.

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