I AM RUBEN ROJAS

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We are all familiar with the concept of Pension Maximization.  Sounds good in theory but rarely is adopted by prospective clients in the traditional sense.  

 Traditional sense goes something like this.  Client opts for the higher single-life pension payout so they can enjoy it while alive.  They use some or all of that additional income above the joint payout figure and apply it towards the purchase of a permanent life insurance policy on their life to provide income to the other spouse in the event they pre-decease their partner.

 There are many factors that determine how you solve this problem. 

Do both spouses work? 

Do they both have pensions?  

What are the health profiles of each spouse? 

What other assets and income sources are available? 

  To name a few. 

 I recently encountered a case where Pension Max was not the desired solution sought by the client.  “Hence, the phrase Pension  Mini.”  Rather than oversell and attempt to convince them Pension Max was what they needed, we sought out our client’s goals and concerns and put a strategy together that worked for them.  In the end, we both walked away satisfied with the outcome.

Case Study:

Successful Husband and Wife both 57 and good health Husband partially retired

Wife retiring with large pension from a prominent private companyMonthly Single Life Pension of $7,800/month

Joint Payout with 50% reduction at her death was $7,200/month 

Other assets and income sources were available

 Solution: Pension Mini

Purchased Level 15 Year Term for 750K on the wife Husband was concerned only if the wife passed away during the next 15 years

After that he felt he had enough assets to make up most of the $43,000 of income he forgoes by not taking the survivor payout.

Here are some important Planning Opportunities with Permanent Life Insurance under American Tax Relief Act of 2012.

Tax Deferral and Tax Avoidance will become increasingly popular. Permanent life insurance has the ability to not only offer tax‐free death benefits but also tax deferral and tax‐free access to cash values. If properly structured in a trust life insurance death proceeds can also avoid estate taxes.

The IRR offered by life insurance may prove to be a viable alternative to non‐performing assets. The internal rate of return or IRR on the death benefit can be competitive investment alternatives for clients with non‐performing assets in their portfolios like CDs, Muni‐Bonds and Money Market accounts. By liquidating some of this dead money and leveraging it into a tax‐free death benefit, these clients could leave their heirs with a much larger windfall.

 Charitably inclined clients may opt to donate appreciated securities vs. cash to charities to avoid the 23.8% Cap Gains rates. The client may wish to use cash instead to purchase life insurance as a wealth replacement vehicle for the donated assets and use the new charitablededuction to help offset the cost of the life insurance.

The increased tax rates may increase the popularity of non‐qualified deferred comp plans. Deferring income for high wage earners until retirement when their incomes are less may prove to be advantageous. Permanent life insurance will remain a prevalent choice to informally fund such arrangements.

LinkedIn recommendations should be given as well as asked for.

As a referral based practitioner I value the fact that my clients can and do check me out via my references. What better way to build rapport and trust from the start.

A simple real life reason as to why this man purchased life insurance.

By: Ben Stein’s DREEMZ

Now for a few words about the men and women who sell life insurance: Life is an extremely uncertain and difficult process. In it, we find many people and situations that bedevil us.

 There are bullies and cheats in school and in adult life. There are tricksters and liars and recessions and illnesses. There are people who make it their life work to torment those around them. And there is fear of pain, of loneliness, of economic insecurity, of life itself.

In this world, many tens of millions of us are blessed enough to find a husband or a wife, a soul mate, with whom we share our lives. If these bonds endure for a long time or even a short time, we know that, in a world where roughly 7 billion people do not care if we live or die, this mate cares about our every pain and ache and every mood and touch.

In my own small world, I have been married for roughly 42 years to a wonderful woman. We have had our ups and downs, but she is by far the finest human being I know. Her kindness and caring and indulgence of me and my endless faults and cruelties is superhuman.

Partly as the result of her own labor when she was a lot younger, partly as the result of my parents’ work and prudence, partly as a result of my own hard work and good fortune, she has become accustomed to a certain comfortable way of life.

 We don’t drive Bentleys or wear tiaras or Rolexes, but we live decently. She grew up in far more modest circumstances, and it gives her great pleasure to live the way she does — the way we do. The cruel truth is that, by almost every available metric, it looks as if I will predecease her.

 When that happens, if it does, she is going to have to accustom herself to a very different way of life from what we have now: a lonely, empty home, at least for a while, no one to share her memories with — because we were basically barely more than children when we met, and no one to give her medicine when she has heartburn.

The one thing I can give her after I am gone — I hope — is freedom from fear of economic insecurity. I can, and plan to, leave her enough so that she can live out her days without having to worry about paying for the basics and a few luxuries of life.

 I would think that every spouse, especially every breadwinner, wants to do the same for his mate. Mostly, in my case, it will come from pensions I earned while working in Hollywood and from my savings and investments (which some years look good and some years look bad).

But a large chunk will come from life insurance. I can, and have, arranged that, when I enter immortality and say hello to my parents, she will not have to worry about money, at least not about money at a reasonable level. With respect, it is a moral duty for husbands to do something like this for their wives and minor children — to leave them in economic security, at least of a basic sort, when they pass on.

 The men and women who can make that happen even in the worst, rockiest economic climates, even in times of extreme uncertainty are called insurance agents (or brokers).

 They sell two of what Franklin Delano Roosevelt considered the most basic freedoms of human beings: freedom from fear and freedom from want. They make certain that the breadwinner can show his love (or her love) in even the most desperate situations. I have seen the difference they have made in the lives of family left behind. It is dramatic.

 I wish I could show to every man who has not bought life insurance, or enough life insurance, how fearful those left behind without enough money are, and how relatively comforted and grateful those who have enough insurance are.

 If husbands could take a moment to foresee what their potential widows’ lives would be like without their regular paycheck or pension check, their very next call would be to their insurance agent.

 Of course, times are tough. We all know that. Almost everyone has been hit hard. I know I have been. But what is more of a necessity than keeping your loved ones secure? What expense is more responsible and adult than sacrificing now to take care of those you love down the road when the inevitable happens?

In the history of the modern world, have there been bad financial times?

During those bad times, even during the Great Depression were there people that made money?

Was it the people that planned and prepared, or the people that just let stuff happen?

Which one do you want to be? When do you want to get started? 

Here are some important Planning Opportunities with Permanent Life       Insurance under American Tax Relief Act of 2012

• Tax Deferral and Tax Avoidance will become increasingly popular. Permanent life insurance has the ability to not only offer tax‐free death benefits but also tax deferral and tax‐free access to cash values. If properly structured in a trust life insurance death proceeds can also avoid estate taxes.

• The IRR offered by life insurance may prove to be a viable alternative to non‐performing assets. The internal rate of return or IRR on the death benefit can be competitive investment alternatives for older clients with non‐performing assets in their portfolios like CDs, Muni‐Bonds and Money Market accounts. By liquidating some of this dead money and leveraging it into a tax‐free death benefit, these clients could leave their heirs with a much larger windfall.

• Charitably inclined clients may opt to donate appreciated securities vs. cash to charities to avoid the 23.8% Cap Gains rates. The client may wish to use cash instead to purchase life insurance as a wealth replacement vehicle for the donated assets and use the new charitable deduction to help offset the cost of the life insurance.

• The increased tax rates may increase the popularity of non‐qualified deferred comp plans. Deferring income for high wage earners until retirement when their incomes are less may prove to be advantageous. Permanent life insurance will remain a prevalent choice to informally fund such arrangements.

• Making permanent the $5M Estate/Gift Tax exemption will assist in funding ILITs without the hassle of having to use annual Crummey powers. This may likely increase the use of life insurance inside ILITs due to the relatively simple admin issues as compared to other alternatives like GRATs. SLATs and CLATs.

• Estates under $5M may still have death taxes. Several states have their own estate and inheritance taxes with much lower exemption limits. Combine this with the potential probate costs and many clients may still find the need for estate liquidity offered by life insurance.