Aug 24, 2015 | Life Insurance, Retirement
Life insurance truly is a multipurpose solution. Savvy financial professionals are leveraging the power of innovative life insurance strategies to counteract some key tax planning and estate transfer needs for affluent and super-affluent consumers alike. Definitions of wealth categories vary, but for the purposes of this article, affluent consumers are defined as having $1 million to $5 million in investible assets (excluding their home) and super-affluent clients as having $5+ million. First, let’s explore a particular wealth transfer issue that, in my experience, tends to impact affluent as well as super-affluent consumers. Then, we’ll review some other challenges that may impact clients in the two wealth categories. 1. Explore the IRA wealth transfer issue Many people who have been successful in saving for retirement have established a sufficient nest egg to be able to create a legacy for their children, grandchildren and favorite charities, leaving them to wonder how best to leverage their qualified or tax advantaged retirement plans. A common question is whether individual retirement account (IRA) owners should take larger withdrawals and pay income taxes now, or take out as little as possible during their lifetime, leaving a likely income tax burden for their heirs and beneficiaries. If an IRA owner seeks to protect loved ones and maximize wealth transfer, he or she can utilize life insurance to minimize the tax burden that inheriting an IRA may impose on a beneficiary. Two solutions described here — a “tax offset” strategy and a “tax elimination” strategy — can help the client maximize the after-tax value of the IRA or eliminate taxes paid on the IRA inheritance. Keep in mind, however,...
Aug 10, 2015 | Retirement
Speakers had more meat for the annuity community than for the long-term care insurance (LTCI) industry today at the White House Conference on Aging. The Obama administration used the 2015 event to promote a U.S. Department of Labor fiduciary standard proposal that the National Association of Insurance and Financial Advisors (NAIFA) hates — and it unveiled a Labor Department retirement benefits annuitization proposal that retirement plan advisors might like. The administration also announced smaller-scale proposals for improving retirement benefits and caregiver support. President Obama said in a speech at the conference that preparing for retirement is getting tougher. “Too many older Americans leave the workforce without having saved enough for a dignified retirement,” Obama said. “It’s not as if they haven’t tried. There are a lot of folks out there who work really, really hard, but, at the end of the day, still don’t have enough of a nest egg.” Presidents have been organizing the conference events roughly every 10 years since the days of the Kennedy administration. Belle Likover, a social worker, talked in a video shown during the conference about meeting the late Rep. Claude Pepper, a leader in aging policy efforts, at the 1995 White House Conference on Aging. “The thing that strikes me,” she said, “is that the issues are the same year after year.” But, in some cases, all of the talk at an aging conference turns into changes that have major effects on insurers, producers and policyholders. For a look at some of the changes discussed at the White House today, read on. 1. Annuitization selection safe harbor clarification Labor Secretary Thomas Perez promoted the Obama...
