As important as saving and investing are to reaching your goals, so is managing the risks that can threaten those plans.
Insurance should be thought of as a risk management tool, and as something that provides protection for you, your estate and the people that you love.
Here at Entirety Financial, we use detailed financial planning software powered by e-money called Wealth Vision.
This holistic approach allows us to review our clients’ entire financial picture regularly to help identify potential risk and provide strategies for adequate protection.
Below is a list of insurance choices and some of the risk management they provide:
Life Insurance
Whether it is term life, permanent life or a more complex policy, we have the strategies to help protect you and your family. Life insurance is used to cover expenses that you are not here to cover yourself. Everything from funeral expenses, income replacement, college funding to things like taxes, charitable gifting, and estate planning can be covered with the appropriate life insurance policy.
Some of the life insurance planning tools and products available to us here at Entirety Financial include:
- Term Life Insurance: If you have a specific time-horizon over which you need protection, then Term Life Insurance policies are definitely worth considering. These policies are designed to provide short to intermediate term coverage at an affordable cost. For instance, if you have young children whom you wish to provide for until they are older – say 15 to 20 years – or if you have an unpaid mortgage that you want your family to pay off in the event of your untimely passing, then a Term Life policy is worth considering.
- Permanent Life Insurance: Permanent life policies not only provide insurance protection for life, but are also a great way to grow the value of your policy. The enhanced cash value might then be tapped subsequently, to meet future needs, such as funding college/university education of a child, or creating an additional retirement income stream.
- Participating (or Whole) Life Insurance: Depending on what your investment goals are, our insurance advisory team might recommend a Participating Life Insurance product for you. With these products, the cash value and death benefit payout of your policy can experience tax-advantaged growth within the policy. You might also be eligible to borrow tax-free funds (for any purpose you might deem fit) against the cash value of your policy
- Universal Life Insurance: If you are in search of higher savings and earnings potential from your life insurance policy, then a Universal Life Insurance might be what our advisers recommend. These policies also offer great flexibility, as the amount insured can be changed, and premiums can be adjusted (increased, deferred, decreased), while enabling policy-holders to also withdraw part of the cash value
- Variable Life Insurance: If you are someone looking to leverage stock market performance through your insurance policy, then a Variable Life Insurance product might be what you need. They provide policy-holders the option to invest their cash value in a host of insurer-recommended stocks, bonds, money-market funds and other investment products. Our insurance specialists will make you aware of the all the risks and opportunities associated with a variable insurance product
*The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.
Disability Income Insurance
Individual disability income insurance helps preserve a portion of your income and provides financial protection if you become disabled for an extended period of time. Your ability to earn an income is one of your greatest assets and disability income insurance is a way to insure against the loss of that ability.
Long-Term Care Insurance
Among 65-year-olds, 70% will use some form of long-term care in the years ahead, according to the U.S. Department of Health and Human Services.
Regular health insurance doesn’t cover long-term care and Medicare only covers short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab. It does not pay for custodial care, which includes supervision and help with day-to-day tasks.
Paying for these expenses yourself can be very expensive and you won’t be able to qualify for help through Medicaid until you have exhausted most of your savings.
Buying long-term care insurance might not be affordable if you have a low income and little savings. The National Association of Insurance Commissioners says some experts recommend spending no more than 5% of your income on a long-term care policy.
People primarily buy long-term care insurance for 2 reasons:
To protect their savings: Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semi-private nursing home tops $80,000 a year, according to Genworth’s 2016 Cost of Care Survey.
To give you more choices of care: As with most things, the more you can spend, the better quality of care you can get. If you have to rely on Medicaid, your choices will be limited to nursing homes that accept payments from the government program.
Cited from NerdWallet
Annuities
What are Annuities?
An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time.
Guarantees are based upon the claims paying ability of the issuing company.
Annuities provide three things:
- Periodic payments for a specific amount of time. This may be for the rest of your life, or the life of your spouse or another person.
- Death benefits. If you die before you start receiving payments, the person you name as your beneficiary receives a specific payment.
- Tax-deferred growth. You pay no taxes on the income and investment gains from your annuity until you withdraw the money.
Why Do People Buy Annuities?
People typically buy annuities to help manage their income in retirement.
Please note that:
Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.
