6 problems solved by Life Insurance. Life insurance is the only certain way for you to create “instant” capital. That capital can help you solve multiple personal and business problems. To understand how life insurance can, and should, be used, you must first focus on the problems. Once you have the problems identified the planning team will then match the products. Then the planner will attempt to formulate a strategy for you.
6 problems solved:
Problem No. 1: Lack of liquidity
Not enough cash to pay death taxes, administrative costs, attorneys’ fees, appraisal fees, and other death-generated expenses as they fall due. (This is one of the major and most obvious reasons)
Problem. No 2: Improper disposition of assets
The wrong thing goes to the wrong person at the wrong time in the wrong manner. Safeguarding, investing, and distributing income from complex property or the task of running a business interest This can be an awesome responsibility and often is thrust upon persons who are unable or unwilling to handle it.
Problem No. 3: Insufficient cash for major expenses
Life insurance can help when there’s too little income or capital at the client’s death, disability, retirement, or for special needs. College costs continue to climb and exhausts funds that might otherwise have been used for retirement. In return this leaves many facing retirement with debt rather than assets. Clients are living longer, and having greater medical expenses during retirement and higher standards of living with consequent maintenance costs. Some have more time to travel, try new hobbies, and spend more money than they did before they retired.
Problem No. 4: Asset stabilization
Sometimes, the value of the client’s assets (particularly real estate portfolios or business interests) has not been stabilized or maximized. The cash required to pay taxes for real estate often far exceeds the cash available to pay the taxes. The result is often a forced sale of the real estate at the worst possible time. Likewise, a business which loses a key employee through death often loses value needlessly. Without a “buy-sell” agreement, the client’s family will seldom obtain a full and fair price for a business interest. This is a result of the absence of a buy-sell agreement between business owners. Or at best a forced sale at pennies on the dollar (a “fire sale”).
Problem No. 5: Excessive transfer costs
The cost of transferring wealth from one generation to another continues to increase. This is because of increasing federal and state taxes, probate costs, attorneys’ fees, and other slippage. In some instances the ownership of property is set up in a manner that aggravates rather than minimizes the tax burden and other costs. This also applies to multiple probates.
Problem No. 6: Special needs
Successful clients often express a strong desire to “give back” to their schools, churches, other charitable organizations, and etc. Many have spouses or children with certain gift or handicaps that require larger than usual amounts of both capital and income. This also includes those who have asset management needs.