Which life insurance policy is right for you?

Life insurance is a complex amalgamation of legal, tax and economic elements. Basically, it is a unique wealth creation tool that assures the accumulation of a desired amount of liquid capital at death. Depending on the plan of insurance, it may also create more or less capital for lifetime needs.

Through its unique capital creation feature and tax advantages, life insurance can help people solve a host of personal and business problems. However, insurers offer a wide variety of life insurance policies that are suited to a broad host of financial planning problems. Once an advisor identifies a client's problems, the advisor must match the appropriate life insurance products to the problems. To do so, the planner must first fully understand the legal, tax and economic elements of life insurance and the particular features of each type of policy.

This primer provides an overview of the products available, and is designed to help you gain perspective and balance in your practice. 

Advantages

The advantages offered by life insurance vary with the type of policy and the problem to which the policy is applied. However, all types of life insurance policies provide certain favorable features, which are listed below.

1. Life insurance provides a guarantee of large amounts of cash payable immediately at the death of the insured. The amount of the death benefit payable is usually significantly greater than the premiums paid for the policy.
2. Life insurance proceeds are not part of the probate estate. The only way life insurance benefits become part of probate is when they are paid to or for the benefit of the estate of the insured. Therefore, the insurance company can pay death proceeds to the beneficiary without the delay caused by administration of the estate.
3. There will be no public record of the death benefit amount or to whom it is payable.
4. Life insurance policies generally have some protection against creditors of both the policyowner and of the beneficiary. The amount of protection varies from state to state.
5. Life insurance cash values provide instant availability to cash through policy loans. The interest rate (or interest-rate formula) for policy loans is known in advance and is usually lower than the rate applicable to loans from other sources.
6. The death benefit proceeds from a life insurance policy generally are not subject to federal income taxes.
7. The increases in the cash value of a life insurance policy enjoy federal income tax deferral. Interest earned on policy cash values generally is not taxable unless or until the policyowner surrenders the policy for cash.
8. Life insurance proceeds often are exempt from state inheritance taxes.
9. Despite some highly publicized life insurance company insolvencies, the life insurance industry remains unparalleled in safety among the financial intermediaries such as the savings and loan, banking, and mutual fund industries. It is commonly noted that not a single dollar of death claim has been lost or denied because of a life insurance company insolvency or failure.

Disadvantages

1. Life insurance is not available to persons in extremely poor health (although almost all individuals in poor health can obtain insurance).
2. Life insurance is an extremely complex product that is hard to evaluate and compare. The time required to gather policy information, decipher it, and compare it with other policies discourages purchasers from engaging in comparison shopping.
3. The cost of coverage reduces the amount of funds available for current consumption or investment.

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If you have life insurance shouldn't you have Living Benefits?

This graphic is a great example of utilizing Life Insurance to its fullest. The accumulation of several policies can be expensive and possibly counter productive. 

What are Living Benefits on a life insurance policy?

Living Benefits and Accelerated Death Benefits are terms used interchangeably on a life insurance policy. Both offer access to funds that can be used for chronic, critical and terminal illnesses. When you choose to use your living benefits, you are accelerating your life insurance policy’s face amount so that you can use the funds while you are alive.

 Statistics show that large numbers of Americans may become terminally, critically or chronically ill.

■ Every 40 seconds someone has a stroke

■ Every 34 seconds someone has a heart attack

■ The average cost of a severe heart attack, including direct and indirect costs, is about $1 million

■ 1 in 2 men and 1 in 3 women develop cancer in their lifetime

■ Chronic and critical illnesses may result in the inability to perform activities of daily living such as bathing or 

dressing yourself without help or assistance.

While many of us have health insurance, research has indicated that health care expenses are a significant 

contributing factor in many personal bankruptcies.

Life insurance with living benefits provides the option to access the face amount and receive cash while the 

insured is alive. The Accelerated Death Benefits can provide funds at a time that the insured and his/her 

family need them most.

You gotta blog

Great insurance agency marketing begins with a great blog. If you’re not blogging consistently (at least once a week), you’re missing an important opportunity to impress prospects and clients.

Here are 7 things a blog can do for you:

1.  Drive website traffic. A blog, preferably with original content, helps drive clients and prospects to your website. It gives them a reason to visit and a reason to stay.

2.  Convert traffic into leads. Your blog will help convert visitors into interested prospects. Prominent and professional calls-to-action will help you glean prospect information and will increase inbound inquiries.

3.  Establish credibility. You can demonstrate expertise by offering timely and topical content. Answer questions from prospects and customers. If you’re consistently creating helpful content, it will establish you as an expert in your field.

4.  Provide a content baseline. Share or re purpose your blog content. Send prospects links to your blog, leverage your blog in e-marketing campaigns, share your blog with social-media contacts and post your blog to groups on LinkedIn. Original content will help carry your brand and messaging to thousands of new prospects.

5.  Convert to case studies, ezines and vlogs. A succinct blog can be converted into a one-page case study, a 400-word article or a recorded video. This re purposed content further extends your reach and expertise. Convert your blog entries into recorded videos and post them to YouTube to reach a larger audience.

6.  Improve SEO. Blogs help improve search engine optimization. Your original content is indexed by search engines such as Google and Bing and helps prospects find your website through organic searches.

7.  Promote website stickiness. Your blog ought to be one of your most-visited website areas and should encourage visitors to stick around. Showcase your expertise with timely, topical and relevant content, which will encourage readers to explore the rest of your site.

A blog can make or break your e-marketing efforts. If you don’t have time to create a consistent, compelling blog, consider outsourcing this essential marketing tool to an expert.

Alan Blume is an author, and as founder and CEO of StartUpSelling Inc., he works with small businesses on lead generation, sales, marketing, website design and branding.