https://grreid.com/ G.R. Reid Blog G.R. Reid Associates LLP - G.R. Reid Wealth Management, LLC - G.R. Reid Health Management, LLC - G.R. Reid Insurance Services, LLC - G.R. Reid Consulting, LLC - Woodbury, New York - Great Neck, NY

A

A

A

News

Our news articles are posted on a regular basis to give our clients relevant and timely information about matters pertaining to our financial services. Browse through our current and archived articles to learn more.

Category: Life Insurance

Understanding Life Insurance

Planning to meet the financial needs of your survivors is one of the most important and fundamental steps in creating a sound financial strategy for you and your family. This step usually requires the purchase of a life insurance policy to ensure that your family’s needs will continue to be met, even after your untimely death cuts your earnings potential short. 

Let us help you understand and select the right policy for you:

Corporate Sponsored Plans
Term Life Insurance
Universal Life Insurance
Whole Life insurance
Single Premium Life Insurance
Survivorship Life Insurance
Variable Universal Life Insurance


Term Life Insurance

is the simplest form of life insurance. It provides affordable protection for a specific period of time at a scheduled premium level. Premiums may increase at the end of the term.

You choose a coverage level, a term (usually 5, 10, 15,  20 & 30 years) and name a beneficiary, that is, the person you want to receive the benefit if you die. If you die while your term life insurance policy is in force, the death benefit is paid to the beneficiary you chose.

At the end of the term, you can renew your coverage often at a higher premium, without having to provide evidence of good health. You can also convert it to a permanent life insurance policy which builds cash value and may earn dividends.

Term insurance can help you meet a number of personal and business needs and is often a good choice:

When life insurance is essential but dollars are scarce

For a well-defined period of time

To protect your family (insurance benefits can help pay a mortgage or fund a child’s education)

To protect your business (benefits can ensure business continuation by helping to cover business expenses)

 

Universal Life Insurance

Universal life products give you the flexibility to choose the amount of protection that best suits your family or business. It allows you to increase or decrease coverage as insurance needs change. Increased coverage may be subject to underwriting requirements. You may not decrease your coverage below the required minimum. A decrease may result in a surrender charge being applied against the policy’s cash value. With universal life insurance, you control the amount and frequency of payments. Looking towards the future? You have the option to increase the premium or make lump sum contributions, subject to limits as specified in the policy. The extra dollars grow tax-deferred, and may increase the cash and death benefit values. On the other hand, in a temporary cash crunch, you can pay less than the scheduled premium and let the policy’s accumulated cash value pay the remainder of the monthly charges. Universal life products can be customized with innovative policy features to fit your lifestyle.

 

Variable Universal Life:

VUL offers permanent insurance protection, usually through age 95. Simply put, this means that as long as you meet the policy costs, you are guaranteed protection. Some term insurance products periodically require proof of insurability to continue coverage. While there are term products that can cover you for life without additional requirements, their rising costs can make them prohibitive.

Additionally, while all term insurance is purchased with after-tax dollars, VUL has the potential to satisfy its policy costs with pre-tax dollars (policy’s cash value accumulates on a tax-deferred basis), further strengthening the VUL strategy.

At first look, term insurance may seem attractive because you can purchase large amounts of coverage at a relatively inexpensive price. But, the cost should not be the only consideration that goes into your decision making process. For instance, consider the impact of becoming uninsurable at the end of the term period due to a health condition. You may save a few dollars today, but the eventual cost of un-insurability may be the death benefit your beneficiaries will never receive.

Permanent protection also offers a host of policy riders that can further enhance the effectiveness of your policy. Term insurance provides a much more limited range of riders.

 

Variable Universal Life has Cash Value Accumulation
You can also allocate a portion of each VUL premium to one or several investment divisions, or a fixed-rate general account option. These investment divisions typically include stock, bond, balanced, international, and money-market portfolios. Earnings within the investment divisions will vary with market conditions and your principal may be at risk. Premium payments plus investment earnings, less policy fees and charges, serve as your policy’s cash value. Usually, you can allocate as little as 1% of the premium to any of the investment divisions in a VUL policy. It should be noted that a decrease in your policy’s cash value may decrease the overall amount of insurance coverage.

Term insurance has no cash value. You do have the option of “investing the difference” in growth-oriented products, like mutual funds. The value of your mutual fund account will vary with market conditions. Your principal may be at risk and, in most instances, mutual fund earnings are taxable each year. This means that you have less money working towards achieving long term goals. Most mutual funds also require a minimum dollar amount to participate in a particular portfolio.

Investing in vehicles like mutual funds is still a solid strategy to follow. But you have to have the discipline to carry this out. If you neglect to put money aside for the future, the “buy term and invest the difference” strategy collapses. Without the ‘invest’ portion, you are left with a term policy that is incapable of accumulating funds for the future.

VUL policies are sold by prospectus only. Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. Both the product prospectus and the underlying fund prospectuses contain this and other information about the product and underlying investment options. You should read the prospectuses carefully before investing.

 

Survivorship Life Insurance

Under one arrangement, you may want to establish an irrevocable life insurance trust to purchase the insurance policy, with your heirs as beneficiaries. (This keeps the insurance proceeds out of your estate for tax purposes.) By means of a will, estate assets then pass to the surviving spouse at the first death. At the second death, the insurance death benefit is paid, with the policy proceeds passing directly to the named beneficiaries. They can then use the money to replace assets lost to taxes.

• Price. Since two lives are insured, premiums are generally lower than for two single-life policies.

• No second guessing. There is no need to plan based on who will die first.

• Underwriting is generally more liberal than that for a single life policy, since two lives are insured and the benefit is paid at the death of the second. A proposed insured who may have been denied life insurance coverage by a single life insurance product, may be approved for coverage by a survivorship life insurance product. Keep in mind that not every person who has been declined for coverage for a single-life policy is necessarily eligible for coverage under a survivorship life insurance policy.

 

Survivorship can meet other needs as well, and is commonly used to benefit:

• Children with special needs. The insurance can provide guaranteed funding for a trust to provide for a child with disabilities after the death of the second parent.

• Charitable gifts. This coverage can help create a living legacy for a favorite charitable organization after both spouses’ needs have been provided for.

• You work hard to build up an estate over your lifetime — and you may end up a millionaire. While taxes may be inevitable, you can help counter the loss with a Survivorship Life Insurance policy.

 

Whole Life

Whole life is permanent life insurance protection that protects your family or business no matter what lies ahead, from the day you purchase the policy until you die, as long as you pay the premiums when due.

Whole life insurance can be a solid foundation upon which to build a long-term financial strategy because it guarantees a lifetime of protection for your family or business.

Generally, the death benefit can be used for:

• Survivor needs
• Mortgage protection
• Wealth transfer
• Charitable giving
• Business needs

 

For more information and to arrange an appointment to discuss your life insurance needs, click to contact us.

Posted on in category: Life Insurance | Tagged , , | Leave a comment

What Are the Basic Types of Life Insurance?

Article-Types-of-Life-Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One of the best ways to protect against the financial consequences of a primary wage earner’s premature death is life insurance. However, only about 6 out of 10 Americans actually own life insurance and half believe they do not have enough.1 However, choosing from the many types of life insurance policies that are available can be a difficult process. A few main categories are described here to help you search for a life insurance policy that is appropriate for you.

Keep in mind that the cost and availability of insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving insurance, it would be prudent to make sure that you are insurable.

 

 

Term Life Insurance

Term life insurance is the most basic and usually the most affordable. Policies can be purchased for a specified period of time. If you die within the time period defined in your policy, the insurance company will pay your beneficiaries the face value of your policy.

Policies can usually be bought for one- to 30-year time spans. Annual renewable term insurance usually can be renewed every year without proof of insurability, but the premium may increase with each renewal. Term insurance is useful if you can afford only a low-cost option or you need life insurance only for a certain amount of time (such as until your children graduate from college).

 

Permanent Life Insurance

The other major category is permanent life insurance. You pay a premium for as long as you live, and a benefit will be paid to your beneficiaries upon your death. Permanent life insurance typically comes with a “cash value” savings element. There are three main types of permanent life insurance: whole, universal, and variable.

Whole life insurance.
This type of permanent life insurance has a premium that stays the same throughout the life of the policy. Although the premiums may seem higher than the risk of death in the early years, they can accumulate cash value and are invested in the company’s general investment portfolio. You may be able to borrow funds from the cash value or surrender your policy for its face value, if necessary.

Access to cash values through borrowing or partial surrenders can reduce the policy’s cash value and death benefit, increase the chance that the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. Additional out-of-pocket payments may be needed if actual dividends or investment returns decrease, if you withdraw policy values, if you take out a loan, or if current charges increase.

Universal life insurance.
Universal life coverage goes one step further. You have the same type of coverage and cash value as you would with whole life, but with greater flexibility. Once money has accumulated in your cash-value account, you may be able to vary the frequency, as well as the amount, of your premiums. In fact, it may be possible to structure the policy so that the invested cash value eventually covers your premium costs completely. Of course, it’s important to remember that altering your premiums may decrease the value of the death benefit.

Variable life insurance.
With variable life insurance, you receive the same death protection as with other types of permanent life insurance, but you are given control over how your cash value is invested. You have the option of investing your cash value in stocks, bonds, or money market funds. The value of your policy has the potential to grow more quickly, but there is also more risk. If your investments do not perform well, your cash value and the death benefit may decrease. However, some policies provide a guarantee that your death benefit will not fall below a certain level. The premiums for this type of insurance are fixed and you cannot change them in relation to the size of your cash-value account.

Variable universal life is another type of variable life insurance. It combines the features of variable and universal life insurance, giving you the investment options as well as the ability to adjust your premiums and death benefit.

As with most financial decisions, there are expenses associated with life insurance. Generally, life insurance policies have contract limitations, fees, and charges, which can include mortality and expense charges, account fees, underlying investment management fees, administrative fees, and charges for optional benefits. Most policies have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the policy. Any guarantees are contingent on the claims-paying ability of the issuing company. Life insurance is not guaranteed by the FDIC or any other government agency; it is not a deposit of, nor is it guaranteed or endorsed by, any bank or savings association.

Withdrawals of earnings are taxed as ordinary income and may be subject to surrender charges plus a 10% federal income tax penalty if made prior to age 59½. Withdrawals reduce contract benefits and values. For variable life insurance and variable universal life, the investment return and principal value of an investment option are not guaranteed and fluctuate with changes in market conditions; thus, the principal may be worth more or less than the original amount invested when the policy is surrendered.

Variable life and variable universal life are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses before investing. The prospectus, which contains this and other information about the variable life or variable universal life insurance policy and the underlying investment options, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

 

Source: 1) LIMRA, 2013
The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2014 Emerald Connect, LLC.

 

 

Posted on in category: Financial & Wealth, Life Insurance | Tagged , , | Leave a comment

Wealth Management :: Life Insurance: How Can I Upgrade My Insurance — Tax-Free?

Responding to the changing needs of consumers, the life insurance industry has developed some alternatives that go much further in satisfying a variety of financial needs and objectives than some of the more traditional types of insurance and annuities.

Advancements
Modern contracts offer much more financial flexibility than traditional alternatives do. For example, universal life and variable universal life insurance policies allow policy owners to adjust premiums and death benefits to suit their financial needs.

Modern contracts can also provide much more financial control. Whereas traditional vehicles, such as whole life insurance and fixed annuities, provide returns that are determined by the insurance company, newer alternatives enable clients to make choices that help determine returns. For example, variable annuities and variable universal life insurance allow investors to allocate premiums among a variety of investment subaccounts, which can range from conservative choices, such as fixed-interest and money market portfolios, to more aggressive, growth-oriented portfolios. Returns are based on the performance of these subaccounts.

There are contract limitations, fees, and charges associated with variable annuities and variable universal life insurance, which can include mortality and expense risk charges, sales and surrender charges, investment management fees, administrative fees, and charges for optional benefits. Withdrawals reduce annuity contract benefits and values. Variable annuities and variable universal life insurance are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. Any guarantees are contingent on the claims-paying ability of the issuing company.

Withdrawals of annuity earnings are taxed as ordinary income and may be subject to surrender charges plus a 10 percent federal income tax penalty if made prior to age 59 ½. The investment return and principal value of an investment option are not guaranteed. Because variable annuity subaccounts fluctuate with changes in market conditions, the principal may be worth more or less than the original amount invested when the annuity is surrendered.

The cash value of a variable universal life insurance policy is not guaranteed. The investment return and principal value of the variable subaccounts will fluctuate. Your cash value, and perhaps the death benefit, will be determined by the performance of the chosen subaccounts. Withdrawals may be subject to surrender charges and are taxable if you withdraw more than your basis in the policy. Policy loans or withdrawals will reduce the policy’s cash value and death benefit , and may require additional premium payments to keep the policy in force.

There are differences between variable- and fixed-insurance products. Variable universal life insurance offers several investment subaccounts that invest in a portfolio of securities whose principal and rates of return fluctuate. Also, there are additional fees and charges associated with a variable universal life insurance policy that are not found in a whole life policy, such as management fees. Whole life insurance offers a fixed account, generally guaranteed by the issuing insurance company.

A Dilemma
So what should you do if you want to cash out of your existing insurance policy or annuity contract and trade into one that better suits your financial needs, without having to pay income taxes on what you’ve accumulated?

One solution is the “1035 exchange,” found in Internal Revenue Code Section 1035. This provision allows you to exchange an existing insurance policy or annuity contract for a newer contract without having to pay taxes on the accumulation in your old contract. This way, you gain new opportunities for flexibility and tax-deferred accumulation without paying taxes on what you’ve already built up.

The rules governing 1035 exchanges are complex, and you may incur surrender charges from your old policy or contract. In addition, you may be subject to new sales and surrender charges for the new policy or contract. It may be worth your time to seek the help of a financial professional to consider your options.

Variable annuities and variable universal life insurance are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity and variable universal life contract and the underlying investment options, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

G.R. Reid Wealth Management Services, LLC, offers you a talented, experienced team of professionals that have a broad range of financial expertise and complimentary market specific experience, necessary to help you achieve your financial goals. Please contact us to arrange an appointment.

Jason Reid Saladino and George G. Elkin are Registered Representatives offering Securities through American Portfolios Financial Services, Inc. Member: FINRA, SIPC. Investment Advisory products/services are offered through American Portfolios Advisors Inc., a SEC Registered Investment Advisor. G.R. Reid Wealth Management Services, LLC is not a registered investment advisor and is independent of American Portfolios Financial Services Inc. and American Portfolios Advisors Inc. Independent Portfolio Consultants is an independent financial consulting firm and is not affiliated with American Portfolios Financial Services Inc. and American Portfolios Advisors Inc. American Portfolios Financial Services Inc. and American Portfolios Advisors Inc. does not offer tax advice. Please consult with your tax advisor.

 

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc.
This material was written and prepared by Emerald. © 2013 Emerald Connect, Inc. All rights reserved.

 

 

Posted on in category: Financial & Wealth, Personal Insurance, Life Insurance | Leave a comment

Wealth Management :: Life Insurance: What Is a 1035 Exchange?

Named after Section 1035 of the Internal Revenue Code, a 1035 exchange allows life insurance policyowners (and annuity contract owners) to exchange an old policy (or contract) for a new one from a different insurance company without tax consequences. Of course, it must meet the requirements of Section 1035 in order for the transaction to be tax-free. This strategy can be especially beneficial to a person who purchased a life insurance policy or annuity contract many years ago that has less favorable contract stipulations than those available today.

A 1035 exchange applies only when it involves the same contract holder and the same type of contract. It gives the contract owner the flexibility to find another contract that features lower costs, a higher death benefit, or more investment choices. The cost and availability of insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before surrendering your “old” life insurance policy, it would be prudent to make sure that you are insurable.

Investors can also do partial 1035 exchanges for a portion of the total contract amount. In this case, the transferring company should notify the new company of the exchange amount that is investment versus gain, because any gain is subject to ordinary income taxes when withdrawn. Some companies do not recognize partial 1035 exchanges for tax reporting purposes. A tax professional should be consulted to properly track these amounts in the contract.

Nonetheless, a 1035 exchange can be an effective tool for contract holders who want to exchange older contracts for current, more useful ones.

The rules governing 1035 exchanges are complex, and you may incur surrender charges from your “old” annuity contract or life insurance policy. In addition, you may be subject to new sales, mortality and expense charges, and surrender charges for the new contract or policy.

Annuities have contract limitations, fees, and charges, which can include mortality and expense risk charges, sales and surrender charges, investment management fees, administrative fees, and charges for optional benefits. Annuities are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. Any guarantees are contingent on the claims-paying ability of the issuing insurance company. Withdrawals reduce annuity contract benefits and values. The investment return and principal value of an investment option are not guaranteed. Because variable annuity subaccounts fluctuate with changes in market conditions, the principal may be worth more or less than the original amount invested when the annuity is surrendered.

Variable annuities are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

 

G.R. Reid Wealth Management Services, LLC, offers you a talented, experienced team of professionals that have a broad range of financial expertise and complimentary market specific experience, necessary to help you achieve your financial goals. Please contact us to arrange an appointment.

Jason Reid Saladino and George G. Elkin are Registered Representatives offering Securities through American Portfolios Financial Services, Inc. Member: FINRA, SIPC. Investment Advisory products/services are offered through American Portfolios Advisors Inc., a SEC Registered Investment Advisor. G.R. Reid Wealth Management Services, LLC is not a registered investment advisor and is independent of American Portfolios Financial Services Inc. and American Portfolios Advisors Inc. Independent Portfolio Consultants is an independent financial consulting firm and is not affiliated with American Portfolios Financial Services Inc. and American Portfolios Advisors Inc. American Portfolios Financial Services Inc. and American Portfolios Advisors Inc. does not offer tax advice. Please consult with your tax advisor.

 

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc.
This material was written and prepared by Emerald. © 2013 Emerald Connect, Inc. All rights reserved.

Posted on in category: Financial & Wealth, Personal Insurance, Life Insurance | Leave a comment