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People from All Income Levels Can Benefit from Life Insurance

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Find out how, and discover how to avoid estate tax pitfalls.

In essence, life insurance ensures against forced change. If a household income is reduced following a death, life insurance proceeds can cover the mortgage to keep a family in the only home they know; help a living parent continue to save for her kids’ educations; or allow a father who looses his stay-at-home wife to pay for daycare so he can continue working at a job he loves.

In all these instances, the life insurance policy fills a financial void. But don’t discredit life insurance as a potential vehicle for clients who have enough assets to cover these expenses, regardless of an income loss. Tax advantages make life insurance a desirable planning contract for the wealthy, as it can be used to provide funds to children or grandchildren, as well as to non-family members. Anyone can be named as beneficiary, or there may be multiple beneficiaries.

It is incumbent upon producers to become extremely knowledgeable about the many uses of life insurance and how this product can help clients address a variety of financial security issues as part of managing the planning process. There are two courses producers can take to help them serve their clients more effectively, and you should certainly consider pursuing one, if not both: the Life Underwriter Training Council Fellow (LUTCF) and the Chartered Life Underwriter® (CLU®) designation programs, both of which are available through The American College (www.TheAmericanCollege.edu).

The LUTCF program is an accelerated sales training program for insurance professionals.  By combining essential product knowledge with basic planning concepts, the LUTCF has helped thousands of insurance professionals boost their production by as much as 40 percent. The American College and the National Association of Insurance and Financial Advisors (NAIFA) jointly confer the LUTCF designation.

The Chartered Life Underwriter® designation is widely considered as the highest standard of knowledge and trust in the insurance industry. This prestigious course of study helps financial services professionals advance their careers by providing in-depth knowledge on the insurance needs of individuals, business owners and professional clients. CLU® designees often generate an average of 27 percent more production income than their peers in the first year alone.

Other Strategies and Uses for a Life Insurance Policy

Charitable Giving

Life insurance contracts can replace funds parents may have given to charity during their lifetimes. In these situations, the children are named beneficiaries of the life insurance that covers amounts to offset the earlier charitable contributions. Policies also can be given to or purchased by charities with specific contributions to pay the premiums.

Advisors can help clients identify reputable charities as part of a philanthropic or estate plan.  Two outstanding websites that can aid advisors in this effort are GuideStar (www.guidestar.org) and Charity Navigator (www.charitynavigator.org).  These sites provide essential financial information about individual charities, and advisors can also use these sites to find data pertaining to a specific charity’s mission, initiatives, leaders, goals, accomplishments and needs that they can share with their clients — all at no charge.

Family Business

Life insurance pays cash to the beneficiary after the death of the insured, making it very effective in equalizing the treatment of children who will not receive any ownership interest in an ongoing family business. It also can be used to pay any taxes on a parent’s estate (due within nine months of death), preventing the liquidation of the family business.


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