Archive for the ‘Estate Tax Reduction’ Category

Lock Up $3 million TAX-FREE For Just 1.3% and NO PREMIUMS Over 10 Years…

Lock Up $3 million TAX-FREE For Just 1.3% and
This is a case I am working on for a couple of healthy 46 year old husband and 43 year old spouse who hate the idea of paying annual life insurance premiums.
Their goal is to create a legacy tax free for their children but they are not ready to make a big commitment financially at this young age but know its cheapest to start right now.
Here’s is what I suggested after uncovering a hidden pricing advantage in one insurance companies pricing software:
This is so simple….
1.    Pay a $40,000 premium year 1 only into a life insurance policy* with a $3 million tax free death benefit.
2.    Pay NO premiums “GUARANTEED” for the next 24 years. “Yes, guaranteed”.
3.    What do you do for 24 years of NO premium payments…Let life just sail by and just watch what ultimately happens to your finances, the economy, your children, your health etc. till you are 70 and 67 in this case.
4.    You tied up the life company when you are in perfect health with NO commitment that you would ever pay the future premiums beginning in year 25…also “GUARANTEED”.
5.    Premiums start in year 25 and they are just 1.9% of the death benefit!
Here’s a few things to think about:
1.    Where can you tie up a potential $3 million tax free asset for 1.3% for 24 years?
2.    Maybe at your age 70 and 67 you gift the policy to your children and they pay the premiums since they will collect the death benefit.
3.    What if your health changed for the worse. That $3 million starts to look like a valuable asset because your life expectancy just shortened.
4.    What if you and your siblings used this same idea and bought a policy on your parents or grandparents.
5.    Ever notice when you have money everyone else wants to invest it for you? Why not invest in your own family? That’s how “old money” gets old.. they keep perpetuating it in the same family.
Now that’s a legacy worth starting.

The big question is…

Do you have Investment Grade Life Insurance?
David D'Arcangelo
David D’Arcangelo

Race Car Driver Danica Patrick’s Quick Take…

Watch Danica Patrick talk about being prepared for the inevitable. Are you prepared?

Click to watch a few minutes…Danica talks life and death!

Case Study #8: Non-Reportable Tax FREE Money

Help me please…Consider 2 methods of Creating $5 Million Tax-Free…

…Which 1 method Would You choose?

Proposition: Do you have grandparents, parents, children or children planned for the future?
Question: Would you like to create and transfer $1 million to $25 million tax-free at your parents or grandparents generation to yourself or your children?

Explanation: This is a real case I am working on for a couple of healthy 50 year old couple who would never buy life insurance unless the premiums and potential where this motivating.

This is so simple….this is a strategy they brought to my office to get a second opinion:

  1. Pay a $21,575 premium per year into a life insurance policy* with a $5 million tax free death benefit.   .
  2. The Internal Rate of Return (IRR-that means the number is compounded back to year 1) at life expectancy at age 90 is 7.03% tax free or if it was a taxable investment they would need an equivalent of 11.71% to net 7.03%.

That is a very good return! Who has compounded taxable money for 40 years at 11.71%? Not many people we know.

But wait….Here is what I proposed for the same $5 million*:

  1. Pay a $44,750 premium for year 1 & 2.
  2. Pay NO premiums years 3-10.
  3. Pay $385 premium year 11
  4. Pay $1,620 premium year 12
  5. Pay $1,757 premium year 13
  6. Pay $1,946 premium year 14
  7. Continue to pay minimum premiums years 15 through the life of the policy

The Internal Rate of Return at life expectancy at age 90 is 9.64% tax free or 37% higher than the 7.03%.

If it was a taxable investment they would need an equivalent of 16.06% to net the 9.64%.

Minimum out-of-pocket cash and 37% higher tax free returns with moderate risk.

Which way would you fund the premiums…option 1 or option 2?
*This is an index life policy with a 6.5% annual crediting rate based on the performance of the S&P 500. The policy has a 12% annual cap cap on the crediting rate and a 0% annual floor. Be sure to consult with a financial advisor and see all illustrations for details.

What You Need To Know About South Dakota?

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