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Fee-only Life Insurance Advisers... Check Them Out!
Financial Planning
November 2002
Fee-only Life Insurance Advisers... Check Them Out!
Life insurance comes in a bewildering array of choices. For a lot of people, simple term coverage will suffice: Itâs cheap, and you buy it only when you really need it (until the kids are out of college).
But if you are prosperous (assets in seven figures) and concerned about estate taxes, it could make sense to buy a whole life policy or permanent life. It builds up a cash value that can go to you in retirement or to your heirs at your death. Properly structured, the policy will pay out a death benefit that escapes both estate tax and income tax. The tax benefits are sometimes enough to overcome the considerable overhead costs (salesmenâs commissions, etc.) of passing on wealth in this fashion.
Should you have the time and the willpower to school yourself in the vast arena of insurance products, you can make the decisions yourself. Insurance agents are eager to help you even if you donât need so much. While the world is full of honorable agents, remember they typically pocket your first yearâs premium, so the bigger the policy they sell you, the better for them.
Thatâs why fee-only insurance advisers exist. These advisers are working for you; they donât sell policies and thus receive no commissions. With most charging around $250 per hour, they configure policies to suit your particular needs and steer you to low cost insurers like Ameritas Life or TIAA-CREF, which eliminates commissions. For complex estate planning, it is smart to have the adviser work with your attorney, CPA and financial planner.
It could be very beneficial to take a look at all the complexities of insurance within the bigger picture of estate planning. An adviser and your CPA can definitely help sort it out. Insurance is expensive, so you should look at all aspects of your financial picture first.
But if you are prosperous (assets in seven figures) and concerned about estate taxes, it could make sense to buy a whole life policy or permanent life. It builds up a cash value that can go to you in retirement or to your heirs at your death. Properly structured, the policy will pay out a death benefit that escapes both estate tax and income tax. The tax benefits are sometimes enough to overcome the considerable overhead costs (salesmenâs commissions, etc.) of passing on wealth in this fashion.
Should you have the time and the willpower to school yourself in the vast arena of insurance products, you can make the decisions yourself. Insurance agents are eager to help you even if you donât need so much. While the world is full of honorable agents, remember they typically pocket your first yearâs premium, so the bigger the policy they sell you, the better for them.
Thatâs why fee-only insurance advisers exist. These advisers are working for you; they donât sell policies and thus receive no commissions. With most charging around $250 per hour, they configure policies to suit your particular needs and steer you to low cost insurers like Ameritas Life or TIAA-CREF, which eliminates commissions. For complex estate planning, it is smart to have the adviser work with your attorney, CPA and financial planner.
It could be very beneficial to take a look at all the complexities of insurance within the bigger picture of estate planning. An adviser and your CPA can definitely help sort it out. Insurance is expensive, so you should look at all aspects of your financial picture first.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.
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