financial planning

Term Life Insurance – What is it and how does it work?

jim Business Planning, business succession planning, buy sell agreement, Family Protection Planning, Financial Planning, key man insurance, Life Insurance, Life Insurance Planning, Protection Planning, Term life insurance , , , , , , , ,
Term life insurance Erie CO

Term life insurance is a common coverage option for life insurance protection.  This type of insurance is the least expensive, making it affordable for families and business owners.  Term life insurance provides coverage for a specific number of years.  The number of years will depend on how long the policy owner would like to own the policy.  Term life insurance is available for coverage periods from 1 year up to 35 years.  Best of all, the cost of coverage will remain the same throughout the entire period!  Low cost allows the insured to purchase enough coverage to protect family, assets, and business in the event of death.  As with other types of life insurance coverage, the death benefit is tax free to the beneficiaries.

Term Life Insurance

Term life insurance Erie CO

For young families, this coverage can provide protection to your spouse and children.  For a small business owner, this can provide adequate coverage until the owner decides to exit. Whether they sell the business, retire, insure a key person, fund a buy/sell agreement, or utilized other succession planning.  The insurance policy is active unless a premium payment is missed, causing the policy to lapse. 

With proper planning, this should not be an issue.  At the end of the term period you have options to renew the policy for a specific number of years, convert the policy to a permanent type of coverage, or surrender (drop) the coverage because there is no longer a need.  If you are in the market for term insurance, or would like to meet with a professional advisor to review your options, contact us today!

Summary

  • Affordable – low cost for coverage allows for largest amount of protection for smallest premium compared to other types of life insurance
  • Specific Number of Years – Coverage remains in effect for a specific number of years that is decided when the policy is applied for
  • Options –  renew, convert, or surrender the policy at the end of the term period

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Roth IRA Advantages

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We have a special blog post tonight from the one and only Senor Frog, one of our biggest fans, submitting this question through the website contact form – What are the advantages to setting up a Roth IRA plan?  Great question Senor, thanks for writing us!  First, a Roth IRA is a retirement account for individuals.  The contributions (money you put in each year) grow tax free, and then when you pull the money out it is also tax free!  Pretty nice right?  Does this sound to good to be true?  All these tax advantages, there must be a catch, and there are, a few anyway…

Roth IRA

  1. Income Limits – not everyone can open a Roth IRA, you have to be below a “Modified AGI” (Adjusted Gross Income) amount each year.  In 2018, the amount for married couples filing jointly to make full contribution amounts is $189,000, and single/head of household tax filings the max modified AGI is $120,000.  If you file married but filing separately, contact your tax specialist for plan details.
  2. Contributions Limits – with tax advantages who wouldn’t want to put all the money they can into this plan, this includes me, what’s the maximum each year?  In 2018, the maximum contribution to a Roth IRA is $5,500, or your total taxable compensation amount for the year, if your compensation was less than $5,500.  Bonus for the 50+ crowd, if you are age 50 or older, the maximum contribution amount is $6,500.  This additional amount is often referred to as the “catch-up” provision.
  3. Tax Limits – what tax limits, in the intro of this post there was nothing but tax advantages!  With a Roth IRA, there is no income tax deduction on the contribution amounts.  This is also the reason when you withdraw the funds it is tax free, because you already paid taxes on the money you put in!  Also, unlike a non-qualified brokerage account, if you have a loss in the account there is no tax write-off for the losses incurred.
  4. Withdrawal Limits – if you satisfy the requirements, qualified distributions are tax free.  The basic qualified distribution would be pulling money out of this plan after age 59 1/2.  However, if the account has grown and you are under the age of 59 1/2 you are penalized if the withdrawal includes contributions and gains.  In this scenario, the gains are taxable and penalized.
Roth IRA Advantages

Hmmm, not sure this plan sounds so great anymore, read on, it gets better!  The advantages of the Roth IRA plan are:

  1. It’s a savings plan often used alongside a 401(k) or other retirement plan to mix tax strategies in retirement.
  2. The contributions made into the plan grow tax free. Compounding tax free growth adds up to a lot of money over 10, 15, 20, or even 30+ years.
  3. If you still have earned income, you can make contributions to this plan beyond age 70 1/2. People are living longer, and working longer, this may be a bigger advantage than people think.
  4. There are not RMD’s (Required Minimum Distributions) with this plan. Unlike a IRA/401(k), at 70 1/2 nobody (IRS) is demanding you take a certain amount each year. This is very important during market corrections or downturns.
  5. And finally, tax free withdrawals! Wouldn’t it be nice after paying 30 or 40 years of taxes to receive tax free income.

Summary: It’s not a perfect plan, those don’t exist.  But this plan offers tremendous tax savings opportunity. To grow a retirement account over a working period of time, whether its 40 years or 5 years.  If you would like to speak with one of our advisors regarding how you can take advantage of a Roth IRA, contact us today.

For more information on individual retirement planning, follow this link.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Life insurance for a Stay-At-Home Parent

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life insurance for a stay-at-home parent

Below is a video from Denver’s 9News channel discussing the need of life insurance for a stay-at-home parent.

Great interview on a topic that is often discussed with our clients.  I do agree there is a significant need to provide coverage on both parents, working and non-working.  Obviously, the family wants to insure the bread winner’s full human life value and income potential.  But what is the value of a parent that does not have a W-2 job, works on a contract basis, part-time, or not at all?  Just how much is a stay-at-home parent worth?  My wife and I both work, so we know the cost of full-time child care nowadays, and it’s not cheap.  Not to mention, all the other jobs around the house that would need to be taken care of if the stay-at-home parent unexpectedly passed away; laundry, dishes, making lunches, rides to/from school, helping kids with homework, making dinner, cleaning the house, transporting the family to after school activities, outside yard work, keeping the house in order, paying bills, mid-day doctor appointments, grocery shopping, and the list goes on.

I disagree with the estimated amount discussed in the conversation.  This amount will vary based on each family’s unique situation.  Maybe the amount is an average based on this advisor’s experience, but the exact amount is hard to provide with a blanket “rule of thumb” amount.  The advisor in the video does provide the correct advice for the consumer to discuss this topic with a professional.  These questions and more are discussed in the video below.  We are here to help you.  If you would like your current coverage reviewed or if you think it’s time as a stay-at-home parent to get life insurance coverage, give us a call today.

WATCH VIDEO BELOW

https://www.9news.com/video/money/heres-why-its-important-that-you-get-life-insurance/73-8118949

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.