June 2009

The Need for Life Insurance  We’ve all either read stories about or know people who have died suddenly and left their families in less than ideal circumstances. Death is normally not on the top of my clients’ minds, but I want to do what I can to help make sure their families are well situated if something unfortunate should happen. So why is it important to have adequate life insurance coverage? Let me give you my top fifteen reasons. Create a guaranteed estate for your family at a very competitive rate. You’re leveraging a relatively small amount of money to gain a potentially sizeable amount of money for your family. When you die, your family will have final expenses (funeral costs, debt payments, attorneys’ fees, potentially probate costs) to pay. With proper planning, the insurance proceeds should provide the needed funds. If you have debts (large loans, mortgages, credit cards, income taxes, etc.), your family can use the insurance proceeds to pay them down or completely pay them off. The insurance proceeds can be used to provide your family with the money to help maintain their standard of living and potentially pay for college, etc. The proceeds may be used to equalize inheritances in those cases where one of several adult children may inherit ownership of a business. The insurance money can be used to fund buy/sell agreements where the insured owns an interest in a business with another person. The money may be used to fund a non-qualified deferred compensation plan for a business owner and/or key employees. Provide funds for a surviving spouse who is not the parent of the insured’s children to minimize conflicts in second marriages. Pay all or a portion of any estate taxes due. Fund a personal supplementary retirement plan where tax-free (first in/first out) withdrawals and loans can be made from policy values. Replacing all or part of the insured’s heirs amounts that have been left to charitable organizations. Potentially protecting the future profitability of a business with key person insurance owned by the business. Buying tax-deductible life insurance in a pension or profit sharing plan to provide a retirement fund for the decreased family. Buying tax-deductible life insurance in an employee welfare benefit plan to fund a death benefit only plan or post-retirement medical expense plan. Peace of mind. The estate planning landscape is very fuzzy at the moment. While the 2009 estate tax exemption is $3,500,000 ($7,000,000 for a married couple with marital-deduction-credit shelter planning), no one knows what Congress will decide in the future. In my view, it’s better to be safe than sorry and make sure your family is protected and your business can continue as you desire. In addition, the sooner you address such issues, the less expensive the life insurance will be. However, the statements above should not interpreted or construed as a promise or guarantee of insurance coverage or value upon death. It’s just some more information to think about as you plan for the future in these challenging economic times. Bruce F. Williams is a financial adviser with Tidewater Financial Group in Virginia Beach. He can be reached at 460-2889 or bwilliams@investorssecurity.net. Securities and investment advisory services offered through Investors Security Company, Inc. Member FINRA and SIPC. 127 E Washington St. Suite 101 Suffolk, VA 23434 (757) 539-2396.

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