Life Insurance is the foundation of every financial plan. There are numerous types of policies but only two types of coverage:
Term and Permanent.
It is estimated that less than 2% of all term policies pay a death benefit. This means the policies either lapse or expire worthless at the end of the term. For this reason, it is the absolute cheapest life insurance on the planet.
With that said, term insurance has its place. We often use it to help a client bridge a gap. They need a certain amount of permanent coverage but their current budget cannot support the premium. In this case, we recommend a convertible term policy. As the name implies, these policies are convertible into permanent policies prior to the end of the term. This is a wonderful opportunity for you to qualify for the insurance you need today while you are healthy as you do not have to medically re-qualify when the policy is converted provided you do not request an increase in death benefit.
There are various types of permanent insurance including Whole Life, Universal Life (UL), Guaranteed Universal Life (GUL), Variable Universal Life (VUL) and Indexed Universal Life (IUL).
Although we can offer many products, Five Star Life & Wealth chooses to focus on Guaranteed Universal Life and Indexed Universal Life.
Guaranteed Universal Life (GUL) is currently the best option available when death benefit takes priority over cash accumulation. As the name indicates, the death benefit is guaranteed to be paid to the beneficiary provided you pay the agreed upon premiums.
Indexed Universal Life (IUL) is a powerful financial tool. It allows you to use life insurance to accumulate cash without market risk that you can access as needed, income tax FREE. With a 20+ year history of consistently outperforming the S&P500, many consumers have turned to IUL as an investment alternative to fund their retirement.
With no income limits, no contribution limits, no liquidity restrictions and no income tax, IUL puts you in control of how much you save and exactly when you want to retire even if it is before age 59 1/2.
Annuities are another powerful financial tool as they can provide GUARANTEED income for life. There is no other product on the planet that can do that. Period! If you are considering investing in an annuity BUT you have no plans of taking income now or in the future, STOP! An annuity is not the best option for you. There are various types of annuities including Fixed, Variable and Equity Indexed Annuities.
Fixed Annuities are similar to bank CDs in that they pay a fixed rate of interest for a fixed period of time. Buyer beware. The days of locking in a fixed rate for a multi-year contract are nearly gone. What we are seeing more of is a bonus rate in year one with a lower rate in years 2 and beyond. This can be quite the eye-opener when your income drops with no warning.
Variable Annuities are basically tax-deferred mutual funds with any number of expensive riders your advisor tacked on. Five Star Life & Wealth does not offer variable annuities as there is a much better option available that provides the same benefits with no market risk at a fraction of the cost. If you own a variable annuity and are concerned about fees and market risk, we will review your policy and provide you with the best plan for transitioning to a more suitable option.
Equity Indexed Annuities
If you are looking for a cost-effective way to produce GUARANTEED income for life with ZERO market risk, look no further. Indexed annuities do that and so much more. DO NOT be concerned about the 7-10 year surrender period that accompanies most of these contracts. REMEMBER, you are purchasing an annuity for income which means you have no plans of liquidating your contract barring an emergency. And, if you are planning to liquidate your contract, STOP. An annuity is not the best option for you. If guaranteed income with no market risk is not enough to make you fall in love with Indexed Annuities, then how do you feel about 100% liquidity if you are confined to a nursing home or become terminally ill? Most of the contracts offered today have a surrender charge waiver for these financial hardships making this product hard to beat.
Have you ever calculated exactly how much coverage you and your family need? Click the link above to download a worksheet that will help you determine if you need more coverage.
No need to roll the dice when you have Accelerated Benefit Riders. Available on both term and permanent policies, this rider advances a portion of your death benefit while you are living if you experience a chronic, critical or terminal illness. You no longer have to die to receive benefits from your life insurance policy.