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Life Protection Review

Examine and Improve Your Life Protection

Let’s review your Life Insurance, Wills, and Trusts

Life Protection 101: Life Insurance

Not all life insurance policies are the same. There are basically two ways to acquire life insurance, similar to the two ways you can go about getting a home: rent or own. When you rent your life insurance, you purchase what is known as term-life insurance. Most people have at least hear of this type of insurance, in which a person pays a premium in exchange for a promised death benefit in the event the policyholder dies within a specified time frame. Once the time frame runs out, the policy expires and the policyholder’s beneficiary will no longer receive the death benefit in the person dies.

The second way to obtain life insurance is the own it. When you own your life insurance, you purchase what is known as cash-value life insurance. The features of a cash-value policy include a death benefit payout upon the policyholder’s death, cash value accumulation during the policyholder’s lifetime, and a tax-sheltered investment in which the interest and earnings are not taxable. The owner of the policy can also use the investment (cash value) as a fund from which to borrow, which is why it is listed in this book as an income stream. The owner also has the option to use the cash value to pay policy premiums later in life or to pass it on to his heirs.

6 Reasons to Review Your Life Insurance Policy

Life Protection 101: Estate Planning with Wills and Trusts

According to an ABCNews article, only about 50% of Americans have a will, and only 42% have a living will or a health care proxy. If you do not have a will, the state in which you live has one for you. Also, if you were to become incapacitated and unable to make decisions for yourself, who would take care of your affairs? Who would make medical decisions for you? To make sure you get to make all the decisions regarding your affairs, the following documents are necessary to obtain:

1. A Will, which allows you to designate who will receive which of your assets upon your death. It also allows you to designate guardians for your dependent children.

If you do not currently have a will, or if your will needs updating, we recommend you get that process started today. Don’t let your state government choose where you assets and children go after your death.

2. A Durable Power of Attorney for Finances, which designates who will handle your money, real estate, business affairs and other financial decisions for any period of time that you are alive but unable to handle these matters yourself.

3. A Health Care Power or Proxy, which lets you name who will make medical decisions for you when you are unable to make them for yourself (including the carrying out of your desires under any Living Will).

4. A Living Will, which tells doctors and family members exactly what kind of health care you do and do not want to receive if you are terminally ill and incapacitated or in a persistent vegetative state.

Fortunately, you can get a Will and the Advance Directive documents drawn up by an Estate Planning attorney for a reasonable fee.

A trust is a legal document that allows you to “pull strings from the grave” so to speak. These are usually put in place when you have a sizable amount of assets to protect and to direct after your passing. Trusts can also be used in combination with life insurance policies to help minimize estate taxes upon your death. Read about this creative strategy here.

Top Ten Most Common Estate Planning Mistakes

1. Not understanding the impact life insurance has on estate and inheritance taxes.

2. Not understanding the tax consequences of retirement plan assets

3. Not understanding the true “fair market value” of your assets.

4. Allowing potential tax savings to dictate all financial decisions in estate planning

5. Not coordinating your retirement plan, annuity and life insurance beneficiary designations with your Will and Trusts.

6. Allowing your estate plan to go un-reviewed for more than 3 years.

7. Not taking advantage of the ability to “discount” your assets — convince the IRS that the value of your assets for estate tax purposes is less than they really are.

8. Not taking advantage of charitable gifting — directing your “Social Wealth” to your favorite ministries and charities other than the IRS.

9. Not having your advisors work as a team. Your advisors may include a specialized estate planning attorney, insurance representative, financial advisor, accountant, and others.

10. Not having a “relationship” with your estate planning attorney and advisors.

The Checklist

Before proceeding, be sure that you:

– Examine your life insurance policy (if you have one). Make sure your beneficiaries are up-to-date.
– Examine your wills and trusts, along with any advance directives (if you have them). Make sure they are up-to-date.
– Make sure each of these areas in your plan looks the way you want.


When you have completed this step, you are now ready to proceed to step three, which is to examine your Life Protection!



Take Me To Level Three! >>

<< Back to Step Three: Examine and Improve Your Income Protection





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