Does Your Life Insurance Policy Still Fit You?

For Mark Roberts’ Use: The life insurance industry has been around since the days of ancient Rome, helping to protect the dependent families of workers from worst-case scenarios. But a lot has changed in society since then, particularly over the last 100 years. Today’s life insurance policies are changing quickly with the times, just as your family dynamics and needs change over the years. If you haven’t updated your life insurance plan in the past few years, you might find that your policy no longer suits you.

For example, you might find that you need a significantly larger death benefit than is provided by your current policy. Or, you might need certain features which are not available from your current life insurance provider. As your family structure changes, your life insurance policy should also change.

Once every two to three years, you should conduct a new needs analysis with your life insurance specialist. This analysis helps you to understand your life insurance needs, as well as your financial capabilities. After your needs analysis and a discussion with your life insurance broker, you might realize that your old policy just isn’t cutting it.

What can you do? Are you stuck with your existing life insurance policy? No, not at all! In most cases you can actually cash out your current policy, and upgrade to one that better fits you and your family. But you must operate this exchange carefully, so that you don’t trigger certain problems with your income taxes.

One solution is to conduct a 1035 exchange, which allows you to switch an old insurance policy for a new one, without owing taxes on the accumulated funds in the old policy. However, the rules governing 1035 exchanges are complex, and you may incur surrender charges from your old policy or contract. In addition, you may be subject to new sales and surrender charges for the new policy or contract.

Don’t attempt to conduct a 1035 exchange without help. It’s a complicated maneuver that requires the oversight of an experienced professional. Even so, it’s important to make sure your life insurance adequately protects your family, so don’t neglect to get started with that needs analysis right away. Then let the professionals take care of the rest.

By Mark Roberts|2015-11-02T07:59:20-06:00November 2nd, 2015|Retirement|0 Comments

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

Does Your Life Insurance Policy Still Fit You?

Does Your Life Insurance Policy Still Fit You?

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About the Author: Mark Roberts