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Create an Estate
Pay death taxes and other estate settlement costs
Fund a business transfer
College fund for children or grandchildren
Pay off a home mortgage
Protect a business from the loss of a key employee
Supplement retirement funds
Replace a charitable gift
Pay off loans
Equalize inheritances
Accelerated death benefits
Pension maximization
Where time or other circumstances have kept the estate owner from accumulating sufficient assets to care for his or her loved ones, life insurance can create an instant estate.
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These costs can very from a low of three to four percent to over 50 percent of the estate. Federal Estate Taxes are due nine months after death.
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Business owners often agree to buy a deceased owner's share from his or her estate after death. Life insurance provides the ready cash to finance the transaction.
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Cash value increases in a policy on a minor's life (or parent's life) can be used to accumulate fund for college.
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Many people would like to pass the family residence to their spouse or children free of any mortgage. Often a decreasing term policy is used, which decreases in face amount as the mortgage balance is paid down.
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Key employees are difficult to attract and retain. Their untimely death may cause a severe financial strain on the business.
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Current insurance products provide competitive returns and are a prudent way of accumulating additional funds fro retirement years.
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Gifts of appreciated assets to Charitable Remainder Trusts can provide income and estate tax benefits. Life insurance can be used to replace the value of the donated assets. Proceeds from life insurance policies can also be paid directly to a charity.
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Personal or business loans can be paid off with insurance proceeds.
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When the family business passes to children who are active in it, life insurance can give an equal amount to the other children.
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The Health Insurance Portability and Accountability Act of 1996 changed federal tax law to allow a "terminally ill" individual to receive the death benefits of a life insurance policy on his or her life, income tax free. Such "living benefits" received prior to death can allow a person to pay medical bills or other expenses, and maintain his or her dignity by not dying destitute. If certain conditions are met, a "chronically ill" person may also receive accelerated death benefits free of federal income tax.
Existing life insurance policies should be reviewed to verify that policy provisions allow for payment of such "accelerated death" benefits.
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At retirement, married pension plan participants must make a choice to either:
Take the maximum monthly income for the life of the retiring employee (single life only, for example $1,000 per month) , or
Take a substantially reduced monthly income for the lifetime of both the retiring employee and his or her spouse (joint and survivor, for example, $800 per month).
The pension maximization strategy uses a permanent life insurance policy to provide a death benefit to the surviving spouse sufficient to replace the income that might have been received if the joint and survivor option had been chosen.
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