A life insurance policy is a great way to take advantage of major tax benefits and is a powerful tool for protecting your financial confidence. However, before you decide to get a life insurance policy you should ask yourself: what type of financial protection do you need?
Bank Owned Life Insurance
Bank owned life insurance, or BOLI, is a life insurance policy for banks. The life insurance policy is used to fund employee benefits programs. The policy is taken out on a top executive’s life; the policy remains in place even if the top executive leaves the bank.
The purpose of bank owned life insurance is to create an asset with tax incentives. In most cases, the cash value and death benefit are tax-free. This creates an asset that banks can draw from for employee benefits funding that is often seen as superior to other investment options since it is tax-free.
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Corporate Owned Life Insurance
Corporate owned life insurance, or COLI, is a way for corporations to better fund non-qualified benefits plans, execute buy-sell agreements, and/or protect the company through the purchase of key-person life insurance. With COLI, one or more members of the organization (usually high-level executives or owners) are listed as the insured. However, the payout from the life insurance policy does not always go to the insured. In many cases, the corporation may receive the payout, or the payout may go to another business partner as a part of a buy-sell agreement.
When executed properly, corporate owned life insurance enables corporations to receive legal tax advantages. They also may receive access to cash value from the corporate life insurance policy that they can use to help fund non-qualified benefits plans (i.e., employer-sponsored retirement funds for employees).
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Estate Preservation Life Insurance
Estate preservation is a way to ensure the safe transfer of your estate once you pass. One of the most effective ways to do this is through a life insurance policy. This comes with huge tax incentives and helps ensure more of your estate is transferred to your beneficiaries rather than the government.
With a life insurance policy for estate preservation purposes, your wealth can be transferred tax-free. A whole life policy also gives you the opportunity to draw from your cash asset that is built into the policy as well.
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High Risk Life Insurance
High risk life insurance is a policy for individuals that are in a subcategory (high-risk category). Insurees’ are usually placed in a high-risk category due to their medical history, lifestyle habits and hobbies, occupation., and/or travel. Individuals who are deemed high risk may have more limited policy options.
It is imperative for those in a high-risk category to work with an experienced broker to ensure they receive the fairest rate possible for their life insurance coverage. Here at Vector Financial Group, we use our experience and industry relationships to help insure those who are considered to be at a higher risk for life insurance providers.
Indexed Universal Life Insurance
Indexed universal life insurance, or IUL, is a life insurance policy that invests in a stock index such as the S&P 500. The proceeds from the stock investment are added to the cash value of the policyholder’s permanent life IUL policy. There is also a minimum interest rate for policyholders, so the risk is minimal.
The cash value proceeds — which are free from capital gains tax in most cases — can be put toward premium costs. In fact, many are able to entirely eliminate their premium payments from their cash value while keeping their death benefit. Of course, there are additional ways in which indexed universal life insurance policies can be used as well.
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Premium Financing Life Insurance
Premium financed life insurance is a type of life insurance policy for high net worth individuals in which the premium payments are partially or entirely funded through a third-party loan provider.
This allows the policyholder to choose a policy option that allows for a higher death benefit. The policyholder can also avoid liquifying capital and assets for a whole life insurance policy.
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Private Placement Life Insurance
Private placement life insurance, or PPLI, offers a low (or minimal) death benefit and maximizes the cash value potential for a whole life policy.
PPLI is a great way for high net worth individuals to better invest in other assets with major tax incentives, including the avoidance of capital gains taxes on cash value withdrawal and a tax-free death benefit.
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Ready To Get A Life Insurance Policy That Works For Your Needs?
Vector Financial Group helps individuals, banks, and other corporations with their life insurance needs. To learn more about our services and how we can assist you, give us a call today or send us a message for a prompt response. We are glad to answer any questions and concerns you may have and assist you with all of your life insurance needs.
