Change is the only constant in life, and it is not an option. How you keep up with it is. When businesses don’t keep up with technology, they lose themselves in the shuffle. When individuals don’t keep up with life changes, they could end up in financial distress. As our clients mature, these changes may affect their insurance needs without realizing them.
Like all components of a comprehensive financial plan, life insurance, long-term care insurance, disability insurance, homeowners insurance, auto insurance, and umbrella insurance should be reviewed regularly.
Our policy review service uncovers strengths and weaknesses in existing policies and helps our clients determine if their coverage meets their current needs. As a result, there might be gaps in coverage, or they might be able to save money.
Term Life Insurance
Term life insurance provides low-cost peace of mind for a finite amount of time – usually 10, 15, 20, 25, or 30 years – with premiums guaranteed to stay level within the period specified.
Unlike permanent life insurance, term has no cash value, which allows for lower premiums. As with any life insurance, the younger and healthier you are, the lower your rate per thousand will be. This is the cost of insurance per thousand.
Most term policies are convertible (and the only type Modern Wealth typically recommends). A conversion is an excellent option for people who need coverage for a more extended period than initially anticipated. Converting term insurance to permanent insurance does not require underwriting or a paramedical exam, so it’s also an excellent option for insureds whose health has declined. But be careful! The conversion option usually has an end date, so staying on top of things is crucial. When you work with Modern Wealth, we send you a reminder when it’s conversion time.
Universal Life Insurance
Universal life insurance (UL) adds a layer of security to policies, combining death protection with savings and a layer of convenience with adjustable premiums and payment schedules.
Premiums are paid to the insurance company. It subtracts the cost of insurance and other expenses. It then credits interest in a cash accumulation account. By reviewing the annual statement, policyholders can monitor the growth in the policy and see costs and the interest crediting rate. If the cash surrender value is sufficient to pay the annual insurance costs, policyholders can skip a premium or reduce the premium.
Financially speaking, a person’s biggest asset is their ability to earn an income. Why? Because that income pays for all the big things (insurance coverage, retirement fund, healthcare, mortgage, college) and all the little things (vacations, child’s ballet lessons, dog’s treats).
Most group DI plans at work are capped, not portable if you change jobs, and can be canceled by the insurance company or the employer at any time. So it’s worth looking at individual disability insurance as a supplement to fill any gaps.
Disability policies can be completely customized to our client’s circumstances in the following ways:
Length of benefit: The length of time an insurance company pays a monthly benefit after a claim has been filed (typically to age 65, but different benefit periods are available).
Elimination period: The amount of time an insured must be disabled before benefits begin. The longer the elimination period, the lower the premium.
Disability definition: Dependent upon occupation and determines how benefits are paid (Own Occ, Transitional Occ, Your Occ, and Any Occ).
Residual: Another word for partial disability.
Cost of Living Adjustment (COLA): This allows benefits to continuously increase based on an index or set percentage while on a claim.
Future Increases (monthly benefit): Without any medical qualifications after the policy is issued, sometimes based on income increases.
- Student loan protection
- New professionals program
- Retirement protection
- Group disability
- Business owners: Business Overhead Expense (BOE), Disability Buy-Out (DBO), business loan protection
- Specialty solutions: for hard-to-insure occupations or high-wage earners
Long-Term Care Insurance
Long-Term Care is the type of care people may need if they have a prolonged physical illness, disability, or severe cognitive impairment (such as Alzheimer’s Disease) that keeps them from living independently.
These limitations may prevent them from carrying out basic self-care tasks, known as activities of daily living (ADLs):
A long-term care insurance (LTCi) policy provides benefits if they cannot perform two ADLs and/or have a cognitive impairment.
Elimination period: Sometimes called the deductible or waiting period. Typically 30, 60, 90, 180, or 365 days. During the elimination period, other people or assets would be relied upon for care. The longer the elimination period, the lower the premium.
Benefit amount: The maximum amount paid by a policy daily or monthly. We can help determine how much benefit is needed by providing the current cost of care in an area. Lower benefits mean lower premiums.
Age: As with most types of insurance, younger and healthier people get lower rates.
Inflation option: Costs for LTC have increased at a steady rate. This offers protection from rising LTC costs by minimizing the effects of inflation.
Partner discount. Available even if your partner doesn’t apply. Applicable to married and unmarried couples.
Shared care. Pools partners’ benefits, allowing each partner to access the other’s.
Home health care. About 80% of people initially receive care in their homes. Therefore, we recommend plans that allow 100% of the benefits to be used at home and at a facility.
Hybrid Life / Long-Term Care Insurance
Hybrid life/long term care insurance (LTCi) combines permanent life and an LTCi rider with guaranteed premiums
Hybrid Annuity / Long-Term Care Insurance
Hybrid annuity/long term care insurance (LTCi) combines a fixed deferred annuity (that grows tax deferred) and an LTCi rider.
An annuity is a financial instrument issued and backed by an insurance company that provides guaranteed monthly income payments for the contract’s life, regardless of market conditions. You can customize an annuity based on various options, including how long you think you’ll live, when your payments start, and whether you want to leave your income stream to a beneficiary after your death.
Fixed Deferred Annuities
Fixed deferred annuities are accumulation vehicles that grow with a guaranteed interest rate on a tax-deferred basis for a set time. They allow people to focus on the long term and define their retirement.
Variable Deferred Annuities.
Variable annuities are accumulation vehicles that grow based on the market performance of their internal investments on a tax-deferred basis for a set time. They allow people to focus on the long term and define their retirement.
Immediate annuities are ideal for people concerned about outliving their savings. A lump sum payment to the insurance company repurposes part of their current assets into guaranteed income for life or a chosen period.
The policy owner gets a lump sum more than the current cash value for any immediate need. The buyer pays the remaining premiums and receives the death benefit upon the insured’s death. It’s a surprising source of cash that’s two-fold.
First, the policy owner gets to stop paying premiums. Secondly, they receive cash generated by selling the policy. Finally, a life settlement can make it possible to take a dream vacation, eliminate debt, or pay end-of-life medical expenses.
Business Insurance Solutions
This type of insurance reimburses businesses for loss of a valuable employee. Many business owners already place a premium on key employees or principals – the individuals who are critical to the long-term objectives of the business: a partner, the operations manager, the client relationship manager, the creative financier. And many business owners have in place incentives to satisfy and retain those key employees.
But how long would it take most business owners to replace a key person? How much business would be lost during that transition? While nothing can replace a long-time valued partner or employee, in the event of an unexpected death, the business can use income tax-free life insurance proceeds to sustain the business until a replacement can be found, hired, relocated, and trained.
Cash values of key person policies grow tax-deferred and can be used by the business as a balance sheet asset.
Having a buy-sell agreement in place at the death of a business owner is critical to the continuation of the business. That’s a commonly accepted principle.
But did you know it’s also important to have a buy-sell agreement in place when other major life events change the relationship of one of the owners to the business? Think disability. Think retirement. Think conflict between owners. Think one owner’s desire to pursue another business opportunity.
A buy-sell agreement acts as a road map, allowing business owners to mitigate conflict and speed the transition.
This protection provides life insurance and tax favored cash accumulation benefits to retain key employees.
This risk management technique helps retain select executives by providing salary continuation at retirement or deferring taxable income until retirement.
This type of insurance helps retain select employee by sharing premium expense of life insurance to provide needed protection on a cost-effective basis