September 26, 2025 • 35 mins
In this episode, Chris Boyd and Jeff Perry of the AMR team at Wealth Enhancement
welcome special guest Joe Gaj, Director of Insurance, for a deep dive into how life
insurance can play a pivotal role in retirement planning. From pension maximization
strategies to hybrid long-term care solutions, they explore how retirees can protect their
loved ones, preserve wealth, and manage healthcare risks. Whether you are nearing
retirement or advising those who are, this conversation offers essential insights into
modern insurance planning.
For more information or to reach TEAM AMR, click the following link:
https://www.wealthenhancement.com/s/advisor-teams/amr
#RetirementPlanning #LifeInsurance #PensionMaximization #LongTermCare
#HybridLTC #WealthPreservation #FinancialWellness #InsuranceStrategies
#EstatePlanning #FinancialPlanning
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to Something More with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president and financial advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome to Something More with Chris Boyd.
I'm Chris Boyd.
I'm here with Jeff Perry.
We are both of the AMR team at
Wealth Enhancement and glad to have you with
(00:43):
us.
We have a special guest today.
We have Joe Guy, the insurance guy, who's
going to join us.
I've got you.
We're glad to have you here.
We'll talk a little bit about some insurance
-related issues.
Maybe to start off with, we can begin
(01:05):
by just an introduction to you and where
you fit into the Wealth Enhancement organization so
we can disclose all that to our listeners.
Yeah, sure.
Joe Guy, director of insurance here at Wealth
Enhancement.
We are part of the centralized service department,
(01:26):
so insurance, which includes life, disability, long-term
care, and now a newly minted annuity desk
as well.
We handle all things insurance from that personal
aspect for our clients.
Advisors are encouraged to use centralized services, which
isn't just insurance.
It expands to retirement planning.
(01:46):
It includes also our tax department, our advanced
planning team.
We have group benefits, obviously pension 401k, the
retirement planning consultants.
What else am I missing?
High net worth, business strategies.
Quite a few centralized services that we offer
(02:06):
here at Wealth Enhancement.
My area of specialty is working with individuals
and business owners on insurance planning strategies.
Again, life, disability, long-term care annuities.
We're here to obviously support our advisors and
put best product and solutions in front of
our clients here at Wealth Enhancement.
It's worth talking about for a second with
(02:27):
our team.
We're a registered investment advisor firm.
Wealth Enhancement has various subsidiary companies that we
can utilize to have integrated resources if people
have a need for, in your case, insurance
(02:47):
services, but maybe it's tax services, maybe it's
trustee services.
Could be all range of possible considerations.
When there is a need for something beyond
the scope of our primary focus, financial planning
and portfolio management, there's a depth of resources
that Wealth Enhancement as a large organization has
(03:09):
coordinated the ability for us to find useful
resources readily accessible that we can help clients
navigate and make use of.
Of course, if people have someone they like
to use for their taxes or insurance or
whatever, that's not a problem.
We can work with their team.
But when they don't have someone and they
need to have some assistance, it's nice that
(03:31):
Wealth Enhancement has put together this depth of
resources for this integrated approach that people like
to have the ability to have and the
convenience of coordinating through one organization that they
can kind of navigate all of their range
of needs that they might have.
So that's the goal.
(03:52):
Try to make life easy for the clients
and not to overlook important areas.
And risk management, which really insurance is fundamentally
about, is a really important part of the
building blocks that we think about when we
talk about financial planning.
However, Joe, one of the things that we
were thinking about, our clientele, retirees, oftentimes people
(04:16):
in or near retirement, oftentimes they start thinking,
well, I don't need insurance at this stage
of my life, which is often the case.
They created wealth.
And the goal of insurance, maybe at a
different stage of life, is wealth creation in
the event that I don't live long enough
to do that, or if I have a
disability, or you mentioned various areas of coverage,
(04:39):
but it's oftentimes thought of as a wealth
creation tool if I'm not able to do
it myself.
Now, when we get to a certain stage
of life, maybe we have some wealth, but
there still can be times when there are
applications for insurance that can be a really
great use.
(04:59):
And we thought we'd talk about a few
of those for people to be mindful of
as they get approaching those issues of in
or near retirement, when they might find this
would be a great time to think about
a use of insurance.
And Jeff and I were kind of brainstorming
before you jumped on with us.
(05:20):
And I think the first one that we
were thinking about is people going through decisions
around pensions.
And the notion of, on the one hand,
the pension gives you the possibility of maybe
a lump sum or maybe an income stream
for life.
And in many cases, people like the idea
(05:43):
of a guarantee of an income stream for
life, but they have this possibility they want
their spouse to be considered as well.
But what if I don't live long enough
or what if we don't live long enough?
Sometimes people look to this concept called pension
maximization, a technique to basically think about maybe
(06:08):
the use of life insurance as a tool
to maximize your benefits, but also make sure
some of that wealth stays with your family
after you're gone in case you don't live
as long as you'd like.
Do you want to talk a little bit
about that topic?
Yeah.
So we often refer to this planning opportunity
as a pension max strategy that's common in
(06:30):
the insurance industry.
When you have a retiree closing in on
that retirement age and they then are meeting
with their benefits coordinator and how to choose
their pension, whether it's going to be a
single life, whether they're going to do joint
survivorship, there's joint survivorship with percentages, 50%, 100%.
(06:52):
So that decision starts to come into play
as they near retirement.
And just like you said, if they decide
to take a single life pension, therefore the
spouse not getting any benefits if that pensioner
passes away early, that single life ends with
the single life retiree, right?
(07:15):
But if they have life insurance, to help
supplement the surviving spouse, that single life pension
typically pays 25, 30% more than a
joint life, say 50% survivor.
So the calculation that's done for someone considering
(07:36):
retirement that has a pension, a defined benefit
pension that they get to choose, think of
state employees, federal employees.
There's not a lot of private pensions out
there anymore.
Not as many as there used to be.
Usually it's public servants, civil service that still
has some pensions, teachers, police officers, things along
(07:57):
those lines.
But the calculation that we do within the
insurance department is what's the single life versus
the joint life, what you would typically choose,
50%, 100%, right?
And then we compare that difference and if
they could afford to buy life insurance and
if it makes sense.
And obviously- I mean, just think about
it for a second, Joe.
(08:18):
If you were saying just for simplicity, if
it was like, oh, it's $1,000 a
month if I take it myself, but $850
a month if I include my spouse for
whatever that amount might be.
If we were to put a name to
that kind of a differential in another circumstance
where you said, oh, I'm going to spend
about $150 a month to make sure my
(08:42):
spouse, my wife, my husband retains an income
stream after I've died, we'd put a name
to that and call it life insurance, right?
If you said, oh, I'm going to spend
a premium and have a death benefit in
effect, right?
That's essentially all you're talking about when it
comes to this notion.
(09:04):
But the idea if you have a situation
where let's say the pensioner lives a long
time and then the spouse becomes the beneficiary,
if it's built into the pension, we might
never see the benefit of that because the
(09:24):
spouse might not live a long time and
the heirs might give up a lot of
that wealth in that scenario.
Whereas if we did this privately through an
insurance policy, we might be better served to
be able to retain wealth intergenerationally.
Now, there are differences in tax treatments and
there's a lot of variables.
Sometimes there's differences in the benefits like health
(09:47):
insurance for the spouse or things.
There's things to be tuned into that you
have to look at and be mindful of.
But oftentimes it can really work out nicely
if your goal is to try to retain
wealth intergenerationally.
Would you say that's a fair characterization?
I would, yes.
And I would say that the planning opportunity
(10:08):
shouldn't start when you're six months away from
retirement, right?
This should be talked about five years at
a minimum because for the pricing to work
for that retiree, they should have probably already
bought their insurance a few years prior to
the retirement age.
Well, of course with a pension, you don't
have to show you're healthy, right?
(10:29):
But with a life insurance policy, you have
to be at least insurable.
And the earlier you do that, maybe a
greater likelihood of not having existing health issues
get in the way.
Right.
So something that I like to talk to
advisors and their clients about, especially with those
pensioners, is buy a 10-year option to
(10:54):
make that decision.
What do I mean by that?
If you bought at 55, a 10-year
convertible term policy, let's just say is a
million dollars.
You're 55 years old, 10-year term, and
it costs for that 10-year term, it's
going to cost, I don't know, a thousand
dollars a year, right?
I might be low-balling a little, maybe
it's $2,000.
But you're 55, you're in your prime earning
(11:18):
years, you're still healthy enough, you're an empty
nester.
You can probably afford the $2,000 to
buy the million dollar option.
I'm calling it an option because it's convertible.
Now, if you plan on retiring somewhere between
62, 65, guess what?
I locked your health in at 55.
And when you say, you know what?
I'm getting these pension reports and now I
(11:39):
need to start thinking about how I'm going
to choose my pension when I retire.
Let me consider converting that million dollars to
permanent insurance or some of it to permanent
and leave the rest in term.
Whatever that is, you need to then figure
out, is it enough to cover what you
would have gotten by taking a survivorship benefit,
right?
(12:00):
The survivorship calculation, a lot of pensions are
pretty rich for the survivor.
50% of a $5,000 a month
benefit, that adds up to be a $30
,000 income a year.
You need a significant lump sum of money
in order to provide a spouse $30,000
a year income, right?
(12:21):
So, you have to have that calculation done
in order to back into how much insurance
you should probably have.
And the insurance doesn't have to be all
permanent insurance, ideally it is, but you could
level.
I think it's a common mistake though, that
sometimes people say, oh, I'm going to get
20 year term insurance.
(12:42):
And then the problem becomes they live 20
years and the survivor is in a bind
when there's not sufficient resources.
So, I think it's a mistake to rely
too heavily on term insurance as the resource
for this.
Your point is you can do it as
(13:03):
a staged kind of approach, maybe as you
get older, the need for, let's just talk
about how that lump sum is calculated essentially.
Conceptually, think of it this way.
If I die at, I'm the pensioner, I
get my pension option and I want to
plan for day one, I've accepted my income.
(13:26):
And then I die in a car accident
on the way home, right?
I need enough of a lump sum in
this insurance to make sure that my spouse
can essentially replace the income we were planning
for 100%, 50%, whatever that number is going
to be.
So, the way we would typically think about
that is like, what would it cost to
buy an annuity to accomplish that gives us
(13:47):
a value of how much insurance do we
need as an essence?
Now, in reality, we may not choose to
use an annuity when the time comes, but
it gives us the way to know how
much would we need if we wanted an
absolute, a guarantee of being able to meet
those needs.
Now, in reality, we're probably not going to
(14:07):
die on the way home from signing those
papers.
And so, it's very likely we're going to
live a lot longer.
And so, when the time comes that we
have that death of the pensioner, we've got
some choices.
Now, we certainly could use an annuity as
a way to guarantee that income for the
surviving spouse.
(14:28):
But if it's later in life, we probably
wouldn't want to, because we want to keep
that cash in the family and available.
But you've got these choices along the way
that you can navigate what's the best plan
at a given moment in time.
And you want to be in a situation
where this insurance exists when it's needed.
(14:50):
And that's why a permanent product of some
type or something with a guaranteed death benefit,
to me, is the way we want to
structure this kind of a circumstance for the
bulk of it, at least.
If we think about it, we're willing to
give up some of that wealth, because now
we live 20 years.
(15:11):
Maybe some portion of term is viable where
you can say, oh, well, there's still a
portion that's going to be available for that
survivor or for the next generation.
Is that essentially where you're going with that?
Yeah.
I mean, the biggest risk is those early
years right after retirement.
(15:31):
If you take the single life pension, those
first 10 years are the most critical that
you need to outlive.
If you die prematurely, then you're going to
need a big lump sum to cover and
support the surviving spouse.
Layering in some shorter term will make it
look much better for that retiring couple to
(15:52):
be able to pick the single life.
You're still going to need some permanent insurance
to last out for the long term.
God forbid you pass away in your early
80s, but your spouse lives to their late
90s.
There's going to be a gap there.
You definitely need that permanent insurance to last
beyond age 75, like a typical term would
last till.
(16:15):
There's a calculation to be done in a
comparison.
It does take some planning, as you said.
The extra money that you're getting from the
single life pension, you have to factor into
how much is going to go to taxes,
and then what's your net after tax extra
that you're earning, and is that enough to
pay for the insurance and still have some
(16:36):
extra money?
The idea is that you don't just zero
out when it's said and done.
You want to be earning more income off
the single life pension after the premiums are
paid, after taxes are paid, so that you're
actually making out better and then taking a
joint survivor benefit.
If it's equivalent, maybe it'd just be easier
to use the pension.
(16:56):
I think it's also worth thinking about people
today have maybe money that's in the bank
that's safety money, but isn't producing a lot.
It's sometimes appealing to say, take some of
that money, put it into this product because
it's going to give you a much bigger
income cash flow, and you might not have
to put as much toward the premium.
(17:18):
It can really help generate more off of
that savings over a lifetime that it can
really be worth thinking about.
Well, this is just one thing that we
mentioned for people in or near retirement, pension
maximization.
Very specific to people who have pension, but
(17:38):
if you're in that scenario, it's really worth
digging into the numbers and giving some thought
to, particularly if you like the idea of
the guaranteed lifetime income structure that this can
be framed around.
Jeff, we had other topics we were thinking
about.
I'm still scarred from this conversation.
(18:00):
Chris knows this, but Joe doesn't.
I served on the Massachusetts Public Service Committee
for a number of years, and part of
that committee's role was to hear appeals from
pension issues.
A common one was the older widow coming
in before us trying to make a case
(18:21):
why her husband's choice, I'm stereotyping, could be
any gender, but why her husband's choice of
a single life should be undone.
We talk about it's probably not going to
happen.
You get killed the day after you sign
your paper for your pension, but it does
happen, or a diagnosis happens a month later,
(18:43):
and the people are trying to undo it.
We all think that these things aren't going
to happen to us.
I'm healthy.
I'm strong.
I'm going to pick the single life.
Maybe my spouse's health isn't all that good,
so it makes sense not to do a
survivor benefit.
That's just making a best guess.
These things do happen, and this decision here
(19:05):
of what pension option to pick and whether
or not to protect yourself with additional life
insurance, it's the most important decision you're making
when you're, in this case, a public employer
or someone with a pension, and you're making
that decision, how should I structure this?
Joe, I'd love your idea of preempting some
of this risk by getting the policy with
(19:26):
the option 10 years or so in advance
of retiring because you can get rid of
the policy after 10 years if you don't
want it, but a lot happens with your
health between age 55 and 65 for a
lot of people.
That's a great takeaway.
(19:47):
Well, I was thinking one of the other
things that people often think about as an
insurance, often with the use of life insurance
in or near retirement, relates to trying to
mitigate the risks of long-term care, and
sometimes people get a long-term care policy,
(20:07):
but it seems more frequent today that people
use some kind of a hybrid policy that
involves a life insurance structure that can give
them some long-term care features that can
help manage some of those costs.
We used to think estate planning, and we'll
(20:28):
talk about that next, but we used to
think estate planning was the primary reason people
would get life insurance in retirement, but I
think this probably is more common today.
Would you agree?
Yeah.
Actually, the long-term care conversation has become
more and more popular.
We all know baby boomer generation, 10,000
(20:49):
baby boomers turning 65 every day.
When you think about it, most of us
have a story about a loved one having
been in a nursing home or needing care
at home of some sort, so we've all
touched and felt a long-term care event
in our personal lives, and to be honest,
I think when we talk about long-term
care as a department with our advisors, it's
(21:14):
usually a conversation that's brought up by the
client, not the advisor.
We need to turn that around.
We need advisors at Wealth Enhancement to talk
more about long-term care planning.
I think a lot of advisors might default
to self-insuring because the clients are successful
and have a few million dollars, so they
think that they could weather the storm of
a $100,000, $150,000 three-year event.
(21:38):
What happens if it's a 10-year event?
Dementia, Alzheimer's, those diagnosis can last for a
decade where you're taking care of that individual,
and if you go into a nursing home
for dementia or some type of mental health
issue or cognitive issue, it's twice as expensive,
(21:59):
so talking about how life insurance has evolved
in the long-term care space is really
important.
The traditional LTC product, think the Genworths, the
John Hancocks, the MetLifes of the world that
sold a lot of product in the 80s,
90s, even 2000s, a lot of those products,
our clients get letters saying, oh, the rates
(22:20):
are going up, and because those products are
built on a health insurance chassis product-wise,
so they could go to the state commissioners
and ask for rate increases just like our
medical insurance goes up regularly every year, so
as long as they do it to the
whole class of policy owners, they can raise
rates, right?
They might not get the 100% rate
(22:41):
increase that they asked, but the states are
often increasing 20%, 30% increases, right?
So that traditional product has pretty much fallen
out of favor for most advisors and clients
because the rates aren't guaranteed.
About 20 years ago, Lincoln came out with
a product called MoneyGarden, and this product was
(23:02):
built on a life insurance chassis.
This product was designed where it had guaranteed
rate, and it was more often used as
a single pay, so someone would put a
lump sum of money in, let's call it
$50,000, and they would buy $250,000
worth of long-term care benefit pool, right?
So that product came out, and Lincoln sold
(23:23):
it like hotcakes.
It became very, very popular, even though it
was a single-pay design only.
Well, more and more carriers got into this
life insurance hybrid space of designing products similar
to that one, so now we have a
dozen carriers that offer these types of products,
and they've changed from just the single-pay
design to a five-pay, to a 10
-pay, to even pay all years, right?
(23:46):
And so those products are by far the
most popular design for LTC, and it also
comes with the benefit of a death benefit
because it's a life insurance contract.
So you put in a lump sum or
you pay it out over 10 years in
premiums, guaranteed premiums, again, and you're usually getting
three to six times leverage on your money
(24:06):
depending on how early you're buying it.
So the ideal clients are your clients between
ages 50 and 70 that should really be
having this long-term care conversation, and these
linked benefit products, as we call them, or
hybrid life insurance products, really do hit home
on the needs planning for LTC.
(24:27):
Usually $100,000 can turn into $800,000,
$900,000 of benefit pool by the time
you're age 80, 85, right?
So if you start in your mid-50s
and buy a product with a single-pay
or 10-pay design, by the time you
get into your mid to late 80s, it's
a meaningful amount of insurance that all pays
(24:47):
out from the insurance company tax-free, income
tax-free.
So that $800,000, $900,000 benefit pool
is coming to you to help pay for
your care in those years that you need
it, helping preserve assets for your loved ones,
your spouse, whoever, right?
And then on top of that hybrid design,
(25:08):
you could buy a traditional life insurance policy,
just think your run-of-the-mill universal
life or even whole life products that are
out there, and add what we call accelerated
benefit riders or LTC feature to them.
So for a little added cost, you add
the rider to it.
So now you bought a million-dollar death
benefit.
(25:28):
You bought it primarily for legacy purposes, you're
buying a permanent life insurance policy, you want
to leave this to your loved ones.
You add the rider, usually the riders either
come with a 2% or 4%
feature, 2% monthly from the death benefit.
So 2% every month from a million
-dollar death benefit is $20,000 a month
(25:49):
tax-free.
So you're essentially drawing down your death benefit
to help pay for your care while you're
alive.
And anything that you don't use from the
death benefit when you pass away goes to
your beneficiaries.
So those are the real two big changes
in the LTC space, the two life insurance
products from a hybrid or what we call
(26:09):
linked benefit versus the life insurance with the
LTC riders or accelerated benefit riders.
Well, you've given us a five, 10-minute
view of that right here, but would you
come back sometime and let's talk about that
on a show on its own, because I
think that could be a lengthy insight that
(26:30):
I think a lot of people would like
to gather.
How do I manage this risk?
As you said, I think a lot of
times we think, well, maybe you can self
-insure or put a sinking fund or you
can have a game plan where you can
afford it.
But as you said, you never know how
(26:52):
things play out.
And there might be some virtue to having
insight as to how these products work.
I think a lot of times we look
into this and think, well, it's pretty expensive.
And our clientele are generally inclined to be
like, I don't want that.
And we delude ourselves saying, I just won't
(27:14):
have that problem.
I'll leave you with these two comments about
that perfect timing.
So most clients that purchase, I'm saying more
than 50% of the purchases on long
-term care products are done emotionally because they
had a loved one that went through it
and they realized how taxing it was on
(27:35):
the family, both emotionally and financially.
So they don't really care.
They don't care the cost.
They'll find a way to pay for it.
They don't want to be a burden on
their children like their parents or grandparents were
on their prior, right ahead of them.
So they're buying it emotionally.
Now as financial advisors, we have to make
sure it makes financial sense that it fits
(27:55):
in the plan.
The second thing I'll say is that our
clients are successful because they've been very diligent,
responsible.
They saved, they took your advice on how
to manage their investments to get to their
goals.
They've become successfully financially, right?
So all these years they've made responsible financial
decisions.
Now here they are at age 60 about
(28:17):
to retire.
And we're telling them the fiscally responsible thing
would be to protect your assets with some
long-term care insurance that we could get
leverage of five, eight times what you put
into it premium wise and get back tax
free.
All of that makes financial, complete financial sense
from a tax efficiency leverage standpoint makes complete
(28:39):
sense.
But because that client might have a net
worth of $3 million, we as advisors say,
oh, you can self-insure and just close
the book and don't talk about it.
So they're financially responsible.
You've helped them be financially responsible.
And now we're at a decision point to
maybe add some extra responsibility or protection and
it's cost too much money.
(28:59):
There's value there.
The value has to be there.
Especially with this kind of product where you
say, irrespective of whether you have this need,
there's a payout of some sort.
There's going to be money coming back to
you.
Benefit coming back.
Because I think that's one of the challenges
people think about with the traditional long-term
care policy is, well, I hope never to
(29:21):
use it.
What if I don't use it?
Right.
And the common objection is that the premium
is not stable and they've heard from their
friends or their family seeing that rise in
premiums and they're afraid they won't be able
to afford it when they actually need it.
Yeah.
You start Googling long-term care, pros and
(29:42):
cons.
The big cons start, there's lots of articles
written about the rising cost of long-term
care products.
Right.
But single premium solution type.
That does seem like it makes sense.
Well, and every situation is different, right?
So we've got to look at the context.
(30:04):
One of the things we didn't really talk
about, but I'll just throw out briefly and
Joe, if you want to comment, feel free.
We used to think in terms of estate
planning as a topic for life insurance.
Today, the estate tax is a relatively high
threshold.
So it's not necessarily the estate tax that
people need to be thinking about, but there
(30:26):
are still instances.
Well, in our case, I live in Massachusetts.
Massachusetts has a state tax after $2 million.
So that's one, it's not the federal estate
tax, but it might be a state estate
tax.
But there's also issues of liquidity or illiquidity.
If I own a business, if I own
real estate, I may not have the ease
(30:48):
of liquidating assets in a timely fashion after
the passing of someone who has this wealth.
There may be a desire to create liquidity
along the way.
Maybe it's like, oh, I want to keep
this house or this business in place, but
I want to also have equity for other
(31:13):
kids.
So I'm going to give them cash, but
I don't have that cash readily accessible.
You have different scenarios that can emerge.
We didn't even talk about business applications of
life insurance, which are again, its own show
sometime.
But this was great, Joe.
We touched on a lot.
(31:33):
Anything you want to last thoughts or comments?
Yeah.
And you're touching on the estate planning.
I say, every client needs an estate plan.
Not every client needs an estate tax plan.
But if you think about what happens at
end of life, is the titling of your
assets right?
Are all the beneficiaries named properly?
Do you have a living will, a poor,
(31:54):
what happens at the end of life?
Life insurance is instant liquidity, tax-free to
your family to use as they see fit.
And whoever the name beneficiaries are, they're entrusted
outside of the estate, but the trust then
dictates how it gets dispersed.
I would say this about permanent life insurance
or using life insurance in estate planning.
(32:18):
We have assets that are typically not really
friendly to being bequested to our loved ones.
For instance, IRA qualified accounts, worst asset to
leave to your loved ones.
Another asset, non-qualified annuities.
You pay taxes on all the built up
gains in a non-qualified annuity.
(32:38):
So there's ways to start changing those asset
classes by maybe liquidating out of them and
buying a permanent life insurance policy that you
leave to your loved ones as your legacy.
I know this too, from my experience over
20 years in the insurance industry, clients that
own permanent life insurance and have that legacy
(32:59):
check box off saying, I already have taken
care of it.
I have a second to die policy and
a trust.
That's what I'm leaving my children.
They feel more inclined to use their money
that they've saved up and are using in
retirement as opposed to always having to worry
about, am I going to run out of
money?
They've already taken care of the legacy side.
They're going to take those children and grandchildren
(33:20):
on the two week cruise to the Caribbean
or to Disney World on the big family
reunion because they feel comfortable spending their money
because they're already taking care of it.
So it's a permission slip to actually spend
your money and enjoy life.
Can you use the magic word?
That's my favorite word, permission.
That's a great point.
(33:41):
So by having that insurance in place as
in that maybe irrevocable life insurance trust or
part of their estate plan that they've put
this money aside, that's for the next generation.
They've planned for it, but it gives them
permission to use their resources.
And then that can be in shared experiences.
That was a great example you gave, Joe.
(34:03):
It is.
That's an excellent point.
This was a great discussion.
I don't know if you want to, but
you're going to have to come back.
Let me know.
We barely scratched the surface.
That was a great conversation.
Thanks so much.
We'll look forward to having you back and
talk more.
Until next time, everybody keeps driving for something
more.
Thank you for listening to Something More with
(34:23):
Chris Boyd.
Call us for help, whether it's for financial
planning or portfolio management, insurance concerns, or those
quality of life issues that make the money
matters matter.
Whatever's on your mind, visit us at somethingmorewithchrisboyd
.com or call us toll free at 866
-771-8901 or send us your questions to
(34:46):
amr-info at wealthenhancement.com.
You're listening to Something More with Chris Boyd
Financial Talk Show.
Wealth Enhancement Advisory Services and Jay Christopher Boyd
provide investment advice on an individual basis to
clients only.
Proper advice depends on a complete analysis of
all facts and circumstances.
The information given on this program is general
financial comments and cannot be relied upon as
pertaining to your specific situation.
(35:07):
Wealth Enhancement Group cannot guarantee that using the
information from this show will generate profits or
ensure freedom from loss.
Listeners should consult their own financial advisors or
conduct their own due diligence before making any
financial decisions.
Welcome to Something More with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president and financial advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Welcome to Something More with Chris Boyd.
I'm Chris Boyd.
I'm here with Jeff Perry.
We are both of the AMR team at
Wealth Enhancement and glad to have you with
(00:43):
us.
We have a special guest today.
We have Joe Guy, the insurance guy, who's
going to join us.
I've got you.
We're glad to have you here.
We'll talk a little bit about some insurance
-related issues.
Maybe to start off with, we can begin
(01:05):
by just an introduction to you and where
you fit into the Wealth Enhancement organization so
we can disclose all that to our listeners.
Yeah, sure.
Joe Guy, director of insurance here at Wealth
Enhancement.
We are part of the centralized service department,
(01:26):
so insurance, which includes life, disability, long-term
care, and now a newly minted annuity desk
as well.
We handle all things insurance from that personal
aspect for our clients.
Advisors are encouraged to use centralized services, which
isn't just insurance.
It expands to retirement planning.
(01:46):
It includes also our tax department, our advanced
planning team.
We have group benefits, obviously pension 401k, the
retirement planning consultants.
What else am I missing?
High net worth, business strategies.
Quite a few centralized services that we offer
(02:06):
here at Wealth Enhancement.
My area of specialty is working with individuals
and business owners on insurance planning strategies.
Again, life, disability, long-term care annuities.
We're here to obviously support our advisors and
put best product and solutions in front of
our clients here at Wealth Enhancement.
It's worth talking about for a second with
(02:27):
our team.
We're a registered investment advisor firm.
Wealth Enhancement has various subsidiary companies that we
can utilize to have integrated resources if people
have a need for, in your case, insurance
(02:47):
services, but maybe it's tax services, maybe it's
trustee services.
Could be all range of possible considerations.
When there is a need for something beyond
the scope of our primary focus, financial planning
and portfolio management, there's a depth of resources
that Wealth Enhancement as a large organization has
(03:09):
coordinated the ability for us to find useful
resources readily accessible that we can help clients
navigate and make use of.
Of course, if people have someone they like
to use for their taxes or insurance or
whatever, that's not a problem.
We can work with their team.
But when they don't have someone and they
need to have some assistance, it's nice that
(03:31):
Wealth Enhancement has put together this depth of
resources for this integrated approach that people like
to have the ability to have and the
convenience of coordinating through one organization that they
can kind of navigate all of their range
of needs that they might have.
So that's the goal.
(03:52):
Try to make life easy for the clients
and not to overlook important areas.
And risk management, which really insurance is fundamentally
about, is a really important part of the
building blocks that we think about when we
talk about financial planning.
However, Joe, one of the things that we
were thinking about, our clientele, retirees, oftentimes people
(04:16):
in or near retirement, oftentimes they start thinking,
well, I don't need insurance at this stage
of my life, which is often the case.
They created wealth.
And the goal of insurance, maybe at a
different stage of life, is wealth creation in
the event that I don't live long enough
to do that, or if I have a
disability, or you mentioned various areas of coverage,
(04:39):
but it's oftentimes thought of as a wealth
creation tool if I'm not able to do
it myself.
Now, when we get to a certain stage
of life, maybe we have some wealth, but
there still can be times when there are
applications for insurance that can be a really
great use.
(04:59):
And we thought we'd talk about a few
of those for people to be mindful of
as they get approaching those issues of in
or near retirement, when they might find this
would be a great time to think about
a use of insurance.
And Jeff and I were kind of brainstorming
before you jumped on with us.
(05:20):
And I think the first one that we
were thinking about is people going through decisions
around pensions.
And the notion of, on the one hand,
the pension gives you the possibility of maybe
a lump sum or maybe an income stream
for life.
And in many cases, people like the idea
(05:43):
of a guarantee of an income stream for
life, but they have this possibility they want
their spouse to be considered as well.
But what if I don't live long enough
or what if we don't live long enough?
Sometimes people look to this concept called pension
maximization, a technique to basically think about maybe
(06:08):
the use of life insurance as a tool
to maximize your benefits, but also make sure
some of that wealth stays with your family
after you're gone in case you don't live
as long as you'd like.
Do you want to talk a little bit
about that topic?
Yeah.
So we often refer to this planning opportunity
as a pension max strategy that's common in
(06:30):
the insurance industry.
When you have a retiree closing in on
that retirement age and they then are meeting
with their benefits coordinator and how to choose
their pension, whether it's going to be a
single life, whether they're going to do joint
survivorship, there's joint survivorship with percentages, 50%, 100%.
(06:52):
So that decision starts to come into play
as they near retirement.
And just like you said, if they decide
to take a single life pension, therefore the
spouse not getting any benefits if that pensioner
passes away early, that single life ends with
the single life retiree, right?
(07:15):
But if they have life insurance, to help
supplement the surviving spouse, that single life pension
typically pays 25, 30% more than a
joint life, say 50% survivor.
So the calculation that's done for someone considering
(07:36):
retirement that has a pension, a defined benefit
pension that they get to choose, think of
state employees, federal employees.
There's not a lot of private pensions out
there anymore.
Not as many as there used to be.
Usually it's public servants, civil service that still
has some pensions, teachers, police officers, things along
(07:57):
those lines.
But the calculation that we do within the
insurance department is what's the single life versus
the joint life, what you would typically choose,
50%, 100%, right?
And then we compare that difference and if
they could afford to buy life insurance and
if it makes sense.
And obviously- I mean, just think about
it for a second, Joe.
(08:18):
If you were saying just for simplicity, if
it was like, oh, it's $1,000 a
month if I take it myself, but $850
a month if I include my spouse for
whatever that amount might be.
If we were to put a name to
that kind of a differential in another circumstance
where you said, oh, I'm going to spend
about $150 a month to make sure my
(08:42):
spouse, my wife, my husband retains an income
stream after I've died, we'd put a name
to that and call it life insurance, right?
If you said, oh, I'm going to spend
a premium and have a death benefit in
effect, right?
That's essentially all you're talking about when it
comes to this notion.
(09:04):
But the idea if you have a situation
where let's say the pensioner lives a long
time and then the spouse becomes the beneficiary,
if it's built into the pension, we might
never see the benefit of that because the
(09:24):
spouse might not live a long time and
the heirs might give up a lot of
that wealth in that scenario.
Whereas if we did this privately through an
insurance policy, we might be better served to
be able to retain wealth intergenerationally.
Now, there are differences in tax treatments and
there's a lot of variables.
Sometimes there's differences in the benefits like health
(09:47):
insurance for the spouse or things.
There's things to be tuned into that you
have to look at and be mindful of.
But oftentimes it can really work out nicely
if your goal is to try to retain
wealth intergenerationally.
Would you say that's a fair characterization?
I would, yes.
And I would say that the planning opportunity
(10:08):
shouldn't start when you're six months away from
retirement, right?
This should be talked about five years at
a minimum because for the pricing to work
for that retiree, they should have probably already
bought their insurance a few years prior to
the retirement age.
Well, of course with a pension, you don't
have to show you're healthy, right?
(10:29):
But with a life insurance policy, you have
to be at least insurable.
And the earlier you do that, maybe a
greater likelihood of not having existing health issues
get in the way.
Right.
So something that I like to talk to
advisors and their clients about, especially with those
pensioners, is buy a 10-year option to
(10:54):
make that decision.
What do I mean by that?
If you bought at 55, a 10-year
convertible term policy, let's just say is a
million dollars.
You're 55 years old, 10-year term, and
it costs for that 10-year term, it's
going to cost, I don't know, a thousand
dollars a year, right?
I might be low-balling a little, maybe
it's $2,000.
But you're 55, you're in your prime earning
(11:18):
years, you're still healthy enough, you're an empty
nester.
You can probably afford the $2,000 to
buy the million dollar option.
I'm calling it an option because it's convertible.
Now, if you plan on retiring somewhere between
62, 65, guess what?
I locked your health in at 55.
And when you say, you know what?
I'm getting these pension reports and now I
(11:39):
need to start thinking about how I'm going
to choose my pension when I retire.
Let me consider converting that million dollars to
permanent insurance or some of it to permanent
and leave the rest in term.
Whatever that is, you need to then figure
out, is it enough to cover what you
would have gotten by taking a survivorship benefit,
right?
(12:00):
The survivorship calculation, a lot of pensions are
pretty rich for the survivor.
50% of a $5,000 a month
benefit, that adds up to be a $30
,000 income a year.
You need a significant lump sum of money
in order to provide a spouse $30,000
a year income, right?
(12:21):
So, you have to have that calculation done
in order to back into how much insurance
you should probably have.
And the insurance doesn't have to be all
permanent insurance, ideally it is, but you could
level.
I think it's a common mistake though, that
sometimes people say, oh, I'm going to get
20 year term insurance.
(12:42):
And then the problem becomes they live 20
years and the survivor is in a bind
when there's not sufficient resources.
So, I think it's a mistake to rely
too heavily on term insurance as the resource
for this.
Your point is you can do it as
(13:03):
a staged kind of approach, maybe as you
get older, the need for, let's just talk
about how that lump sum is calculated essentially.
Conceptually, think of it this way.
If I die at, I'm the pensioner, I
get my pension option and I want to
plan for day one, I've accepted my income.
(13:26):
And then I die in a car accident
on the way home, right?
I need enough of a lump sum in
this insurance to make sure that my spouse
can essentially replace the income we were planning
for 100%, 50%, whatever that number is going
to be.
So, the way we would typically think about
that is like, what would it cost to
buy an annuity to accomplish that gives us
(13:47):
a value of how much insurance do we
need as an essence?
Now, in reality, we may not choose to
use an annuity when the time comes, but
it gives us the way to know how
much would we need if we wanted an
absolute, a guarantee of being able to meet
those needs.
Now, in reality, we're probably not going to
(14:07):
die on the way home from signing those
papers.
And so, it's very likely we're going to
live a lot longer.
And so, when the time comes that we
have that death of the pensioner, we've got
some choices.
Now, we certainly could use an annuity as
a way to guarantee that income for the
surviving spouse.
(14:28):
But if it's later in life, we probably
wouldn't want to, because we want to keep
that cash in the family and available.
But you've got these choices along the way
that you can navigate what's the best plan
at a given moment in time.
And you want to be in a situation
where this insurance exists when it's needed.
(14:50):
And that's why a permanent product of some
type or something with a guaranteed death benefit,
to me, is the way we want to
structure this kind of a circumstance for the
bulk of it, at least.
If we think about it, we're willing to
give up some of that wealth, because now
we live 20 years.
(15:11):
Maybe some portion of term is viable where
you can say, oh, well, there's still a
portion that's going to be available for that
survivor or for the next generation.
Is that essentially where you're going with that?
Yeah.
I mean, the biggest risk is those early
years right after retirement.
(15:31):
If you take the single life pension, those
first 10 years are the most critical that
you need to outlive.
If you die prematurely, then you're going to
need a big lump sum to cover and
support the surviving spouse.
Layering in some shorter term will make it
look much better for that retiring couple to
(15:52):
be able to pick the single life.
You're still going to need some permanent insurance
to last out for the long term.
God forbid you pass away in your early
80s, but your spouse lives to their late
90s.
There's going to be a gap there.
You definitely need that permanent insurance to last
beyond age 75, like a typical term would
last till.
(16:15):
There's a calculation to be done in a
comparison.
It does take some planning, as you said.
The extra money that you're getting from the
single life pension, you have to factor into
how much is going to go to taxes,
and then what's your net after tax extra
that you're earning, and is that enough to
pay for the insurance and still have some
(16:36):
extra money?
The idea is that you don't just zero
out when it's said and done.
You want to be earning more income off
the single life pension after the premiums are
paid, after taxes are paid, so that you're
actually making out better and then taking a
joint survivor benefit.
If it's equivalent, maybe it'd just be easier
to use the pension.
(16:56):
I think it's also worth thinking about people
today have maybe money that's in the bank
that's safety money, but isn't producing a lot.
It's sometimes appealing to say, take some of
that money, put it into this product because
it's going to give you a much bigger
income cash flow, and you might not have
to put as much toward the premium.
(17:18):
It can really help generate more off of
that savings over a lifetime that it can
really be worth thinking about.
Well, this is just one thing that we
mentioned for people in or near retirement, pension
maximization.
Very specific to people who have pension, but
(17:38):
if you're in that scenario, it's really worth
digging into the numbers and giving some thought
to, particularly if you like the idea of
the guaranteed lifetime income structure that this can
be framed around.
Jeff, we had other topics we were thinking
about.
I'm still scarred from this conversation.
(18:00):
Chris knows this, but Joe doesn't.
I served on the Massachusetts Public Service Committee
for a number of years, and part of
that committee's role was to hear appeals from
pension issues.
A common one was the older widow coming
in before us trying to make a case
(18:21):
why her husband's choice, I'm stereotyping, could be
any gender, but why her husband's choice of
a single life should be undone.
We talk about it's probably not going to
happen.
You get killed the day after you sign
your paper for your pension, but it does
happen, or a diagnosis happens a month later,
(18:43):
and the people are trying to undo it.
We all think that these things aren't going
to happen to us.
I'm healthy.
I'm strong.
I'm going to pick the single life.
Maybe my spouse's health isn't all that good,
so it makes sense not to do a
survivor benefit.
That's just making a best guess.
These things do happen, and this decision here
(19:05):
of what pension option to pick and whether
or not to protect yourself with additional life
insurance, it's the most important decision you're making
when you're, in this case, a public employer
or someone with a pension, and you're making
that decision, how should I structure this?
Joe, I'd love your idea of preempting some
of this risk by getting the policy with
(19:26):
the option 10 years or so in advance
of retiring because you can get rid of
the policy after 10 years if you don't
want it, but a lot happens with your
health between age 55 and 65 for a
lot of people.
That's a great takeaway.
(19:47):
Well, I was thinking one of the other
things that people often think about as an
insurance, often with the use of life insurance
in or near retirement, relates to trying to
mitigate the risks of long-term care, and
sometimes people get a long-term care policy,
(20:07):
but it seems more frequent today that people
use some kind of a hybrid policy that
involves a life insurance structure that can give
them some long-term care features that can
help manage some of those costs.
We used to think estate planning, and we'll
(20:28):
talk about that next, but we used to
think estate planning was the primary reason people
would get life insurance in retirement, but I
think this probably is more common today.
Would you agree?
Yeah.
Actually, the long-term care conversation has become
more and more popular.
We all know baby boomer generation, 10,000
(20:49):
baby boomers turning 65 every day.
When you think about it, most of us
have a story about a loved one having
been in a nursing home or needing care
at home of some sort, so we've all
touched and felt a long-term care event
in our personal lives, and to be honest,
I think when we talk about long-term
care as a department with our advisors, it's
(21:14):
usually a conversation that's brought up by the
client, not the advisor.
We need to turn that around.
We need advisors at Wealth Enhancement to talk
more about long-term care planning.
I think a lot of advisors might default
to self-insuring because the clients are successful
and have a few million dollars, so they
think that they could weather the storm of
a $100,000, $150,000 three-year event.
(21:38):
What happens if it's a 10-year event?
Dementia, Alzheimer's, those diagnosis can last for a
decade where you're taking care of that individual,
and if you go into a nursing home
for dementia or some type of mental health
issue or cognitive issue, it's twice as expensive,
(21:59):
so talking about how life insurance has evolved
in the long-term care space is really
important.
The traditional LTC product, think the Genworths, the
John Hancocks, the MetLifes of the world that
sold a lot of product in the 80s,
90s, even 2000s, a lot of those products,
our clients get letters saying, oh, the rates
(22:20):
are going up, and because those products are
built on a health insurance chassis product-wise,
so they could go to the state commissioners
and ask for rate increases just like our
medical insurance goes up regularly every year, so
as long as they do it to the
whole class of policy owners, they can raise
rates, right?
They might not get the 100% rate
(22:41):
increase that they asked, but the states are
often increasing 20%, 30% increases, right?
So that traditional product has pretty much fallen
out of favor for most advisors and clients
because the rates aren't guaranteed.
About 20 years ago, Lincoln came out with
a product called MoneyGarden, and this product was
(23:02):
built on a life insurance chassis.
This product was designed where it had guaranteed
rate, and it was more often used as
a single pay, so someone would put a
lump sum of money in, let's call it
$50,000, and they would buy $250,000
worth of long-term care benefit pool, right?
So that product came out, and Lincoln sold
(23:23):
it like hotcakes.
It became very, very popular, even though it
was a single-pay design only.
Well, more and more carriers got into this
life insurance hybrid space of designing products similar
to that one, so now we have a
dozen carriers that offer these types of products,
and they've changed from just the single-pay
design to a five-pay, to a 10
-pay, to even pay all years, right?
(23:46):
And so those products are by far the
most popular design for LTC, and it also
comes with the benefit of a death benefit
because it's a life insurance contract.
So you put in a lump sum or
you pay it out over 10 years in
premiums, guaranteed premiums, again, and you're usually getting
three to six times leverage on your money
(24:06):
depending on how early you're buying it.
So the ideal clients are your clients between
ages 50 and 70 that should really be
having this long-term care conversation, and these
linked benefit products, as we call them, or
hybrid life insurance products, really do hit home
on the needs planning for LTC.
(24:27):
Usually $100,000 can turn into $800,000,
$900,000 of benefit pool by the time
you're age 80, 85, right?
So if you start in your mid-50s
and buy a product with a single-pay
or 10-pay design, by the time you
get into your mid to late 80s, it's
a meaningful amount of insurance that all pays
(24:47):
out from the insurance company tax-free, income
tax-free.
So that $800,000, $900,000 benefit pool
is coming to you to help pay for
your care in those years that you need
it, helping preserve assets for your loved ones,
your spouse, whoever, right?
And then on top of that hybrid design,
(25:08):
you could buy a traditional life insurance policy,
just think your run-of-the-mill universal
life or even whole life products that are
out there, and add what we call accelerated
benefit riders or LTC feature to them.
So for a little added cost, you add
the rider to it.
So now you bought a million-dollar death
benefit.
(25:28):
You bought it primarily for legacy purposes, you're
buying a permanent life insurance policy, you want
to leave this to your loved ones.
You add the rider, usually the riders either
come with a 2% or 4%
feature, 2% monthly from the death benefit.
So 2% every month from a million
-dollar death benefit is $20,000 a month
(25:49):
tax-free.
So you're essentially drawing down your death benefit
to help pay for your care while you're
alive.
And anything that you don't use from the
death benefit when you pass away goes to
your beneficiaries.
So those are the real two big changes
in the LTC space, the two life insurance
products from a hybrid or what we call
(26:09):
linked benefit versus the life insurance with the
LTC riders or accelerated benefit riders.
Well, you've given us a five, 10-minute
view of that right here, but would you
come back sometime and let's talk about that
on a show on its own, because I
think that could be a lengthy insight that
(26:30):
I think a lot of people would like
to gather.
How do I manage this risk?
As you said, I think a lot of
times we think, well, maybe you can self
-insure or put a sinking fund or you
can have a game plan where you can
afford it.
But as you said, you never know how
(26:52):
things play out.
And there might be some virtue to having
insight as to how these products work.
I think a lot of times we look
into this and think, well, it's pretty expensive.
And our clientele are generally inclined to be
like, I don't want that.
And we delude ourselves saying, I just won't
(27:14):
have that problem.
I'll leave you with these two comments about
that perfect timing.
So most clients that purchase, I'm saying more
than 50% of the purchases on long
-term care products are done emotionally because they
had a loved one that went through it
and they realized how taxing it was on
(27:35):
the family, both emotionally and financially.
So they don't really care.
They don't care the cost.
They'll find a way to pay for it.
They don't want to be a burden on
their children like their parents or grandparents were
on their prior, right ahead of them.
So they're buying it emotionally.
Now as financial advisors, we have to make
sure it makes financial sense that it fits
(27:55):
in the plan.
The second thing I'll say is that our
clients are successful because they've been very diligent,
responsible.
They saved, they took your advice on how
to manage their investments to get to their
goals.
They've become successfully financially, right?
So all these years they've made responsible financial
decisions.
Now here they are at age 60 about
(28:17):
to retire.
And we're telling them the fiscally responsible thing
would be to protect your assets with some
long-term care insurance that we could get
leverage of five, eight times what you put
into it premium wise and get back tax
free.
All of that makes financial, complete financial sense
from a tax efficiency leverage standpoint makes complete
(28:39):
sense.
But because that client might have a net
worth of $3 million, we as advisors say,
oh, you can self-insure and just close
the book and don't talk about it.
So they're financially responsible.
You've helped them be financially responsible.
And now we're at a decision point to
maybe add some extra responsibility or protection and
it's cost too much money.
(28:59):
There's value there.
The value has to be there.
Especially with this kind of product where you
say, irrespective of whether you have this need,
there's a payout of some sort.
There's going to be money coming back to
you.
Benefit coming back.
Because I think that's one of the challenges
people think about with the traditional long-term
care policy is, well, I hope never to
(29:21):
use it.
What if I don't use it?
Right.
And the common objection is that the premium
is not stable and they've heard from their
friends or their family seeing that rise in
premiums and they're afraid they won't be able
to afford it when they actually need it.
Yeah.
You start Googling long-term care, pros and
(29:42):
cons.
The big cons start, there's lots of articles
written about the rising cost of long-term
care products.
Right.
But single premium solution type.
That does seem like it makes sense.
Well, and every situation is different, right?
So we've got to look at the context.
(30:04):
One of the things we didn't really talk
about, but I'll just throw out briefly and
Joe, if you want to comment, feel free.
We used to think in terms of estate
planning as a topic for life insurance.
Today, the estate tax is a relatively high
threshold.
So it's not necessarily the estate tax that
people need to be thinking about, but there
(30:26):
are still instances.
Well, in our case, I live in Massachusetts.
Massachusetts has a state tax after $2 million.
So that's one, it's not the federal estate
tax, but it might be a state estate
tax.
But there's also issues of liquidity or illiquidity.
If I own a business, if I own
real estate, I may not have the ease
(30:48):
of liquidating assets in a timely fashion after
the passing of someone who has this wealth.
There may be a desire to create liquidity
along the way.
Maybe it's like, oh, I want to keep
this house or this business in place, but
I want to also have equity for other
(31:13):
kids.
So I'm going to give them cash, but
I don't have that cash readily accessible.
You have different scenarios that can emerge.
We didn't even talk about business applications of
life insurance, which are again, its own show
sometime.
But this was great, Joe.
We touched on a lot.
(31:33):
Anything you want to last thoughts or comments?
Yeah.
And you're touching on the estate planning.
I say, every client needs an estate plan.
Not every client needs an estate tax plan.
But if you think about what happens at
end of life, is the titling of your
assets right?
Are all the beneficiaries named properly?
Do you have a living will, a poor,
(31:54):
what happens at the end of life?
Life insurance is instant liquidity, tax-free to
your family to use as they see fit.
And whoever the name beneficiaries are, they're entrusted
outside of the estate, but the trust then
dictates how it gets dispersed.
I would say this about permanent life insurance
or using life insurance in estate planning.
(32:18):
We have assets that are typically not really
friendly to being bequested to our loved ones.
For instance, IRA qualified accounts, worst asset to
leave to your loved ones.
Another asset, non-qualified annuities.
You pay taxes on all the built up
gains in a non-qualified annuity.
(32:38):
So there's ways to start changing those asset
classes by maybe liquidating out of them and
buying a permanent life insurance policy that you
leave to your loved ones as your legacy.
I know this too, from my experience over
20 years in the insurance industry, clients that
own permanent life insurance and have that legacy
(32:59):
check box off saying, I already have taken
care of it.
I have a second to die policy and
a trust.
That's what I'm leaving my children.
They feel more inclined to use their money
that they've saved up and are using in
retirement as opposed to always having to worry
about, am I going to run out of
money?
They've already taken care of the legacy side.
They're going to take those children and grandchildren
(33:20):
on the two week cruise to the Caribbean
or to Disney World on the big family
reunion because they feel comfortable spending their money
because they're already taking care of it.
So it's a permission slip to actually spend
your money and enjoy life.
Can you use the magic word?
That's my favorite word, permission.
That's a great point.
(33:41):
So by having that insurance in place as
in that maybe irrevocable life insurance trust or
part of their estate plan that they've put
this money aside, that's for the next generation.
They've planned for it, but it gives them
permission to use their resources.
And then that can be in shared experiences.
That was a great example you gave, Joe.
(34:03):
It is.
That's an excellent point.
This was a great discussion.
I don't know if you want to, but
you're going to have to come back.
Let me know.
We barely scratched the surface.
That was a great conversation.
Thanks so much.
We'll look forward to having you back and
talk more.
Until next time, everybody keeps driving for something
more.
Thank you for listening to Something More with
(34:23):
Chris Boyd.
Call us for help, whether it's for financial
planning or portfolio management, insurance concerns, or those
quality of life issues that make the money
matters matter.
Whatever's on your mind, visit us at somethingmorewithchrisboyd
.com or call us toll free at 866
-771-8901 or send us your questions to
(34:46):
amr-info at wealthenhancement.com.
You're listening to Something More with Chris Boyd
Financial Talk Show.
Wealth Enhancement Advisory Services and Jay Christopher Boyd
provide investment advice on an individual basis to
clients only.
Proper advice depends on a complete analysis of
all facts and circumstances.
The information given on this program is general
financial comments and cannot be relied upon as
pertaining to your specific situation.
(35:07):
Wealth Enhancement Group cannot guarantee that using the
information from this show will generate profits or
ensure freedom from loss.
Listeners should consult their own financial advisors or
conduct their own due diligence before making any
financial decisions.
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