Use Insurance and Financial Tools Wisely

Legacy Day Three

Thomas Plemmons

Owens Insurance

Know key terms

If it is challenging to understand insurance jargon, consulting with an experienced agent can help. He mentioned terms that often confuse the public.

Premium, death benefit beneficiaries, contingent beneficiaries, underwrite, cash value, riders are optional add-ons.

Six types of life insurance

Term

Whole

Universal life

Indexed, tied to the stock market or government bonds. It’s very important to review annual reports.

Simplified issue in life. Limited qualifying medical questions.

Guaranteed issue life. No medical questions. Limited face value of $25,000 or $50,000. No death benefit for the first two years. If death occurs during the first two years, the policy pays a stipulated interest rate, like 10 or 12% of the premiums paid into the plan.

Long-term care insurance

30 to 90 days

Benefit period ranges from 2 to 5 years with riders, it can be longer.

Daily benefit: maximum amount paid per day for care.

Chronic illnesses can trigger payments of long-term care benefits. If you have issues with two or more challenges in caring routinely for yourself, like getting dressed or diminished cognition, you can receive benefits.

Life insurance with long-term care riders

Stewart Smith

Financial

Do a good budget.

Make sure you are efficient in using your money.  Be clear about income and expenses.

Beware of subscriptions and eating out. Anyone can be caught having two subscriptions to the same app.  I did it myself. I had a personal account and a business to the same app. I surprised myself.

Eating out often can kill a budget. Do the math. Do we really need to eat out that often?

Determine your assets.

Insurance products, cash value, collectibles, real property, cash, and family heirlooms.

Do an inventory and share this data with loved ones. Are my assets titled correctly?

Understand capital gains taxes on real estate.

Real estate appreciates.  A house bought at $100,000 could be worth $300,000 or more several decades later. Ask yourself, am I passing my assets in the most tax-efficient way?

If you have certain funds earmarked for particular heirs, why leave cash in an IRA when you can buy life insurance with your heirs as beneficiaries? Leave them three to four times the amount in the IRA tax-free.

Document all present and future income streams. Notify Social Security promptly about the death of a loved one. Why wait months and be forced to repay unauthorized payments?

Address spending for special health care in case you have a stroke or heart attack. Who will be your caregiver then?