Permanent Life Insurance

Permanent insurance is a sophisticated financial instrument.

 

 

 

 

Applications of Life Insurance

Permanent insurance is used in five areas:

  1. To meet the needs of family members in the event of pre-mature death.
  2. To provide a source of tax-advantaged income as a retirement income supplement.
  3. To provide a source of capital during one’s life that can be accessed to meet capital requirements in lieu of paying interest on bank loans.
  4. To provide liquidity to cover estate taxes; and
  5. As a funding vehicle for a variety of business purposes.
    1. To fund buy-sell | stock-redemption plans.
    2. To fund non-qualified deferred compensation plans.
    3. To protect a business for the financial losses that could be incurred in the event of a key employee.
    4. To assist in retaining key employees by providing a tax-advantaged annual bonus plan.
Group vs. Individual Coverage?
Key Disability Income Insurance Policy Provisions

The following are just a few of the contractual issues that we consider to be important distinctions between Disability Income Insurance policies.

  • Maximum Potential Benefits – How much could you receive in the event of a long-term disability?
  • Definition of Your Occupation – Under what conditions will you be considered disabled?
  • Partial (aka Residual) Disability Calculation – if you are partially disabled, how much of an earnings loss must you experience to qualify to receive benefits?
  • Elimination Period – the number of days you must be disabled before benefits become payable.
  • Accumulation Period – the maximum number of days within which you must complete the elimination period.
  • Benefit Indexing – will the amount of insurance you purchased keep pace with inflation?
  • Definition of Pre-Disability Earnings – this definition can be particularly important for self-employed professionals.
  • Cost of Living Adjustment Provision – if you are disabled, will your monthly benefit keep pace with inflation?
  • Premium Structure – Are annually increasing | graded premium options available?

 

The top 7 reasons every working American needs paycheck protection

Disability Statistics

Just over 1 in 4 of today’s 20 year olds will become disabled before they retire. [1]

 In December of 2010, there were over 2.5 million workers in their 20s, 30s, and 40s receiving SSDI benefits. [2]

 The average long-term disability claim duration is 31.2 months. [3]

 75% of Americans don’t have enough savings to cover their bills for six months. [4]

 Approximately 90% of disabilities are caused by illnesses rather than accidents. [5]

 Medical problems contributed to 62% of all personal bankruptcies filed in the U.S. in 2007, a 49.6% increase over results from a similar 2001 study. [6]

 One in three Americans between ages 35 and 65 will become disabled for more than 90 days.[7]

 

[1] Social Security Administration, Fact Sheet March 18, 2011

[2] Social Security Administration, Disabled Worker Beneficiary Statistics, ssa.gov

[3] 2010 Gen Re Disability Fact Book

[4] Bankrate.com, Financial Security Index Survey, June 24, 2013

[5] Council for Disability Awareness, Long-Term Disability Claims Review, 2011

[6] The American Journal of Medicine, June 4, 2009 Medical Bankruptcy in the United States, 2007: Results of a National Study; David U. Himmelstein, MD, Deborah Thorne, PhD, Elizabeth Warren, JD, Steffie Woolhandler, MD.

[7] Statistics, ssa.gov