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Insured Family Legacy

What is Legacy Planning?

Your clients have worked a lifetime to create financial security for themselves and their family. They are comfortable and have assets that they may not need to fund their retirement. How can we best prepare them now to pass their wealth on to their loved ones? One of our non-conventional strategies that will help your clients succeed in their financial accomplishments is insured family legacy planning.

insured family legacy

When To Use Insured Family Legacy

There comes a point in time when seniors begin to worry about the legacy they’re leaving behind. Grandparents often worry about the grandchildren’s future. Their goal now is to pass their wealth on to others. A spouse is typically the first recipient. After that, children, grandchildren, and charities are usually next. Your clients want to control who will benefit from their financial success and establish the best way to transfer their wealth. This is a typical circumstance where insured family legacy can be used. 
With proper planning, it is possible for older generations to utilize assets that are not needed for everyday living expenses and make more efficient use of them for the benefit of future generations, while still maintaining control over these assets.

Our Insured Family Legacy Plan

Life Insurance is a powerful tool you may utilize when planning a legacy for multiple generations. Your clients may already be familiar with its primary use – providing money to your family or other beneficiaries after death. But the value of life insurance exceeds just that. Permanent life insurance provides both death benefits and possibilities through cash value accumulation. If properly structured, it can positively meet the planning goals of multiple generations.

Who will Benefit from Our Insured Family Legacy Plan?

Do you have clients between the ages of 60-75 that are grandparents? Many grandparents worry about the future of their children and grandchildren when they are no longer around. They may have money that is idle or are not using all of their retirement income due to excessive RMDs (Required Minimum Distributions) or pensions. It’s important to give them options to help maintain control of their wealth and how it will be distributed once they are gone.

What It Works

Our Insured Family Legacy Plan allows grandparents (Generation 1) to purchase cash value life insurance where the insured is their children (Generation 2). The reason buying life insurance on their children is attractive is:

1. Grandparents (Generation 1) likely have health issues that make underwriting (qualifying) difficult.

2. The policy will accumulate cash values much more rapidly on the younger person (Generation 2)

3. They are able to create a much higher death benefit because the insured is younger (Generation 2)

4. The ownership of the policy is important because Generation 1 own the policy and control the cash values

Demographics

Parents/grandparents who want to provide a legacy for their children/grandchildren.

  • Ages 60-75 with over $1M Net Worth
  • $5K+ Premium
  • Insured (Generation 2) must have enough income to justify the death benefit
  • Insured (Generation 2) must have their own personal life insurance
  • Death benefit Cannot exceed $2,000,000
  • Insured must have children/dependents
  • Generation 1 (Grandparents) and Insured must be immediate family members
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Generation 1 purchases a Life Insurance Policy on the life of Generation 2.

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Upon the death of Generation 1, the policy is now owned by the insured

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Upon the death of Gen2, the policy proceeds can provide a legacy for Gen3.

Benefits of Insured Family Legacy Plan

Life insurance serves as one of the most, if not the most, tax-effective way to transfer money. Depending on the policy type, it can provide guarantees no other product or tool can. With life insurance, grandparents have the ability to put some money aside on a tax-advantaged basis that will eventually go to their grandchildren. It allows them to start “giving” away their money while still retaining control over it. If they should ever need this money for their retirement income, they can access it for their own income.

Oftentimes we see that the older generation feels like they have had it better financially or had better opportunities in their lives compared to their parents and done better. However, they also feel like their children may only do about as well as they did. With the political environment, taxes, debt, stock market and other important factors, grandparents are extremely concerned that their grandchildren will not be able to have it as good as their children or certainly not as well as they did. The Insured Family Legacy Plan is critical because it helps to ensure their grandchildren are financially secure.

How Advisor’s Resource Company Can Help

Our strategies are aimed to exceed the goals of your clients. Advisors Resource Company has the experience and expertise to help you with the use of life insurance in any financial plan. Our Leverage Life Process will give you the tools and confidence to bring these solutions to your clients to better serve and advise them. Schedule a meeting with our team today.

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