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Insure My Life Right, LLC is an independent insurance agency. We represent multiple insurance companies. Each person, each family has a different need for their insurance coverage. Each insurance company has different specialties. Because we represent many carriers, we have more options with better


How to legally pass more money on to your beneficiaries, “Tax Free”, Guaranteed!

How to legally pass more money on to your beneficiaries, “Tax Free”,Guaranteed!

Estate Planning using Life Insurance

The concepts discussed in this article come from a book, “Die Rich & Tax Free”. These are estate planning strategies that are legal, honest & used by attorney’s, CPA’s & Insurance agents for estate planning.

If you have any assets that are greater than the IRS allows to be transferred as tax free in your estate, whether it’s cd’s, cash, savings account(s), money market account(s), stocks, bonds, mutual funds, real estate, etc, and you want your heirs (children or others) to inherit the assets or monies, by keeping those ??funds or assets in their same form, your beneficiaries will be taxed at the estate tax set by the government, up to 50%

Estate & Gift Taxes

** Please consult the IRS estate taxes & your CPA for your particular situation

For Deaths/Gifts Occuring in 2010
If Taxable Estate Is:
Over But Not > The Tax Is: Of the Amount >
$0 $10,000 $0 + 18% $0
10,000 20,000 1,800 + 20% 10,000
20,000 40,000 3,800 + 22% 20,000
40,000 60,000 8,200 + 24% 40,000
60,000 80,000 13,000 + 22% 60,000
80,000 100,000 18,200 + 28% 80,000
100,000 150,000 23,800 + 30% 100,000
150,000 250,000 38,800 + 32% 150,000
250,000 500,000 70,800 + 34% 250,000
500,000 750,000 155,800 + 37% 500,000
750,000 1,000,000 248,300 + 39% 750,000
1,000,000 1,250,000 345,800 + 41% 1,000,000
1,250,000 1,500,000 448,300 + 43% 1,250,000
1,500,000 2,000,000 555,800 + 45% 1,500,000
2,000,000 780,800 + 45% 2,000,000
Subtract applicable credit below from calculated tax
?? Exclusion Amount Applicable Credit
2002-2003 1,000,000 345,800
2004-2005 1,500,000 555,800
2006-2008 2,000,000 780,800
2009 3,500,000 1,455,800
2010 Estate tax repealed; gift tax remains
2011 1,000,000 345,800
Annual Gift Tax Exclusion: $13,000

Up until Dec 31, 2012, on a 5 million dollar estate, that is a lot of money taken off the top payable to the United States Treasury (IRS). ??Without proper estate planning ahead of time, that’s a great amount of money that could be transferred tax free if planned properly that will be taxed and taken away from your families estate.

There are better methods and fiscally sound methods to guarantee a tax free inheritance for your beneficiaries that they will either have zero taxes.

To maximize the amount of money your beneficiary(ies) receive, even when they pay the estate tax on the assets that are left in the estate at the time of death, by having a life insurance policy to leave guaranteed funds that are tax free is one of the best strategies to use for transferring of wealth and funds.

The easiest and most unique methods to structure estate planning is using Life Insurance to transfer the value of your estate and the wealth to your beneficiary(ies), even if you are 90 years old.

So let’s say calculate the amount of funds it will take to purchase a guaranteed life insurance policy and you call this your tax (instead of paying the estate tax to the government, you now pay the insurance company the premium.?? The amount you are going to pay to purchase a guaranteed life insurance policy is going to be much less compared to the estate tax that is to be paid on your taxes.

If you have not done your research analytically by crunching the numbers with a life insurance agent that does estate palnning, one may think that this is unconventional and that it is an expensive way to transfer your assets.

To the contrary,??“It’s much cheaper than paying the government up to 50% of your estates value and then having the risk of not keeping the funds in your families’ estate”! ??

Statistics are: “If you don’t use life insurance to pass on your estate’s value, in 3 to 4 generations of being taxed by the government, a wealthy family will have depleted the net worth and not have funds to pass on to the next generation”.

This is an astounding fact that many people that do not plan and figure out how to maintain the hard earned funds over a life time that someone or a couple or a family works so hard to earn and keep the dream of every person that works so hard during their life. ??Every person that has a dream to provide for their family, to excel at what they do and to provide a better tomorrow for their family and the generations that follow is a common desire amongst everyone that has worked so hard to achieve the wealth that they have obtained.

So here’s our successful strategy that has worked in estate planning for transferring of wealth.

Buy an equity indexed annuity that has a Life Time Income Benefit Rider and a guaranteed payout (10 year guarantee / Life Rider) attached to the annuity.

The annual income payments on the annuity are what pay the life insurance premiums.

Why do this / What are the benefits of this structure?

1)?????????? Life Insurance is 100% tax free for individual policies. For key-man policies, it is taxed at a maximum of 20% (Please consult your CPA for Key-Man policies).

2) ?? ?? ??With an annuity, when the owner of the annuity dies, approximately 80% to 87% of the annuity is tax free to the beneficiary(ies) and the remaining balance is taxed.

  1. Compare this to any other form of assets (Cash, CD’s, Equities, etc..), they are taxed at the estate tax rate, generally 35% of the entire amount.

This goes to show that the #1 method of transferring assets / wealth should be to use life insurance so the funds do not go back to the government from the many years of hard earned income that has been obtained.

Pending on the persons age and their overall circumstances is what type of life insurance to get.

It could be term, Universal Life (UL) or Whole Life.

They each have their time and place pending on the circumstances of each individual.

The guaranteed route that is the silver bullet, the safest and most secure way to ensure that the value of the estate will be transferred to the beneficiaries is by using a whole life insurance policy.

To figure this out, we run illustrations and analyze the amount of funds it will take to determine the amount of coverage is needed. ??The dollar amount of the premium is always less than what the percentage of the estate tax amount payable to the government is.

The easiest way to pay for the life insurance premium is to pay in one lump sum, a “Single Premium” payment. ??We can also determine other premium methods, annual, 2 payments, 3, 4, 5, 6, 7, 8, 9 10 etc.. up to being paid for at a certain attained age.

If you are looking to transfer the assets that you have, whether it’s cash, stocks, IRA account, real estate, etc.. it is always cheaper to buy a large life insurance policy and have a guaranteed payout to your beneficiary.

Other products that are Safe, Low Risk & also minimize taxes both while alive as well as upon death are annuities.?? While alive, annuities are a great tool to decrease taxes so you can keep a larger portion of your annual income and to decrease your tax base.?? Whether you are receiving social security income or not, you can keep more money by shifting assets to lower tax based assets.

Annuities and Life Time Income Benefit Riders

What is the Life Time Income Benefit Rider for an annuity?

If the annuitant lives to age 110, they will receive income from the annuity until they die, even if the principle funds are depleted and the value / balance of the annuity goes to zero.

What is the 10 Year period (or whatever the period is for a period certain annuity)?

1)?????????? If the annuitant dies before year 10,?? there are two options for the beneficiary of the annuitant to receive the balance of the annuity funds.

Option 1) ?????????????????????? Benneficiary(ies) continue receiving the remaining annual payments up to year 10.

Option 2) ?????????????????????? Receive a Lump sum Payment refund of the balance that is remaining beween the current balance of the annuity and however many years of payments that were paid out to the annuitant.

So this method is a double hedge for estate planning.

1)?????????? In case the individual lives longer than expected, there is a guaranteed income stream that will pay for the life insurance policy.

2)?????????? In?? case of earlier than expected death, the beneficiaries receive not just the life insurance tax free, but also a larger percentage of the assets that were used to pay for the life insurance that are now converted into an annuity as a lower tax base and higher percentage of funds received overall.