RISK MANAGEMENT AND
INSURANCE PLANNING

Managing your risk and insuring your assets are critical components to running a sustainable business and pose a variety of challenges to business owners.  Identifying your assets including your most valuable employees and creating a plan to maintain business in the face of possible disruptions separates the professionals from the amateurs. We at Pulse Financial can help ensure that you have solid solutions to these challenges, which may include professional plans to determine how your benefits will be used, confirming that your life insurance plan is coordinated with your estate plan, and safeguarding your assets by planning for your long term care.

Common Issues

  1. No guiding plan as to how death benefits would be used if the you or your spouse passed away.
  2. Failing to analyze the impact of long-term care issues and by default “self-insuring” the risk.
  3. Increase in wealth/assets has caused liability insurance to be insufficient.

Common Solutions

  1. A simple solution is a written use-of-funds plan for life insurance proceeds. This often demonstrates a shortfall of death benefits. Additional solutions may include creating an Irrevocable Life Insurance Trust.
  2. A simple cost/benefit analysis will likely show how a long-term care policy is an efficient way to help protect assets and significantly reduce difficult administrative issues for the you.
  3. An annual review and update of liability coverage that corresponds with increases in wealth.

5 Reasons & Considerations for Life Insurance:

  1. Buy-Sell Funding and Key Person Liquidity

    If you are a business owner and decide to structure a buy-sell agreement to facilitate a transfer of the business at your passing, the plan should likely be funded with Life Insurance. The purchase of Life Insurance can provide replacement income for your business due to the loss of a key person.
     
  2. Replacement of Income

    In the unfortunate event that something happens in your life that jeopardizes your performance to earn an income, life insurance can ensure funds are distributed to family members and loved ones for care purposes.
     
  3. IRA Exchange

    If you wish to pass assets in an IRA to beneficiaries, we could set up systematic distributions from your account over a period of time and gift the net after-tax proceeds into an Irrevocable Life Insurance Trust with “Crummey Powers*” to purchase Life Insurance and secure a significant increase in after-tax dollars to your designated beneficiaries.
    * What is a Crummey power? It is an approach that would enable you to receive a gift without incurring a gift tax, when you otherwise would have.
     
  4. Charitable Giving

    Life Insurance can be used to transfer death benefits to a charity or philanthropy of your choice.
     
  5. Liquidity for Estate Taxes

    We can help establish an irrevocable life insurance trust which would potentially diminish the costs of an estate tax. Estate taxes are costly, not just financially, but they are time consuming and litigious.

Long-Term Care Insurance – Two Options:

Self-Insure
 

You have an enough level of assets to retain risk – question liquidity. Income is an accurate indicator of whether a client should self-insure. Liquidating assets may not be the best route, as it can be expensive and become a detriment to your financial plans. Considering extra costs such as nursing home care and spousal costs.

Invest in a long-term care policy

  • Life insurance with a long-term care rider.
  • LTCI, lifetime coverage or five to six-year plan.
  • Premiums may be partially or fully deductible (based on age and income).
  • Benefits are generally tax exempt. (linked benefit products)

Pulse can help fortify your finances, no matter which path you choose to go in order to support yourself and your family after retirement. We can work out the complexities that come along with life insurance and what it can be used for, particularly in a way that is unique and beneficial to you.

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