Life Insurance Acquisition and Management
We believe that a primary reason people steer away from discussing life insurance is that many life insurance practitioners use traditional approaches, treating life insurance as a transaction. These approaches match a numeric need to a product-based solution, seemingly without full consideration for the goals and vision of the people at the heart of the plan. Often for high-impact individuals and affluent families, everyone at the planning table seems clear that a need exists: everyone, that is, except you.
When we’re invited in to discuss life insurance with a high-impact individual or affluent family, it’s typically driven by a desire to safeguard someone or something – livelihoods, families or companies. We seek first to understand: what is the broader vision around what you or your company wishes to safeguard? Why is that vision important?
Then and only then, we explore the range of possibilities and options that align with your stated vision. In the process of researching relevant and elegant solutions, we determine whether life insurance makes sense, or whether a different solution may offer better alignment between need and strategy.
Importantly, this speaks to the difference between having an insurance dialogue with an insurance firm, and having it with a planning firm. If a firm has one primary tool to offer, there’s a general inclination to validate the need for that tool. In contrast, as a planning firm, we seek to arrive at your ideal outcome
What are your Risk-PointsTM?
Currently, you are somewhere between your historical accomplishments and your future achievements… a mid-point. For high-impact individuals and affluent families, remaining desires for life and business are both substantial and dynamic. What if something interrupted that trajectory?
Your mid-point is populated with a healthy measure of Risk-Points. You can take on and own all of your Risk-Points in their entirety, which typically means passing them to your spouse, to the next generation of your family, or to your organization’s leadership. Or, you can choose to mitigate unanticipated interruptions to your future vision by transferring certain Risk-Points to an outside party. This process of transferring risk can help to reduce emotional uncertainties and ensure your future plans play out, even in light of unforeseen circumstances. Life insurance offers a methodology for clearly understanding your options.
Common Risk-Points include:
- Premature death or disability of the head of the family, or a business owner or key executive
- Majority of a family’s wealth concentrated in a closely-held company
- Lack of liquidity for income and Estate Taxes, or business transfer
- Emotional burden of passing risk to your family or your organization
- Changes in family dynamics, such as birth, death or divorce
- Impact of families’ global mobility on legal and tax jurisdictions, Nexus points, and the resulting decision about where to acquire life insurance: domiciled in the United States, off shore or another situs
Post-purchase Due Care
Many of the savviest people we meet aren’t aware that life insurance is a dynamic asset that requires diligent post-purchase management. Similar to investment portfolios, life insurance illustrations are hypothetical assumptions based on what may occur in the financial markets, and legal and tax environments.
During our thorough annual review process, we analyze your original intentions at the point of purchase. These include both your vision and Risk-Points, and the financial projections embedded in the original life insurance portfolio. Then we review your policies’ historic performance over the previous 12-months as well as their projected future performance based on current market conditions. We confirm your policies are on track to be there when you need them. If not, we make prudent adjustments.
This comes back to the difference between a planning firm and an insurance-only firm. As a planning firm, founded in 1962, today we find ourselves delivering on the promises made to our first client-families by the founder of our firm. If these policies hadn’t been proactively managed through diligent, annual Post-purchase Due Care, they may not have performed as intended at the time of need.
Life Insurance Audits
For professional advisors and their high-net worth clients, M Advisory Group’s Life Insurance Audit process offers a thorough assessment of the policies you already own prior to meeting us. With many policies having been purchased decades ago, and left unwatched, it’s imperative to audit what a family or business actually owns against perceived insurance coverage.
Our process helps you determine whether or not your life insurance portfolio – both in terms of cost and performance – is in line with your vision and goals, and whether it’s on track to perform as intended.
It’s not only about Death and Estate Taxes
For individuals and organizations, life insurance offers compelling opportunities outside of the traditional need for tax-free death benefits. Many of our clients acquire insurance for use as a Private Family Bank, with provisions to take tax-free withdrawals, and loans at lower borrowing costs without having to personally guarantee the loans. It also offers innovative opportunities for high-income earners to supplement their retirement plans, because assets inside policies grow tax-deferred, and at the time of distribution, when structured properly, they can be received tax-free.
For corporations, life insurance programs offer the unusual opportunity of a dual benefit. These programs can align your corporate culture and core values – with the particular needs and preferences of individual key executives. Key decision makers are often surprised to find that these structures aren’t hampered by the usual restrictions inherent to many corporate benefits vehicles that seek to achieve similar outcomes.