Grow Financial Independence
Plan, Plant & Provide for the Seasons of Life
How to establish a Living & Legacy Core Asset utilizing Universal Life Insurance (ULI)
The Legacy Benefits of protection against premature death and superior wealth transfer provided by ULI are well known; however, the Living Benefits are not widely known.
In its basic form, ULI is a type of permanent life insurance based on a cash value that accumulates over time. Structured properly by insurance professionals with specialized training and certification, there are various types of ULI that can be tailored to meet all of your long-term financial goals.
One type of ULI known as "maximum funded" fixed indexed universal life (FIUL) is often used to accumulate cash for anticipated needs such as college tuition or guaranteed retirement income that you cannot outlive. While offering competitive rates of return and liquidity (i.e., instant access to your cash value whenever needed), FIUL also offers these important long-term planning advantages:
- Safety: You have the flexibility of growing the cash value of your policy by either tying the interest credited to the annual performance of a major market index such as the S&P 500, or by locking in a competitive guaranteed rate of return which is declared annually. You can also choose a percentage allocation between the two crediting methods. When utilizing the indexing method, the allocated portion of your accumulated cash value is never directly invested in the market, and you have up front contractual guarantees from the insurance company that provide at all times Safety of Principal and Locked-in Gains as achieved. The indexing method eliminates direct exposure to The Wave Pattern of the markets and replaces it with the guaranteed Steps of Financial Conservation (see Core Asset Conservation page). You are now positioned to take advantage of positive market cycles when they occur, while having an automatic defense system in place whenever the cycles turn negative.
- Major Tax Advantages: The cash value of a FIUL policy grows on a tax-deferred basis. When the time is right, you can establish a tax-free Income stream via regular withdrawals in the form of loans taken from the accumulated cash value of the policy. Additionally, from day one of the policy, there is the added protection of a death benefit that will blossom and pass to your heirs tax free.
What matters at the end of the day is not how much you make, but how much you get to keep, enjoy while living and then ultimately pass on to your heirs.
NBC News - Investing In Life Insurance
The 401(k) Question
Take a close look at whether it would be more advantageous for you to pay less taxes now on the smaller amounts of your "Seed Money" (i.e., contributions you would make to 401K, IRA, 403B and other qualified or pre-tax accounts) versus the traditional approach of deferring those taxes until years later when you start or are required to begin liquidating these accounts and will most likely have to pay a higher tax rate on the larger amounts of the "Harvest Money." Your age, levels of matching contributions from your employer and the type of investment options available are important factors to consider. Some employers are reducing or eliminating their matching contributions, and the investment options they provide that meet the standards of Financial Conservation may be limited. Also, be aware that the rules governing qualified plans are changing -- you need to stay informed.
Uncle Sam thinks long term on this point: He's more than happy to give you a tax break now knowing he has a lien on these qualified accounts that will yield a much bigger payday for the government down the line -- or he can change the rules to suit his needs.
CBS 60 Minutes Segment - "Retirement Dreams Disappear With 401(k)s"
Time.com - "Why It's Time to Retire the 401(k)"
Inflation & Interest Rates
To maintain purchasing power, the interest you earn on your money will, at the very least, need to keep growing ahead of inflation. The ebb and flow of interest rates are in part a function of the prevailing rate of inflation. If as a result of current governmental policies we are anticipating a rising rate of inflation in the years to come, laddering is one method where you are not committing a large portion of your assets at any one time and are able to maintain flexibility as interest rates fluctuate. Here's how it works:
- Laddered Annuities & UL Policies: Using a combination of single premium immediate annuities, multi-year guaranteed and fixed indexed annuities or various types of UL policies, for short, medium and long term needs, the method of laddering allows you to diversify away many of the risks which lay seen or unseen in today’s fast-changing economy, while freeing up capital at regularly scheduled intervals. Compared to laddering with non-qualified (after-tax) accounts like CDs where you earn double compound interest (i.e, taxable interest), with annuities or UL policies, taxes on the interest earned are deferred during the term so you are earning triple compound interest.
The idea is to spread monies that earn rates of returns over successively longer maturity dates, with each position typically the same size as the next, and there would be a roughly equal time interval between each maturity. This works on a revolving basis so that when one position matures, unused proceeds should be reinvested out at the longest maturity term you have established according to a timetable that suits individual needs.
Market Watch Article - “Inflation Hits Hard When You Can Least Afford It”
Strategy of Side Funds
Learn the strategy of optimizing and protecting the equity in your property by separating and placing a portion of it into a side fund that meets the safety requirements of Financial Conservation. By repositioning part of your equity in this manner, it is now able to earn a rate of return; you have flexibility and liquidity with that equity that you did not have before; and the separated equity is shielded from depreciation during any down cycle in the market. FIUL policies described above are often utilized for this strategy.
Family Security Plan
Providing financial security for the younger and older generations in the face of any future market, global and human uncertainties is of growing concern for many families. Based on standards of Financial Conservation, the goal of such planning is to pool and leverage with safety combined family resources in order to accomplish the following:
- Increase the supply of funds currently available to each generation without incurring additional expenses or change in out-of-pocket cash flow.
- Reduce or eliminate risk to family capital.
- Maximize tax efficiency.
- Create by multiples the amount of wealth transfer that will pass from generation to generation.
Every family has its own story. We look forward to spending the time necessary to familiarize ourselves not only with financial details, but, of course, the more important human elements that are unique in each and every situation.
