2018 Life Insurance Planning Opportunities

Updated: Dec 10, 2019


Happy New Year! We wanted to share some life insurance planning opportunities to consider for 2018 in light of the new tax bill signed into law by President Trump on December 22, 2017 ("Tax Cuts and Jobs Act").

Should I change how my life insurance policy is owned in light of the new tax bill?

In light of the higher estate exemption of $11,200,000 per individual, this is an excellent time to evaluate the transfer of a life insurance policy to children or to a trust outside of your taxable estate. The current changes to the exemption amount will expire after 2025.

Important considerations to evaluate before a life insurance policy is transferred are:

  • Is the life insurance policy properly funded? Does the policy require more premiums?

  • Can a tax-free 1035 Exchange improve the policy performance?

  • Is the market value of my policy higher than the cash surrender value?

  • Should I take advantage of the new higher exemption to acquire new life insurance owned outside of my estate?

Is there a simple way to achieve income tax deferral?

With the top income tax rate at 37%, high-income tax payers continue to evaluate tax-deferral strategies. The new limitations in state deductions make deferring taxes even more important in states like California and New York.

Wealthy individuals and families interested in tax-efficient investing are increasingly drawn to the benefits associated with Private Placement Variable Annuity (PPVA) and Private Placement Life Insurance (PPLI) investment accounts. The investments accounts within a private placement annuity or insurance contract enable investors to defer current tax on investment gains.

  • Simple way with minimal costs to achieve tax deferral

  • Remain in control of assets

  • Defer taxes on both alternative and traditional asset classes

  • Private placement annuity and life insurance investment account costs are generally substantially lower than the cost of income taxes otherwise payable on investment gains

My estate won't need to pay estate taxes - where does life insurance fit in?

Life insurance is an efficient asset to own, regardless of your estate tax exposure. Beyond the powerful tax advantages, life insurance provides a range of investment results that can deliver a competitive rate of return to your overall asset allocation.

Life insurance delivers competitive rates of return upon death as well as liquidity options during your lifetime, including a sale of your policy to the secondary market.

Our firm offers institutional and proprietary life insurance products where the underlying policy values can be invested in:

  • Fixed interest rates

  • Guaranteed interest rates

  • Indexes with 0% floors

  • Separate accounts with 80+ alternative and traditional fund options

How can we help? Please contact us with any questions.

#TaxCutsandJobsAct #LifeSettlement #EstateExemption

0 views

Copyright © 2020 TRC Financial. All rights reserved.

TRC Financial Insurance Services and affiliates are presently licensed to sell insurance and annuity products, as well as other securities products in the following states: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Washington, West Virginia and Wisconsin. Residents of other states should consult with a local registered representative for insurance services and securities products. Proper state registration is mandatory prior to conducting business in that state. This is not an offer to sell securities, which may be done only after proper delivery of a prospectus and a client suitability review. CA License - #0E14614 \ CA License #0B40789 \ CA License #0B52893 - The principle place of business and the state of domicile for TRC Financial is: 1 Post, Suite 150, Irvine, CA 92618. Securities offered through Registered Representatives of M Holdings Securities, Inc., a Registered Broker/Dealer Member FINRA / SIPC. Check the background of this Firm and/or investment professional on FINRA's BrokerCheck. TRC Financial is independently owned and operated and is a Member Firm of M Financial. Please go to www.mfin.com and click on “Disclosure Statement” at the bottom of the home page for further details regarding this relationship. For important information related to M Securities, refer to the M Securities’ Client Relationship Summary (Form CRS) by navigating to https://mfin.com/m-securities.

(949) 509-2940