Life Insurance
Life insurance plays a major role in any family’s financial planning process. Traditionally, life insurance is used to protect a family against the unexpected and help the family maintain its lifestyle in the event a loved one passes. In addition, life and long-term care insurance can be used to preserve the wealth you worked to accumulate over your lifetime and to help transition that wealth to other generations.
Income Protection
The untimely loss of a family’s main source of income can create major devastation for the surviving family members. Not only is there a loss of the loved one, but the financial situation has suddenly changed. Life insurance enables the family to focus on the personal healing process rather than the financial concern the death created. With life insurance as income protection, the surviving family members can continue to pay the bills, remain in the home, continue to save for the education of children, and maintain the family structure without additional worry regarding the source of the income that has been lost.
Estate Liquidity
For most high net worth families, unexpected or early loss of life creates an immediate need for funds to cover debts and expenses. When this happens, there can be questions as to which funds should be used and, if there are no funds available, which assets should be sold to pay the estate taxes and debts. Other cases may pose an even larger problem when the estate contains a hard-to-value family business or other assets that are traditionally illiquid. Life insurance offers the simplest solution by providing immediate liquidity upon the death of the insured. The funds are available to cover the expenses, debts and taxes. When life insurance is available, the estate does not need to be concerned about a sale of assets or being unable to pay.
Estate Transition
The transition of wealth and assets from one generation to the next is a common desire for those who have accumulated great wealth. The intention is to transfer as much as possible and limit the amount contributed toward taxes. Life insurance provides a tax-advantaged way to accomplish this goal. Through the use of available gift tax exemptions, a family can establish an irrevocable life insurance trust (ILIT) to hold the life insurance policy and transfer funds to the trust throughout their lifetime. At death, the life insurance proceeds will transfer income tax-free to the beneficiaries and help to reduce the estate tax liability.
Estate Equalization
When large estates are distributed, there are usually a number of assets to be divided among surviving family members. For example, consider an estate that holds most of its value within a family business. If only one of the three children is involved in the business and receives the business upon the parent’s death, the other two children could be left with little or nothing. Life insurance offers the solution by providing immediate funds to distribute to the remaining children and equalizes the estate assets and distribution.
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Banking products and services are provided by KeyBank, Member FDIC. Trust and certain custody and investment management products are provided by KeyBank, a national bank with fiduciary powers. KeyBank is an Equal Housing Lender. All loans provided by KeyBank are subject to underwriting, credit, and collateral approval, in addition to origination or other transaction fees. Financing availability may vary by state. Restrictions may apply NMLS ID 399797.
KeyBank and its affiliates do not provide tax or legal advice. Individuals should consult their personal tax advisor or attorney before making any tax-related investment decisions.
Investing involves risk, including potential loss of principal amount invested. There is no guarantee that investment objectives will be achieved. Past performance does not guarantee future results. Asset allocation and diversification do not guarantee returns or protect against losses.
KIS, KIA and KeyBank are separate entities, and when you buy or sell securities and insurance products you are doing business with KIS and/or KIA, and not KeyBank. Insurance offered by KIA is underwritten by and the obligation of insurance companies that are not affiliated with KeyBank. When you buy insurance, you are dealing with a licensed agency, not KeyBank. KeyBank cannot require you to obtain insurance from a particular agency or with a particular insurer. Before purchasing a policy of insurance, you should compare information obtained from more than two agents. You have the right to obtain insurance from the agent of your choice, and your decision will not in any way affect KeyBank's credit decision.
Wealth Protection Strategists are not fiduciaries, as such, they are compensated based on insurance product sales.
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