How much Life Insurance do you need?

• Calculate How much Insurance you #need, to be adequate, based on Income, Net Worth, Family Responsibilities, etc. – Life Happens.org
• Monthly.expense.fact.finder Jackson
• 10 reasons you might need life insurance even after your kids are grown.
  • People killed in mass shootings got around 275,000 each from charitable fund raising
    • So don’t you think that means that you should have at least 300,000 because nobody knows how they’re going to die
    • Nor should you rely on charity
    • la times.com/victims-fund-vegas
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Uses of universal & Term  life insurance

• Final expenses, such as a funeral, burial, and unpaid medical bills
• Income replacement, to provide for surviving spouses and dependent children
• Debt coverage, to pay off personal and business debts, such as a home mortgage or business operating loan
• Estate liquidity, when an estate has an immediate need for cash to settle federal estate taxes, state inheritance taxes, or unpaid income taxes on income in respect of a decedent (IRD).
• Estate replacement, when an insured has donated assets to a charity and wants to replace the value with cash death benefits.
• Business succession & continuity, for example to fund a cross-purchase or stock redemption buy/sell agreement.
• Key person insurance, to protect a company from the economic loss incurred when a key employee or manager dies.
• Executive bonus, under IRC Sec. 162, where an employer pays the premium on a life insurance policy owned by a key person. The employer deducts the premium as an ordinary business expense, and the employee pays the income tax on the premium.
  • How to Understand an Executive Bonus Plan Without Being an Expert
• Controlled executive bonus, just like above, but with an additional contract between an employee and employer that effectively limits the employee’s access to cash values for a period of time (golden handcuffs).
• Split dollar plans, where the death benefits, cash surrender values, and premium payments are split between an employer and employee, or between an individual and a non-natural person (e.g. trust).
• Non-qualified deferred compensation, as an informal funding vehicle where a corporation owns the policy, pays the premiums, receives the benefits, and then uses them to pay, in whole or in part, a contractual promise to pay retirement benefits to a key person, or survivor benefits to the deceased key person’s beneficiaries.
• An alternative to long-term care insurance, where new policies have accelerated benefits for Long Term Care.
• Mortgage acceleration, where an over-funded UL policy is either surrendered or borrowed against to pay off a home mortgage.
• Life insurance retirement plan, or Roth IRA alternative. High income earners who want an additional tax shelter, with potential creditor/predator protection, who have maxed out their IRA, who are not eligible for a Roth IRA, and who have already maxed out their qualified plans.
• Term life insurance alternative, for example when a policy owner wants to use interest income from a lump sum of cash to pay a term life insurance premium. An alternative is to use the lump sum to pay premiums into a UL policy on a single premium or limited premium basis, creating tax arbitrage when the costs of insurance are paid from untaxed excess interest credits, which may be crediting at a higher rate than other guaranteed, no risk asset classes (e.g. U.S. Treasury Bonds or U.S. Savings Bonds).
• Whole life insurance alternative, where there is a need for permanent death benefits, but little or no need for cash surrender values, then a current assumption UL or GUL may be an appropriate alternative, with potentially lower net premiums.
• Annuity alternative, when a policy owner has a lump sum of cash that they intend to leave to the next generation, a single premium UL policy provides similar benefits during life, but has a stepped up death benefit that is income tax-free.
• Pension maximization, where permanent death benefits are needed so an employee can elect the highest retirement income option from a defined benefit pension.
• Annuity maximization, where a large non-qualified annuity with a low cost basis is no longer needed for retirement and the policy owner wants to maximize the value for the next generation. There is potential for arbitrage when the annuity is exchanged for a single premium immediate annuity (SPIA), and the proceeds of the SPIA are used to fund a permanent death benefit using Universal Life. This arbitrage is magnified at older ages, and when a medical impairment can produce substantially higher payments from a medically underwritten SPIA.
• RMD Required Minimum Distribution maximization, where an IRA owner is facing required minimum distributions (RMD), but has no need for current income, and desires to leave the IRA for heirs. The IRA is used to purchase a qualified SPIA that maximizes the current income from the IRA, and this income is used to purchase a UL policy.
• Creditor/predator protection. A person who earns a high income, or who has a high net worth, and who practices a profession that suffers a high risk from predation by litigation, may benefit from using UL as a warehouse for cash, because in some states the policies enjoy protection from the claims of creditors, including judgments from frivolous lawsuits. ^{Wikipedia *  [2]}