Inside the Strategy
This determines how much money is paid into a life insurance policy over time.
What is a premium?
This type of policy is most appropriate when the primary goal is maximum death benefit at the lowest cost for a temporary need. This protects the client from losing money in a down market.
What is term life insurance?
A financial product specifically designed to provide lifetime income.
What is an annuity?
This missing piece in a high-income client’s plan helps reduce future tax exposure when all their assets are in qualified accounts.
What is a tax free bucket?
This planning strategy uses life insurance to transfer wealth to heirs income-tax-free.
What is estate planning using life insurance?
This annuity feature address both longevity risk and healthcare cost risk in retirement?
What is an income doubler benefit?
This is the primary trade-off when choosing whole life over IUL in a policy design.
What is less flexibility and potentially lower upside in exchange for guarantees?
This limits how much the client can earn in a strong market year.
What is the cap rate?
This strategy helps reduce the long-term impact of Required Minimum Distributions on retirement income. A 65-year-old wants guaranteed income now—this is the best fit.
What is tax diversification?
This legal arrangement helps keep life insurance proceeds outside of a taxable estate.
What is an Irrevocable Life Insurance Trust (ILIT)?
This design approach focuses on minimizing insurance costs to maximize cash value growth.
What is max-funded, minimum insurance design?
This strategy maximizes cash value for retirement income.
What is overfunding the policy?
This risk is solved by lifetime income from annuities.
What is longevity risk?
This strategy protects a retiree from withdrawing assets during a market downturn early in retirement.
What is income flooring using annuities or protected income sources?
This strategy allows high-net-worth clients to leverage borrowed money to fund large life insurance policies.
What is premium financing?
This feature in an annuity allows the owner to withdraw a limited amount each year without penalty.
What is a free withdrawal provision?
This happens if a policy is funded too aggressively without proper structure.
What is becoming a MEC (Modified Endowment Contract)?
This is when clients trade liquidity for guarantees.
What is the annuitization phase?
This combination of strategies provides growth, protection, and tax efficiency within a single financial plan.
What is using an annuity to create guaranteed income (income flooring strategy)?
This is the primary goal of using life insurance in advanced estate planning.
What is providing liquidity to cover estate taxes and preserve wealth?
This is how earnings from a non-qualified annuity are taxed when withdrawn.
What is last-in, first out?
This primarily determines how a whole life policy performs over time.
What are dividends based on the insurance company’s performance (interest rates, expenses, and mortality)?
This risk is reduced when a client shifts part of their portfolio into an annuity with guarantees.
What is sequence of returns risk?
This planning approach combines growth assets with guaranteed income to improve overall retirement stability.
What is a balanced strategy using investments and annuities?
This risk must be carefully managed when using premium financing in life insurance strategies.
What is interest rate risk and policy performance risk?