Insurance

 

The base of any financial planning is life insurance. Whether it is through term life coverage or permanent coverage, life insurance is a way to ensure that the money you meant to save is available to your family if something happens to you

Life insurance should be used to cover debts and liabilities you currently have as well as ones you expect, such as final expenses.  Life insurance should also be used to provide replacement income for you family as well.  In many instances, the last thing your loved ones should worry on the worst day of their life is to think about how to pay ongoing expenses.  Life insurance can also be a means to leave a gift or legacy for your family, or charitable donations to organizations and causes you care about.

Life Insurance death benefits are passed on generally tax free to your beneficiaries and do avoid probate. Contact us if you want to make sure that your family is protected.

 

What types of Life Insurance Are Out There?

Life insurance generally falls into two categories: Term and Permanent

Term Life Insurance is similar to Automobile insurance in that as long as you pay a premium, the life insurance company promises to pay a death benefit to your beneficiaries. Generally this promise goes for a specific period of time, from as little as 5 years up to 30 years.  When this term expires, your premiums may go up or your policy is no longer in force and you will need to purchase another policy.

Permanent Life Insurance provides coverage like term does, but also has an element of savings with a Cash Value savings account. Part of the premiums that you pay go to pay for life insurance with the remainder going into the cash value savings account. This account earns interest with the ultimate goal that your savings grows to the point where the interest generated is enough to pay for the life insurance. There are many kinds of permanent Life Insurance policies out there from Whole Life, Universal Life, Variable Universal Life, and Indexed Universal Life.  Permanent life Insurance also have tax advantages that can be very beneficial to policy holders.

 

Tax Advantages of Life Insurance

Life Insurance death benefits are generally tax free and the Cash Value Savings Account in life Insurance policies grow tax deferred and can be taken out tax free.  However, contributions are not tax deductible.

The key to tax free distributions is that money taken out is in the form of a policy loan. As long as a policy complies with appropriate IRS codes and is not considered a Modified Endowment Contract or MEC, loans are not taxed.

Unlike many other retirement vehicles, permanent life insurance does not have certain restrictions.  There are no penalties for distributions before the age of 59 1/2 nor are there required minimum Distributions (RMDs) after age 70 1/2.  

Permanent life insurance can be a good supplement to existing retirement accounts that offer significant tax advantages.  Contact Us if you want to learn more about how this tax advantage can be added to your portfolio.


Health Insurance

Starting in 2014, all Americans are mandated to maintain health insurance on themselves and their families.  This can be accomplished through plans through your employer or individual plans available either directly through health insurance companies or through Insurance Exchanges available to each state.  Texas uses the federal exchange through healthcare.gov. these plans must cover Essential Health Benefits to qualify as plans that meet the mandate requirement.

Plans now fall under different metal categories based on how much each plan covers:

Catastrophic plans pay less than 60% of the total average of cost of care.  However these are only available for those under 30 or have some type of hardship exemption.

Bronze plans pay on average 60%

Silver plans pay on average 70%

Gold plans pay on average 80%

Platinum plans pay 90%
 

Starting in 2014, fines can be assessed on individuals and families that do not have health insurance. that comply with the individual mandate. 

For 2015, fines are the greater of either 2% of your yearly household income up to the national average premium for a bronze plan or $325 per person ($162.50 per child) up to a maximum of $975. 

In 2016, fines are the greater of either 2.5% of your yearly household income or $695 per person ($347.50 per child).

With on exchange plans through the federal exchange, you may qualify for a premium subsidy that may help lower the overall cost of your premiums.  Depending on your income, you may also qualify for lower out-of-pocket costs such as lower deductibles, copays, and coinsurance. 

We work with some of the largest providers of health insurance, such as Blue Cross/Blue Shield of Texas, Humana, and Aetna, both on and off the Federal exchange to help find coverage that is affordable, fits you and your needs, and generally are accepted by most physicians.


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