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Paul Sobotta, CLU®, ChFC®, CFP®, RICP®
Financial Planner
CA Insurance Lic. #4169793
Kyle Sobotta, CFP®
Financial Planner
Prudential Advisors
205 Washington Street
Arcadia, WI 54612
Phone: 608-323-7032
Fax: 608-323-7964
Email: paul.sobotta@prudential.com
May/June 2024
Hidden Talents of Life Insurance
When someone mentions life insurance, what comes to mind? Most people think they are either content knowing they have enough coverage to meet their needs or concerned because they know they need to obtain coverage. While the primary purpose of life insurance is to protect loved ones, it has other talents.
Help Leave a Meaningful Inheritance
You can potentially give a greater after-tax inheritance through your life insurance policy than other assets. Redistributing some assets you hold in taxable accounts into a life insurance policy may allow you to potentially reduce ongoing taxation. Because the cash value in a life insurance policy grows tax deferred, you also gain an opportunity to grow the assets. With this strategy, you potentially create new wealth for your heirs.For example, say you’d like to leave your family home (or business) to your daughter but do not want to short-change your other child. You could purchase a life insurance policy on your life to equal the home’s value and name your second child as the beneficiary. Then, your other assets could be split equally among your children. Note that as the value of your home increases, you’ll want to increase the amount of life insurance you have.
Simplify Transfer of Business Interests
Have a business partnership? Using life insurance in your and your partners’s business succession planning can help smooth the transfer of the business interests when one partner dies. Owning life insurance on each other’s lives gives the surviving partners money needed to compensate the deceased partner’s family for that partner’s business interest through the insurance proceeds the surviving partners receive.Meet with your insurance professional to review your needs and circumstances and help determine how you can make the most of life insurance’s hidden talents. And use the opportunity to look over your (and your partners’s, if applicable) succession strategy in light of your insurance review and any family or business changes that may have occurred since the last review.
*Applications for life insurance are subject to underwriting. No insurance coverage exists unless the required premium is paid to put an issued policy in force. Accessing cash values may reduce the death benefit and policy values, trigger tax consequences, surrender fees, and charges, and may require additional premium payments to maintain the contract. Guarantees are based on the claims-paying ability of the issuer.
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