A Life Insurance Gift

Posted by on Oct 18, 2009 in Seniors | 0 comments

A Life Insurance Gift

Using life insurance as a gift is the single most effective way to maximize the transfer of assets from one generation to the next.

Gifting cash or property is often used by grandparents who wish to make provisions for their grandchildren or other loved ones of the next generation.  Gifting helps reduce the size of an estate and minimizes estate taxes.  This giving is often accomplished by taking advantage of the annual gift exclusion of $13k/yr. for 2009.

When working with a financial and estate planner, discuss the possibilities of leveraging that $13/yr. that would normally be given directly to a beneficiary and direct it to a life insurance policy.

In other words, use that cash gift to pay premiums to a life insurance policy.   $13k/yr will buy significantly more after tax death benefit than any other option.

Depending on your age, health, and the size of the gifting taking place-it can make much more sense to use that gift money to increase the amount going to your loved ones.

Age Life Expectancy* Premium Death Benefit ROR@LE Pre-tax Yield
65 87 $13,000 $648,439 6.62% 10.18%
70 88 $13,000 $478,812 7.12% 10.95%
75 89 $13,000 $342,462 8.09% 12.45%

*Life expectancy (LE) Tables are based on actual mortality experience collected from sournc as such as life insurance companies and the social security administration. Assuming male preferred non-smoker.

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