InsuranceNewsNet Magazine February 2012 : 23
Do MEDICAL their money up in IRA products for 25 more years or until they retire. Instead, Vagnozzi says, they want to use products with liquidity as well as tax efficiency, and they want their money to be in a safe place that will not decline in value. Furthermore, when they learn that IRA assets are includable in their estates and that beneficiaries will be taxed on the proceeds at ordinary income tax rates, Gen-Xers start viewing the estate-tax free aspect of life insurance proceeds as very appealing, he says. What’s the solution? Vagnozzi recom-mends that these clients roll money out of the 401(k) in chunks over four to five years. For example, a 35-year-old cli-ent had $200,000 in an IRA that, at its highest value, had been $270,000. Rather than suffer any more losses in that account, the man started pulling out $40,000 a year, Vagnozzi says. The client pays the income taxes due on the with-drawn amount and also the 10 percent early withdrawal penalty. Then, with the remainder, he buys an indexed universal life policy. The plan is for the client to do the same thing in each subsequent year until the IRA is depleted and all the post-tax money is in life insurance. “This way, the government gets its tax money, the man’s family is pro-tected by life insurance, the money is liquid (access via tax free policy loans), the principal is protected and there is upside potential,” Vagnozzi says. Some people do want their IRA money to stay in the IRA and keep working for them tax-deferred until retirement when they think they will be in a lower tax bracket, Vagnozzi allows. “This solution is not for those clients. It is not a one-size-fits-all solution.” This is a solution for the person who doesn’t want to leave their money in an IRA where they suffered big losses but who does want the benefits of life insurance, he continues. “For them, it’s an easy pill to swallow. And now is a per-fect time to discuss it.” As for the expectation of being in a lower tax bracket during retirement, that expectation may not come to fruition, he cautions. “If the tax monster makes taxes go up, you might not be in a lower for Life Insurance Make Your Head Spin? Breast Cancer with Negative Receptors Regurgitation of the Tricuspid Valve IMPAIRMENTS 2012: DOOM OR BOOM? | FEATuRE Lacunar Strokes EBCT Score in the 95th Percentile NT-proBNP of 400 Hypertrophic Cardiomyopathy Sleep Apnea with Bi-Pap Stress Imaging Study with Apical Defects Bicuspid Aortic Valve Positive CDT Remitting Relapsing MS Hepatitis C with Bridging Fibrosis Enlarged Aortic Root Lowered Ejection Fraction Elevated GGT, SGOT and SGPT Episodes of DVT Helping Brokers Since 1981 You’ve heard the health impairments above from your clients and underwriters. Don’t know what they mean? That’s okay, we do! From impaired risk clients, to low-cost term, to jumbo sized cases, we have the experience to help you find the right company for your client. EUGENE COHEN INSURANCE AGENCY, INC. 9933 N. Lawler Ave., Suite 140 Skokie, IL 60077 Life -Disability -Long Term Care -Annuities Call Today 800-333-4340 www.CohenAgency.com Please ask for an Impaired Risk Life Marketer NOTE: All conditions, scenarios, and medical impairments may not be considered insurable by the insurance companies. February InsuranceNewsNet Magazine Only the insurance company can accept or deny an application after 2012 a formal underwriting process. Informal 23 inquiries and trial applications do not guarantee coverage or rate classes. FOR AGENT USE ONLY • NOT FOR CONSUMER DISTRIBUTION