Frequently Asked Questions

How does cash-value life insurance work? Glad you asked. While cash value life insurance can be complex, the core concepts are easy to understand. Explore our frequently asked questions below.

Well, this tax loophole was created in 1913 for exactly this reason, to give the top 5% income earners an edge over middle class and the working-class Americans. So, you are very lucky to have stumbled upon this valuable piece of information and to be given this one-time offer for a free consultation with our financial experts today.

Many Financial advisors are out there charging thousands of dollars for services that are designed to keep you away from financial freedom.

Well, our government and the IRS don’t even want us to know about this, because if we do, there will be no more tax revenue for them, knowing that taxes are the biggest source of government revenue.

Because, if they do, you will become financially free, and stop working for them. Also, employers’ promotion tax deferred accounts like the 401k, 403b, TSP, IRA etc., because they get a big tax write off by offering you these tax later accounts. Do you know that our country is at the lowest tax era ever?  So, why defer paying taxes on your little money today, at a much lower tax bracket, just to end up paying a bigger tax, at a higher tax bracket in future? Makes no sense, right? That’s the reason why we are so passionate about setting you free from these tax schemes that are designed to drain your hard-earned income.

Well, we only work with A and A+ rated financial institutions most of which have been in business for over 100 years. And the simple answer is, you won’t lose your money because this program is heavily regulated by the federal and state governing bodies through the enforcement of provisions and regulations meant to protect consumers like you and me.

  1. i) Statutory Reserve provision ensures every one of the companies we work with show prove of a certain amount of cash reserve to prove that they can pay all issued policies even in worst case scenarios.
  2. ii) Reinsurance Provision ensures that these companies reinsure every policy they issued to avoid running out of money in times of natural or man-made catastrophes resulting in mass death and mass claims.

iii) Mandatory Membership of the State Guarantee Association, that will step in to help in the management of financial crisis and insolvency to ensure every policy owner is compensated fairly.

In fact, only stable financial institutions and major Life Insurance companies that have stood the test of time are allowed to transact the business of setting up the 7702 tax-efficient accounts.

And remember, it is with these companies that most commercial banks keep their tier one capital, which is the safest capital a bank can own.

Well, because most Financial Advisors don’t even know about this type of account, and even when they do, they just won’t recommend this to you for fear that you won’t need their services again once you get a 7702 Tax-efficient account.

The only Catch is that this is not a get rich quick scheme, and not everyone who applies gets approved.

Our mission is to empower members of our communities on their quest for Financial Freedom,

but we only work with serious individuals. Talk to one of our Expert Financial Professionals today at (469)843-3595 to see if you qualify or use the link below to schedule a free consultation.

IUL OBJECTIONS HANDLING

Let’s tackle your IUL doubts so you can see the full potential of your investment.

Both types of life insurance provide death benefit coverage. While term life insurance offers protection that last for a specific period of time (usually 10, 20, or 30 years), cash value life insurance offers protection that may last a lifetime. As long as the policy has enough cash value, the policy won’t lapse. Additionally, cash value life insurance policies have the potential to accumulate cash value. Because of these features, cash value life insurance generally has higher premiums.

The primary purpose of life insurance is to provide death benefit protection. But what is that? In short, when a life insurance policy’s insured person passes away, the policy’s death benefit amount is paid to the policy’s beneficiaries. This death benefit is generally paid income tax-free2 and may represent a substantial financial sum to help protect your family, business, or estate from the financial impact of the insured’s death.

Cash value life insurance is different from term life insurance because it offers death benefit protection as well as the ability to accumulate cash value that can be accessed while the insured is alive. A portion of each premium payment is applied to the policy’s cash value. The cash value grows with additional premium payments and any interest the insurance company credits the policy. The cash value decreases as monthly policy charges are deducted and by any policy withdrawals, loans, or other distributions the policyowner takes from the policy.

You may take withdrawals and policy loans from the available cash value of your policy. You can use the money to supplement your income in retirement or meet any other financial need you may have. Just remember that withdrawals and policy loans will reduce your policy’s available cash value and may reduce other policy benefits as well.

Many cash value life insurance policies offer flexible premiums, which means the policyowner may choose the timing and amount of premium payments. However, if the policy’s accumulated cash value is not enough to pay ongoing monthly policy charges, the policy will enter a grace period, and if sufficient premium is not received by the end of the grace period, the policy will lapse. Upon lapse, the policyowner will lose life insurance coverage and any other benefits associated with the policy and a taxable event may occur if the policy has outstanding loan debt in excess of the policy’s cost basis (sum of premiums paid less any policy withdrawals).

Certain Leader Life Financial Solutions cash value life insurance policies offer optional features, called riders, that allow the policyowner to access either the policy’s death benefit or other values in the event of chronic or terminal illness. This can be a significant advantage as many Americans are most likely to need care for chronic illness late into retirement, when other sources of income may be dwindling. There are other benefits too—some riders allow you to change your death benefit amount or cash value pattern. Other riders provide guarantees to keep your policy in force regardless of cash value performance, as long as you pay at least a minimum premium on time. To learn more, talk to your life insurance producer and request a personalized illustration demonstrating the impact of various riders available with your policy.

For the most accurate depiction of your policy’s performance, refer to your policyowner statement. You may access statements, manage your policy’s allocations, request withdrawals, update beneficiaries, and sign up for eDelivery of critical policy documents easily online at

AFTER SESSION OR IN-SESSION OBJECTIONS

Clearing up concerns during our sessions to keep you on the path to financial success.

Yes, but it is more of wealth creation tool than life insurance. It is actually the most effective way to build and transfer wealth across generations. It is not just ordinary life insurance, the one that only pays out when you die, or the one that expires after a certain period (term insurance)

It’s life permanent insurance with a cash value component. The cash value grows based on upward movements made by a stock market index of your choice and NEVER goes down when the index goes down. So, your account can only grow or increase.

There is Zero Risk of losses associated with this type of account. It is actually the same tax-free, risk-free strategy that savvy investors like John D Rockefeller, Walt Disney, JC penny, Ray Kroc and most wealthy individuals had been using for decades to make money without losing money, overcome market fluctuations, out-paced inflation and legally pay Zero tax on their gains. And the US 🇺🇸 congress just made this better in 2021, but you must qualify to even be considered for this. Do you want to see if you can qualify?

It’s life permanent insurance with a cash value component. The cash value grows based on upward movements made by a stock market index of your choice and NEVER goes down when the index goes down. So, your account can only grow or increase.

Oh yes, our government don’t consider this as an investment and money made from this type of strategies or this type of life insurance policy is not considered as income, because if it does, then you will be required to declare taxes on your gains to the IRS.

Again, this is by far better than every investment out there due the fact that there is ZERO Risks of Losses associated with it. Do you know of any investment that you come with life insurance coverage at no additional costs? Any investment that has with zero of losses and you are not required to declare taxes on your gains?

Oh yes, our government don’t consider this as an investment and money made from this type of strategies or this type of life insurance policy is not considered as income, because if it does, then you will be required to declare taxes on your gains to the IRS.

Again, this is by far better than every investment out there due the fact that there is ZERO Risks of Losses associated with it. Do you know of any investment that you come with life insurance coverage at no additional costs? Any investment that has with zero of losses and you are not required to declare taxes on your gains?

To and extend, you are correct. However, in the past 2 decades, this has changed greatly. We do have index strategies like the F&G Barclays Trailblazer Sector 5 annual point to point (PTP), North American Fidelity Multifactor index PTP, National life US Pacesetter PTP, & Balanced Trend PTP, National wide New Heights PTP and many other index strategies that offer a floor of protection against losses, zero cap on the growth of your portfolios. So, with us there is no limit to how much your money can grow. How will you feel if you were to have a financial strategy that protects you against market losses, offers uncapped returns on your investment and your are not LEGALLY required to pay TAXES on the gains?

And most of the strategies we used even offer a higher participation (High PAR) rate for your money and persistency bonuses that further put you ahead of the game.

Great question,

Section 72e of the Internal Revenue Code (IRC-72e) first introduced in 1913, and modified under the Tax Equity and Fiscal Responsibility Act of 1982, states that Cash Value growth in certain types of life insurance (permanent) policies accumulates income tax deferred and IRC section 7702a first introduced in 1913, and modified under the Deficit Reduction Act of 1984 states that policy holders of a fully compliant life insurance policy can take out their gains income tax free and

IRC section 101a first introduced in 1913 and modified under the Technical and Miscellaneous Act of TAMRA states that cash value as well as death benefits of a fully compliant life insurance policy can be accessed income tax-free.

Life insurance offers the biggest tax exemption in the entire US Tax Code, and you too can take advantage of this if you can meet the qualification requirements.

There is no legal limit to the number of life insurance policies you can have. However, the total amount of coverage you can have is dependent upon your income or net worth. For example, adults 40 and younger are limited to 25 to 35 times their annual income. Your coverage typically can’t exceed 15 to 30 times your annual income, depending on your age.

Absolutely yes. There are three ways you can leverage your policy to get money.

 

  1. i) Participating Policy loans or indexed loans: where you get to leverage your cash value to make money in other areas while the money is still literally in your policy earning uninterrupted compound interest for you. This is the most effective way to leverage your policy. Also known as positive arbitrage. This way you pay zero tax and a minimal loan interest as outlined in your contract.

 

  1. ii) Fixed loans where you get to use your money as collateral to get other people’s money to resolve your money issues. The collateralized portion of your cash value is then transferred to a fixed account most often earning the same rate that you are being credited (wash loans). That way you are neither making money nor losing money.

 

iii) Cash value withdrawals: where you simply withdraw money from your cash value up to your cumulative premium amount with zero taxes. However, any withdrawal amount above the premium paid will be fully taxed in accordance with applicable laws.

 

  1. iv) Partial or Absolute Assignments:

Where you can use your policy as a collateral to borrow money from a conventional bank 🏦. And if you die without paying the money, a portion or all of your death benefits is used to pay for the loan balance. This may be a little more expensive than the other options.

A MEC is any life insurance policy that is over funded or one that violates the 7 pay premium test. That is a life insurance contract is not compliant and as such are treated as investments and the cash value and death benefits are fully taxed in accordance with applicable IRS laws. And this is where we come in. We are here to help you understand how life insurance can be a game changer to your financial future and more importantly to help you structure these policies for your best interest and without infringing on the Laws.

Talk to one of our expert financial professionals today using the link below

https://calendly.com/simonntoh/tax-free-investment-strategy-meeting-vip-clone

  1. Guaranteed protection
    If you have a family, a business, or others who depend on you, the life insurance benefit of a whole life policy acts as a financial safety net. When you die, your beneficiaries will receive a lump-sum payment that is guaranteed to be paid in full (provided all premiums are paid and there are no outstanding loans). It’s essential protection that you can count on to be there for your loved ones when needed.
  2. Income replacement
    Imagine what would happen to your family if the income you provide suddenly disappeared. With whole life insurance, you can help make sure that your loved ones have the money they need to help:
  • Pay the mortgage
  • Afford childcare, health care, or other services 
  • Cover tuition or other college expenses 
  • Eliminate household debt
  • Preserve a family business
  1. Tax-free benefit
    Your beneficiaries will be able to enjoy every penny you leave them. That’s because the benefit of a life insurance policy is generally passed along federal income tax free.
  2. Guaranteed cash value growth
    As you pay your premiums, your Whole Life policy builds cash value that is guaranteed to grow—tax deferred—and can help meet a variety of financial goals: 
  • Supplement retirement income 
  • Fund a child or grandchild’s education 
  • Pay off a mortgage 
  • Protect existing assets 
  • Establish an emergency fund 
  1. Dividend potential
    One of the benefits of purchasing whole life insurance from New York Life is that you will be eligible to receive dividends.4Although they are not guaranteed, when dividends are awarded, you can take them in cash, use them to offset your premiums, or use them to buy paid-up additional insurance that increases your coverage and cash value, use them to offset your premiums, or take them in cash.
  2. Optional riders
    There are several ways to tailor a whole life policy to meet your individual needs. For an additional cost, you can use riders to purchase additional protection without further underwriting, to pay your premiums if you become disabled, to use some of your face amount to pay for chronic illnesses, or to purchase coverage for your children. Your agent can help you decide if any of these riders are right for you.

As you get started, it can be helpful to revisit the reasons why you need financial planning using life insurance. Is it to replace your income, pay off your mortgage, or create an inheritance for your loved ones? Whatever the reasons, you’ll want to keep them in mind as you select your coverage.

There are plenty of formulas you can use to determine how much insurance you need. However, it often comes down to the reasons you need coverage in the first place. For example:

  • If you need income replacement, you can add up your annual expenses and multiply that by the number of years you have until retirement.
  • If you want to make sure your loved ones have enough money to pay for a wedding, go to college, take over your business, or fulfill any of your other long-term goals, you could calculate the total cost.

The number you come up with will give you a ballpark idea. It strongly recommended to talk to a financial professional to help you in the process.

  1. Life Insurance

Is a means of transferring or sharing risk of loss associated with loss of life, sickness or loss of function. Life insurance provides a measure of financial security for your loved ones if you become sick or die. Some types of life insurance builds cash value that can be accessed by the insured/policy owner at any time, pay out living benefits to the insured if he/she becomes critically, terminally, or chronically ill, and also pay out death benefits to the beneficiaries when the insured/policy owner dies. 

  1. Disability insurance

Is a means of transferring or sharing risk of loss associated with disability, and other physiological disorders.

Protects you when you can’t work due to illness or injury. This falls under personal lines insurance and is purchased for the individual who is seeking protection.

  1. Health insurance

Is a means of transferring or sharing risk of loss associated with one’s health and/or healthcare.

Covers medical expenses such as hospital bills, cost of medicine, and treatment, if the insured person must undergo medical treatment for any covered illness.

  1. Auto insurance

Is a means of transferring or sharing risk of loss associated with automobiles and related liabilities.

Covers accidents, damages, and liabilities related to automobiles. This includes liability coverage for injuries or damages caused to others, as well as collision and comprehensive coverage for the policyholder’s vehicle.

  1. Home insurance

Is a means of transferring or sharing risk of loss associated with homes and related damages. Helps you if you plan to own a home and helps you get a clear idea about all the terms and conditions involved in home insurance.

  1. Travel insurance

Is a means of transferring or sharing risk of loss associated with long distance travel. Reimburses you for losses that may arise while you travel.

  1. Business insurance

Is a means of transferring or sharing risk of loss associated with one’s business, personnel and infrastructures.

Covers the cost of property damage, theft, and other types of losses that your business may incur.

WHAT ARE THE DIFFERENT TYPES OF LIFE INSURANCE?

Life insurance stands as one of the most efficient and reliable means of transferring and sharing the risk of loss across generations. As one of the oldest and most predictable methods for ensuring financial security for loved ones, it plays a crucial role in family planning. According to LIMRA, an industry-funded research firm, 44% of U.S. households would face financial hardship within six months if the primary wage earner passed away, and for 28%, this struggle would begin in just one month. Life insurance provides a safety net by replacing your income in the event of illness or unexpected death.

Life insurance policies typically fall into two main categories: term life insurance and permanent life insurance.

Term life insurance lets you lock in rates for a particular length of time, like 10, 15, 20 or 30 years. During this time, your premiums are level. Once the level term period ends, you can typically renew the policy on a yearly basis but at a higher cost each time if it’s renewable or convert to a permanent life policy if convertible

If you want to cover a specific financial obligation, like the years of college or a debt, term life insurance may be a good fit for you.

Types of Permanent Life Insurance:

  1. Whole Life Insurance:
    Provides lifelong coverage with a fixed premium.
    • Cash value accumulation with a guaranteed minimum interest rate.
    • a death benefit to beneficiaries upon the insured individual’s passing.
    • Policyholder can access cash value through loans or withdrawals.
  2. Universal Life Insurance:
    • Offers flexibility in premium payments and death benefits.
    • Cash value growth based on interest rates and market performance.
    • Allows for adjustments to coverage and premiums over time.
    • Provides a death benefit to beneficiaries and potential living benefits.
  3. Variable Life Insurance:
    • Combines life insurance protection with investment options.
    • Cash value and death benefit values fluctuate based on investment performance.
    • Offers a range of investment choices within the policy.
    • Policyholder assumes investment risk, as the cash value is tied to market returns.
  4. Indexed Universal Life Insurance:
    • Cash value growth linked to the performance of a selected market index.
    • Offers potential for higher returns compared to traditional universal life insurance.
    • Provides downside protection against market losses.
    • Allows for flexibility in premium payments and death benefit options.
  5. Guaranteed Universal Life Insurance:
    • Offers a guaranteed death benefit and premium payments for a specified period.
    • Cash value growth tied to a fixed interest rate for steady accumulation.
    • Provides lifetime coverage without market risk.
    • Suited for individuals seeking predictable premiums and death benefits.

Each type of permanent life insurance offers distinct features and benefits, catering to various financial objectives and risk profiles. Policyholders should carefully assess their needs and preferences to choose the most suitable type of permanent life insurance for their long-term financial planning.

A whole life insurance policy remains in force for the rest of your life as long as you pay the premiums. Before buying a whole life insurance policy, talk to a licensed insurance agent to understand its cash value, living benefits, death benefits and dividends.

Each time you make a premium payment for a whole life insurance policy, part of that premium is put into a cash value account. The remainder of the premium goes to paying internal policy expenses.

the cash value account grows tax-deferred, based on a guaranteed rate of return that is typically low compared to other types of permanent life insurance. Because of slow growth, it can take a long time before the cash value surpasses what you’ve paid in premiums.

You can choose to tap into your cash value by making a withdrawal, taking a life insurance policy loan or surrendering the policy. Withdrawals will reduce the death benefit your beneficiaries will receive. So will a policy loan if it’s not paid back

If you want lifetime coverage but also flexibility with premiums and the death benefit amount, and the ability to accumulate cash value, universal life (UL) insurance may be a good option. There are many types of universal life insurance policies. However, our focus shall be on Indexed Universal Life (IUL) as it is the best type of UL providing an upside potential for the growth of your portfolio as well as a downside protection to prevent losses due to market downturns.

Indexed Universal Life Insurance is a versatile and innovative financial tool that offers a combination of life insurance protection and potential cash value growth based on the performance of a selected market index. This type of insurance provides policyholders with the opportunity to benefit from market gains while also offering downside protection, as the cash does not directly participate in market losses. Indexed Universal Life Insurance offers flexibility in premium payments and death options, allowing policyholders to adjust their coverage to meet changing financial needs over time. Moreover, the tax-deferred cash value growth of Indexed Universal Life Insurance provides a avenue for potential accumulation of wealth while ensuring financial security for loved ones through the death benefit.

Indexed Universal Life Insurance grants individuals the ability to secure their financial future with a customizable and dynamic approach to life insurance planning. With the potential for cash value growth linked to market performance, policyholders can benefit from market upswings while having protection from downturns. This allows for the potential growth of funds on a tax-advantaged basis, offering a reliable tool for building long-term wealth and providing a legacy for future generations. The flexibility and growth potential of Indexed Universal Life Insurance make it an attractive option for those seeking a blend of financial protection, growth opportunities, and adaptability in their life insurance and financial planning strategies.

The Miracle product, index universal life (IUL) we have today didn’t arrive until 1997.

However, since the introduction of The Internal Revenue Code (IRC) Sections 7702a and 72e, savvy Entrepreneurs and intelligent investors like John D Rockefeller, Andrew Carnegie, Watt Disney, JC Penny and many others have been using Whole Life Insurance as a Tax-Free Personal Bank to minimize Market fluctuations, withstand Economic Recessions, maximize the growth of their portfolio and super charge their savings.

 

In 1982, the definition of minimum coverage for a set premium amount in a UL policy was vaguely outlined by the US Congress under the Tax Equity Fiscal Responsibility Act (TEFRA). Two years later, the MEC Rule or guidelines were redefined it under the Deficit Reduction Act (DEFRA).

However, the TEFRA/DEFRA tax citations, didn’t still very clear on the minimum amount of insurance that had to be attached to a Universal Life policy for it to be given preferential tax treatment.

 

So, in 1988, under the Technical and Miscellaneous Revenue Act (TAMRA), the 7 pay premium guidelines were introduced to permit UL policyholders fund their policies gradually over a period of time until the maximum premium amount for a given policy face amount was reached. This was a game changer and the brainchild of the US Congress Lawsuit against E.F. Hutton and CO.

DISCLAIMER

Leader Life Financial & Investment Solutions provides financial and insurance services with the utmost professionalism and dedication. We strive to offer accurate and reliable information to assist our clients in making informed decisions regarding their financial future However, it is important to note that the information provided on our website, in our communications, and during consultations is for general informational purposes only.

Please be aware that the financial landscape is subject to change, and individual circumstances may vary. The content shared Leader Life Financial & Investment Solutions does not constitute financial, legal, or investment advice, and we recommend that individuals seek personalized advice from qualified professionals before making any financial decisions.

While we make every effort to ensure the accuracy and timeliness of the information we provide, Leader Life Financial & Investment Solutions shall not be held liable for any errors, omissions, or inaccuracies in the content. Clients and visitors are encouraged to independently verify any information and consult with licensed professionals to address their specific financial needs and goals.

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