- One-third of all people between the ages of 30 and 64 will become disabled sometime in their lives. (Source: Health Insurance Association of America)
- At age 32, the chance of being disabled for 90 days is 6.5 times greater than the chance of death. (Source: National Association of Insurance Commissioners)
- Each year, one person in eight will suffer disability. (Source: National Association of Insurance Commissioners)
- Seventeen percent of American families (one in six) have at least one adult who is disabled from employment. (Source: 2000 U.S. Census)
- The likelihood of being disabled for more than three months is greater than dying in any given year. (Source: Society of Actuaries)
- Seventy-five percent of disabilities are caused by an illness rather than an accident. (Source: Commissioner’s Disability Table)
- In the first year following a paraplegia, living expenses average $259,531 per person. (Source: National SCI Statistical Center, 2005)
- Only 17 percent of small businesses offer disability coverage. (Source: Life Insurance Market Research Association)
- Forty-eight percent of VA mortgage foreclosures are attributed to disability. (Source: FHA, Disability Income Concepts, 1998)
- Eighty-two percent of American workers have inadequate or no disability protection. (Source: Consumer Federation of America and American Council of Life Insurers, 2003)
- Social Security Disability Insurance (SSDI) is available if you have worked 10 years before becoming disabled; after five months of disability; if the expected duration of disability is more than one year. It pays an average of $894.10 per month. (Annual Report on the Social Security of DI Program, 2004)
- Seventeen percent of American families (one in six) have at least one adult who is disabled from employment. (Source: 2000 U.S. Census)
For federal employees that are now not getting paid, we will hold our bill until after the government opens up so that you can get some money in your pocket from a federal refund. You can book an appointment to get your taxes done by calling my office at 215-886-2122.
Charley Reese’s Final column!
A very interesting column. COMPLETELY NEUTRAL.
Be sure to Read the Poem at the end..
Charley Reese’s final column for the Orlando Sentinel… He has been a journalist for 49 years. He is retiring and this is HIS LAST COLUMN.
Be sure to read the Tax List at the end.
This is about as clear and easy to understand as it can be. The article below is completely neutral, neither anti-republican or democrat. Charlie Reese, a retired reporter for the Orlando Sentinel, has hit the nail directly on the head, defining clearly who it is that in the final analysis must assume responsibility for the judgments made that impact each one of us every day. It’s a short but good read. Worth the time. Worth remembering!
545 vs. 300,000,000 People
-By Charlie Reese
Politicians are the only people in the world who create problems and then campaign against them.
Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?
Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?
You and I don’t propose a federal budget. The President does.
You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does.
You and I don’t write the tax code, Congress does.
You and I don’t set fiscal policy, Congress does.
You and I don’t control monetary policy, the Federal Reserve Bank does.
One hundred senators, 435 congressmen, one President, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.
I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.
I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a President to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator’s responsibility to determine how he votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.
What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits.. ( The President can only propose a budget. He cannot force the Congress to accept it.)
The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House?( John Boehner. He is the leader of the majority party. He and fellow House members, not the President, can approve any budget they want. ) If the President vetoes it, they can pass it over his veto if they agree to. [The House has passed a budget but the Senate has not approved a budget in over three years. The President’s proposed budgets have gotten almost unanimous rejections in the Senate in that time. ]
It seems inconceivable to me that a nation of 300 million cannot replace 545 people who stand convicted — by present facts — of incompetence and irresponsibility. I can’t think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.
If the tax code is unfair, it’s because they want it unfair.
If the budget is in the red, it’s because they want it in the red.
If the Army & Marines are in Iraq and Afghanistan it’s because they want them in Iraq and Afghanistan ..
If they do not receive social security but are on an elite retirement plan not available to the people, it’s because they want it that way.
There are no insoluble government problems.
Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power.
Above all, do not let them con you into the belief that there exists disembodied mystical forces like “the economy,” “inflation,” or “politics” that prevent them from doing what they take an oath to do.
Those 545 people, and they alone, are responsible. They, and they alone, have the power.
They, and they alone, should be held accountable by the people who are their bosses. Provided the voters have the gumption to manage their own employees… We should vote all of them out of office and clean up their mess!
Charlie Reese is a former columnist of the Orlando Sentinel Newspaper.
What you do with this article now that you have read it… is up to you.
This might be funny if it weren’t so true.
Be sure to read all the way to the end:
Tax his land,
Tax his bed,
Tax the table,
At which he’s fed.
Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.
Tax his work,
Tax his pay,
He works for
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.
Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.
Tax his cigars,
Tax his beers,
If he cries
Tax his tears.
Tax his car,
Tax his gas,
Find other ways
To tax his ass.
Tax all he has
Then let him know
That you won’t be done
Till he has no dough.
When he screams and hollers;
Then tax him some more,
Tax him till
He’s good and sore.
Then tax his coffin,
Tax his grave,
Tax the sod in
Which he’s laid…
Put these words
Upon his tomb,
‘Taxes drove me
to my doom…’
When he’s gone,
Do not relax,
Its time to apply
The inheritance tax.
Accounts Receivable Tax
Building Permit Tax
CDL license Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax (currently 44.75 cents per gallon)
Gross Receipts Tax
Hunting License Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Marriage License Tax
Personal Property Tax
Real Estate Tax
Service Charge Tax
Social Security Tax
Road Usage Tax
Recreational Vehicle Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Nonrecurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
STILL THINK THIS IS FUNNY?
Not one of these taxes existed 100 years ago, & our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.
What in the heck happened? Can you spell ‘politicians?’
I hope this goes around THE USA at least 545 times!!! YOU can help it get there!!!
GO AHEAD. . . BE AN AMERICAN!!!
SEND THIS TO EVERYONE YOU KNOW
A Whole Life insurance policy’s cash value is contractually guaranteed to equal the death benefit as soon as the insured dies or at age 120, whichever comes first.
That may sound laughable now, but with the advances in modern medicine, that may occur with some of the juvenile policies I’m placing today.
Even though you may not intend to reach age 120, what’s nice is that your Whole Life policy’s cash value climbs on that track each and every year on a guaranteed basis toward your total death benefit amount. That’s mainly what we’ll be discussing below, as well as how you can accelerate that phenomenon.
Your guaranteed cash value growth is unfettered by prevailing interest rates, economic downturns, the amount of company death claims, and so on. Once you initiate premium payments into a Whole Life insurance policy, you are guaranteed your own version of the growth schedule depicted below.
The graphic below shows a $1M policy written on a 38-year-old with a guaranteed level $13,840 annual premium to be paid for 28 years so the policy is contractually paid up by age 65.
In this example, the guaranteed cash value steadily converges on the $1M death benefit even after the contractual premium payment period ends. In all Whole Life policies, the cash value must equal the death benefit at age 120 (or sooner if the insured dies) even if no dividends whatsoever are ever paid to policyholders.
In a totally different article I discuss how Whole Life dividends work, but be very clear that the guaranteed growth is the core engine of a Whole life policy. In fact, as soon as you roll dividends back into your policy, they too become part of the guaranteed cash value.
“So what are the 4 possible ways to accelerate the guaranteed growth curve of a Whole Life policy?”
I’m so glad you asked.
- Start with a “Limited Pay” Whole Life Policy
Just like in the graphic above where the 38-year-old male had Whole Life Paid-Up at Age 65, many carriers have policy types that allow you to pay larger premiums for a shortened number of years, rather than pay smaller premiums for your “whole life.” The actuaries dial in the amount of extra premiums that need to be paid in that shortened time-frame so that the guaranteed cash value eventually reaches the death benefit at the end age 120 in spite of premiums not being paid in the later years of the policy.
Most mutual insurance companies at least offer a contractual 10-pay Whole Life policy and a Whole Life Paid-Up at Age 65 policy in addition to the standard Life Paid-Up at Age 100 policy. Keep in mind, the shorter the premium payment period, the larger the premiums must be, and therefore the quicker your guaranteed cash value grows and approaches the death benefit. More-in-sooner is better when it comes to growth.
The downside to getting a Whole Life insurance policy that is paid-up in a contractual number of years is the lack of flexibility. In order to get the life insurance company to guarantee this early paid-up policy status, you have to commit to the rigid premium structure.
Note: Certain insurance companies allow you to customize the shortened payment period exactly the way you want it. If you want a contractual 14-pay, you can dial it in that way. If you want a 22-pay or you want a 7-pay, so be it. This can be especially appealing to clients who have very steady cash flow, or a dedicated block of assets that they want to systematically deploy into Whole Life insurance.
Since more-in-sooner is better, there are carriers that even offer policies that can be contractually paid up in as little as 5-years. No further premiums are due, and that cash value starts chugging towards the death benefit on a guaranteed basis.
Call our office to see if a customized limited-pay policy would be ideal for your situation.
- Add a Paid-Up Additions (PUA) Rider
If you are not ready to commit to the structured accelerated premium structure of a Limited Pay Whole Life policy, most Mutual Insurance Companies offer some version of a flexible PUA rider. PUA stands for “Paid-Up Addition,” which actually allows for additional paid-up life insurance that you can add to your existing Whole Life insurance policy.
With PUAs no underwriting is necessary and no ongoing premiums are due. They are like little mini Whole Life policies that are paid-up in one shot and stacked upon your existing policy.
Now many of you are thinking, “That’s great, but I don’t want additional insurance. I just want to accelerate the growth of my Whole Life policy.”
Well, if you want to pay additional payments into a Whole Life insurance policy to accelerate its growth, those are technically premium payments. And what do premiums have to buy? Yep, more life insurance.
But guess what? This is the most efficient type of Whole Life insurance you can buy from a cost standpoint. Usually 90%-95% of that PUA payment goes straight to your guaranteed cash value and only 5%-10% pays for the additional death benefit. On that new little block of insurance, no additional premiums are due, hence its name “Paid-Up Addition.”
Remember how your guaranteed cash value must climb toward your death benefit each and every year? What do you think happens when you raise the bar…the death benefit bar that is? Your cash value must now climb even higher to hit that new higher death benefit target.
Remember how “more-in-sooner is better?” You just identified a strategy for jamming additional premiums into your Whole Life policy where 90-95 cents on the dollar goes straight to your cash value. And that cash value must converge upon your death benefit on a guaranteed basis. And you also just increased the total death benefit figure that your guaranteed cash value is climbing towards.
How do you like Paid-Up Additional insurance now?
When our same 38-year-old male makes additional premium payments to buy PUAs (Paid-Up-Additions), these little paid-up policies stack upon the initial death benefit to accelerate both the Cash Value and Death Benefit.
Still unclear about Paid-Up Additions (PUA)? Ask us.
However, it is worth noting that you are limited to how much in PUAs you can buy in any given year both by the insurance company and by the Internal Revenue Service (IRS).
Let me explain:
All insurance companies have certain limits or ratios they allow for when it comes to how much in PUAs you can stack on top of your underlying base Whole Life policy. Think about it, it’s the least profitable part of their business. They are only collecting 5-10 cents on every dollar for mortality charges and then agreeing to grow your other 90-95 cents every single year on a guaranteed basis. Not only that, but they are giving you even more death benefit that’s fully paid-up, so unless you cancel it, they have to pay.
As far as the IRS goes, remember that they are agreeing not to tax your cash value growth since you are alleviating some of the Federal Government’s burden of caring for widows and orphans. But once you cross their line in the sand (when your policy becomes too lopsided with cash value and not enough death benefit) the IRS will revoke many of the key tax benefits normally associated with Whole Life insurance.
Ugh, you don’t want that. The next section discusses a handy workaround that allows for maximum overfunding while staying compliant with insurance companies and the IRS.
- Blend your Whole Life Policy with a Term Insurance Rider
Just to be clear, this term rider on its own does nothing to enhance wealth building inside a Whole Life policy. In fact, it will even add additional mortality charges, but usually, a very nominal amount considering the amount of temporary death benefit it props up.
Here you go again, “But wait! I don’t want more life insurance. I just want to maximize my cash value growth.”
Remember how all insurance companies and the IRS mandate that you have a certain amount of death benefit per additional premium dollars that you want to stuff your policy with?
More-in-sooner is better, right? Blending in a Term Insurance Rider is a way to maintain all the proper death benefit ratios while still allowing you to stuff your policy with an abundance of PUA premiums.
By stacking a disproportionate amount of PUAs upon our Base Whole Life policy early on, you accelerate the amount of guaranteed cash value you have growing for you, and you also raise the bar of what that cash value must grow to because of all the paid-up additional insurance those premiums bought. Growth that wouldn’t normally occur until late into the life cycle of the policy, can now happen much earlier thanks to adding the term rider.
Because our 38-year-old increased his death benefit by blending the Whole Life policy with a term insurance rider, he is able to stack a disproportionate amount of PUA premium onto his Base WL policy very early on.
The effect illustrated above can be even better if you have an existing Whole life insurance policy that wasn’t constructed with this kind of efficiency. You can actually roll your existing cash value into a new more efficient design. See below
- Do a 1035-Exchange (Rollover) of an Under-Performing Policy into a Legal PUA
If you have a policy that is already in force, you have the ability to do what is called a 1035 exchange, which is a part of the tax code that allows for a tax-neutral swap of an existing life insurance policy into a new one. It is very similar to an IRA rollover. However, in the eyes of the IRS, you actually get credit for all the death benefit that you already paid for in your old policy.
Remember all the necessary death benefit ratios you need? If you have already paid quite a bit of freight in your old policy, the new one can often be streamlined since you satisfied the necessary requirements in your old policy.
If you want to the ability to keep paying, then we combine enough of the appropriate riders, so that the lion’s share of your ongoing premiums purchase PUAs.
Time for a Policy Check-Up?
Whether you’re an existing policyholder or just exploring all your options before you get started with a new policy, you should definitely take a look at what we can design for you:
Give our office a call at 215-886-2122