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What is Infinite Banking?

Infinite Banking
November 6, 2023 by Dan Kampani No Comments

Infinite Banking, often referred to as the Infinite Banking Concept (IBC), is a financial strategy that uses whole life insurance policies as a tool for personal banking and wealth building. Here’s a simplified explanation:

  1. Whole Life Insurance: Infinite Banking starts with the purchase of a whole life insurance policy. Unlike term life insurance, which covers you for a specified term, whole life insurance provides coverage for your entire life.

  2. Cash Value: Whole life insurance policies accumulate cash value over time. A portion of your premium payments goes into this cash value component. This cash value grows at a guaranteed rate, and it’s tax-deferred, meaning you don’t pay taxes on the growth as long as the money remains within the policy.

  3. Policy Loans: With Infinite Banking, you can borrow money from the cash value of your whole life insurance policy. These are typically referred to as policy loans. Importantly, when you take a policy loan, you’re essentially borrowing from yourself, and the cash value in your policy serves as collateral.

  4. Interest Payments: When you take a policy loan, you pay interest on the borrowed amount. However, this interest goes back into your policy, not to an external lender. In essence, you’re recapturing the interest rather than paying it to a bank.

  5. Flexibility: The key idea behind Infinite Banking is to become your own banker. You can borrow money from your policy for various purposes such as financing major purchases, investments, or emergencies. Once you repay the loan, the money goes back into your policy, replenishing your cash value.

  6. Wealth Building: Over time, as your cash value grows and you continue to use your policy for financing needs, it can become a source of wealth accumulation and a way to achieve financial independence.

Infinite Banking is often associated with the idea of becoming self-reliant in managing your financial affairs, as opposed to relying on traditional banks or financial institutions for loans. It’s important to understand that while this concept can be a valuable financial strategy for some, it’s not without its complexities, and the specific benefits and risks can vary depending on the individual’s financial situation and the terms of the insurance policy.

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Do I really need life insurance?

Black Family
November 3, 2023 by Dan Kampani No Comments

The need for life insurance depends on your individual circumstances, financial situation, and responsibilities. Here are some factors to consider when deciding if you need life insurance:

  1. Dependents: If you have dependents, such as a spouse, children, or aging parents, life insurance can provide financial security for them in the event of your death. It can help replace your income and cover their ongoing expenses, such as housing, education, and daily living costs.

  2. Debts: If you have outstanding debts like a mortgage, car loans, or credit card debt, life insurance can ensure that these debts are paid off if you pass away, preventing the burden from falling on your family.

  3. Financial goals: It can also be a tool for achieving long-term financial goals. It can provide funds for your children’s education, supplement your retirement savings, or leave a financial legacy to your beneficiaries.

  4. Co-signed loans or joint financial responsibilities: If you share financial obligations with someone else, such as a business partner or a co-signer on a loan, life insurance can protect them from shouldering the financial burden in case of your death.

  5. Estate planning: It can facilitate the transfer of assets and wealth to your heirs or beneficiaries, especially in cases where your estate might be subject to estate taxes.

  6. Peace of mind: It can provide peace of mind knowing that your loved ones will be financially secure if something were to happen to you.

On the other hand, if you’re single, have no dependents, no significant debts, and you have enough assets to cover your final expenses, you may not have an immediate need for life insurance. In this case, the decision to purchase life insurance might be driven by other factors like leaving a legacy or using it as an investment or tax planning tool.

Any questions? Call 1-866-526-7264.

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What is Laddering?

Laddering in life insurance
August 21, 2023 by Dan Kampani No Comments

“Laddering” in the context of life insurance typically refers to a strategy where an individual or a family purchases multiple life insurance policies with varying coverage amounts and term lengths. This strategy is often used to provide sufficient coverage during different stages of life while also managing costs.

Laddering Strategy

  1. Here’s how the laddering strategy works:

    1. Multiple Policies: Instead of purchasing a single large life insurance policy, you purchase multiple policies with different coverage amounts and term lengths. Each policy is designed to meet specific needs at different points in time.

    2. Term Lengths: The policies are chosen with varying term lengths, such as 10, 20, or 30 years. Shorter terms might be used to cover specific financial obligations that are temporary, while longer terms might be used for more permanent needs.

    3. Coverage Amounts: The coverage amounts for each policy are determined based on financial obligations and responsibilities. As time passes, certain obligations (like a mortgage or children’s education expenses) might decrease, allowing you to reduce coverage and save on premiums.

    4. Cost Management: Laddering helps manage costs since shorter-term policies generally have lower premiums than longer-term policies with higher coverage. As shorter-term policies expire, the need for coverage might decrease, resulting in cost savings.

    5. Transitioning: As each policy reaches the end of its term, you can reassess your financial situation and decide whether you still need the coverage or if you can reduce it. You might also consider converting some of the policies to permanent life insurance if your needs change.

    Laddering can provide flexibility and cost-effectiveness while ensuring that your life insurance coverage aligns with your changing financial responsibilities over time. However, it requires careful planning and periodic reviews to ensure that the coverage remains appropriate for your circumstances.

An Example of Laddering in Life Insurance ?

Let’s say you have a 10-year policy to cover your mortgage, a 20-year policy for your children’s education, and a 30-year policy for income replacement. As these needs change or are fulfilled, you can adjust or let policies expire accordingly.

The Bottom Line

Laddering your life insurance is like having a financial plan that grows and adapts with you. It’s a smart way to manage costs and coverage over time. However, before embarking on this strategy, it’s essential to consult with a financial advisor or insurance expert. They can help you fine-tune your toolbox, making sure you have the right tools for every stage of your life.

FREQUENTLY ASKED QUESTIONS (FAQ)

While it’s not mandatory, consulting a financial advisor or insurance expert can help you create a well-designed laddering strategy that meets your specific goals. They can provide guidance and ensure you make informed decisions.

Laddering involves managing multiple policies, which can be a bit more complex than having one policy. However, the benefits of tailored coverage and cost savings often outweigh the added management.

Absolutely. Laddering is designed for flexibility. As your needs evolve, you can adjust your coverage by letting policies expire, reducing coverage amounts if the carrier allows, or adding new policies to address new needs.

Yes, you can start laddering at any age, but the best time depends on your life stage and financial goals. It’s advisable to begin when you have clear financial responsibilities that require coverage.

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A Quick Comparison of Premiums

Latino family
April 1, 2023 by Dan Kampani No Comments

Life Insurance Quotes

Here is a quick comparison of premiums between term life and whole life and guaranteed permanent  universal life. To create these quotes, carefully selected, highly competitive carriers are used. This table below is able to offer some clarity on what to expect from various guaranteed life plans. I offered these options to a real client of mine. See the rounded premiums below.

A Quick Comparison of Life Insurance Premiums

MALE | AGE: 35 | RISK CLASS: SUPER PREFERRED | NON-SMOKER
Insure in MInutesReal-time Life Insurance Rates

Face amount: $1000,000
10 Years Term
(convertible to guaranteed universal and whole life)		$19 monthly
20 Years Term
(convertible to guaranteed universal and whole life)		$34 monthly
30 Years Term
(convertible)		$64 monthly
30 years
Refund of Premium Term		$132 monthly
Universal Life (pay only till 65)
(Lifetime of coverage without cash values)
$583 monthly
Whole Life (pay only till 65)
(Lifetime of coverage with cash values)		$1,446 monthly
Please note: The rates quoted are estimates and are subject to underwriting by the insurance carrier.
Rates do not include optional riders. For a no-obligation consultation, call us at 1.866.526.7264.

The lowest premium term life plan may not be the best option for you.

When you see an ad on TV promising hundreds of thousands of dollars worth of term life insurance for a ridiculously low price, you need to keep in mind that they are only throwing a bone at you to call them. These ads only promote a 10-year term plan for those in perfect health (super preferred risk class). Obviously, the low premium quoted makes it look like a breeze to buy life insurance. There are a lot of good life insurance advisors out there to serve your best interest. It is important to talk to them in detail before taking a life policy.

Life Insurance - Bottom Line

A man thinking

The premium difference is obviously huge. While there is no right or wrong life insurance plan, it is what you need and can afford that dictate the kind of life insurance plan you should go for. Life insurance can work as a mortgage protection vehicle, something to protect a loan, or an estate planning tool. Term life insurance plan can hardly take care of the death tax or estate tax issue. To take care of that, you must look into a guaranteed permanent life insurance option as a guaranteed financial legacy. Limited premium or single pay whole life and universal life insurance plans are very useful for those looking into covering estate tax through life insurance.

4 Truths about Life Insurance

  1. Premiums always remain level during the duration of a term in term life plan.
  2. Universal life and whole life plans are usually custom-designed to suit your needs and affordability.
  3. All quotes are subject to underwriting, age and state availability.
  4. Always ask for optional riders that may enhance the value of your life insurance policy.

Conclusion

Purchasing life insurance is a major financial decision. Let not a few sleek TV ads or aggressive marketing sway you. A quick comparison of premiums, and what a life insurance plan can or cannot do for you is very important. Talk about your current and future family protection needs to a professional before you buy one. In a remote work environment, always ask for a virtual meeting.

FREQUENTLY ASKED QUESTIONS (FAQ)

Term life insurance is a type of life insurance that provides coverage for a specified period of time, usually ranging from one to thirty years. If the policyholder passes away during the term of the policy, the beneficiaries will receive a death benefit payout.

Term life insurance is different from other types of life insurance such as whole life insurance or universal life insurance, which provide coverage for the policyholder’s entire life and may also have a savings or investment component.

The amount of term life insurance coverage you need will depend on a number of factors, including your income, debts, and the financial needs of your dependents. A financial advisor or insurance agent can help you determine the appropriate amount of coverage for your specific needs.

The cost of term life insurance will depend on a number of factors, including your age, health, and the amount of coverage you need. Generally, term life insurance is more affordable than other types of life insurance, especially for younger and healthier individuals.

Most term life insurance policies are renewable, but the premiums may increase as you get older. Some policies may also have the option to convert to a permanent life insurance policy.

If you outlive your term life insurance policy, the coverage will expire and you will not receive a death benefit payout. Some policies may have the option to renew or convert to a permanent life insurance policy.

There are several types of life insurance available, including term life insurance, whole life insurance, and universal life insurance. Each type of insurance has its own benefits and drawbacks, so it’s important to speak with a financial advisor or insurance agent who can help you determine which type of insurance is best for your needs.

If you’re single and don’t have any dependents, you may not need life insurance. However, if you have outstanding debts or want to leave a financial legacy for your loved ones or a charitable cause, life insurance may still be beneficial.

When choosing a life insurance policy, it’s important to consider your financial needs and goals, as well as the features and benefits of the policy. It’s a good idea to speak with a financial advisor or insurance agent who can help you understand your options and make an informed decision.

That means you give us a call at 1.866.526.7264.

It’s difficult to say which life insurance company is the best, as there are many factors to consider and the best company for one person may not be the best for another. Some of the factors to consider when choosing a life insurance company include:

  1. Financial strength and stability: Look for a company that has a strong financial rating from independent rating agencies such as A.M. Best or Standard & Poor’s.

  2. Product offerings: Choose a company that offers the types of life insurance policies that meet your needs and goals.

  3. Customer service: Look for a company that has a reputation for good customer service and responsiveness.

  4. Pricing: Compare quotes from several different companies to ensure that you’re getting a competitive price for the coverage you need.

  5. Company reputation: Consider the company’s reputation within the industry and among its customers.

We serve our customers with over 20 top-rated carefully selected insurance carriers. It would be unfair name a few a leave the others.

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Return of Premium Term

Return of Premium
March 14, 2023 by Dan Kampani No Comments

What is Return of Premium Term Life Insurance?

Return of premium term life is a kind of term life insurance that refunds your paid premiums upon maturity of the term.
If term life insurance is like paying rent or fee for service, return of premium term (ROP term) is like getting your payments back. It’s that simple. Only a handful of life insurers in the market offer this coverage. The only downside is that you are going to pay higher premium for the right to receive a refund. The upside is that you would lose nothing at the end of the term.

How much does return of premium term cost?

Coverage Amount:$500,000
at Preferred Risk
Length of Term: 30		Return of Premium
Term
[Monthly Cost]		Return of Premium
Term
[Monthly Cost]
AGEMALEFEMALE
35$75.69$59.60
40
$119.63$92.22
45$187.05$139.20
50$312.77$230.12

Click here for a sample PDF illustration of ROP term life insurance.

As you can see the cost involved in buying a return of premium term life insurance is definitely higher than the the traditional term life. So, is it worth it? I think it depends upon your affordability, risk tolerance and individual tax-bracket.

Get real-time Quotes for Life Insurance

Click on the Length of Coverage field and choose the kind of life insurance plan you are looking for. Return of Premium Term plans have ROP in the end.

 

FREQUENTLY ASKED QUESTIONS (FAQ)

Return of Premium Term (ROP) life insurance is a type of term life insurance that returns the premiums paid by the policyholder at the end of the term if the policyholder does not die during the coverage period.

ROP life insurance works like regular term life insurance, but with the added benefit of a return of premiums feature. If the policyholder outlives the term of the policy, they receive a refund of all the premiums paid.

Whether or not ROP life insurance is worth it depends on your individual needs and financial situation. ROP policies tend to be more expensive than traditional term life insurance policies, but they can be a good option for those who want the added benefit of a refund of premiums.

The cost of ROP life insurance will depend on a number of factors, including your age, health, and the amount of coverage you need. ROP policies tend to be more expensive than traditional term life insurance policies, but they can be a good option for those who want the added benefit of a refund of premiums.

For a reference, please look at the the premium table on this page.

If you cancel your ROP life insurance policy before the end of the term, you may not receive a refund of premiums, or receive partially refund based on for how long your policy was active. However, if you outlive the term of the policy, you will receive a refund of all the premiums paid.

If you outlive your term life insurance policy, the coverage will expire and you will not receive a death benefit payout. Some policies may have the option to renew or convert to a permanent life insurance policy.

When choosing between ROP life insurance and traditional term life insurance, it’s important to consider your individual needs and financial situation. ROP policies tend to be more expensive than traditional term life insurance policies, so you’ll need to weigh the added benefit of a refund of premiums against the higher cost of the policy.

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The Goodman Triangle

The Goodman Triangle and and Gift Tax
July 16, 2021 by Dan Kampani No Comments

The Goodman Triangle Explained

The ‘Goodman Triangle’ refers to a court case (Goodman vs. Commissioner of Internal Revenue) in 1946. Read here about this in detail. The gist of this case was that life insurance policies were purchased with the insured, the owner and, the beneficiary as three different entities. This caused a gift-tax situation. Most of us know that the life insurance proceeds are federal income tax free.

So, if you have $1,000,000 in the bank and, also a $1,000,000 life insurance plan, upon your death, what you had in your bank will be considered your estate and will be appropriately taxed. Whereas, the life insurance policy proceeds will be untouchable. Life insurance has a unique position in financial planning. No one can touch the death benefit upon insured’s death. It just belongs to the beneficiary.

Let’s consider this situation:

  • A = insured
  • B = the owner, the one who pays for the policy, and
  • C = the beneficiary, the one who receives the death benefit proceeds upon the death of the insured.

Let’s say B buys a life insurance policy on A and, makes C the beneficiary. A lot of time this situation comes where a parent wants to buy a cash value whole life plan on the kids and also make the kids the primary beneficiary of the on each other’s policy.
According to the US tax code, upon the the death of the insured, death benefit now becomes a gift from the parent to the child (beneficiary). As a result, it is taxable as income. Learn more about gift tax at IRS.gov.

To avoid this situation, for all life insurance policies

  • the insured and the owner have to be the same, or
  • the owner and the primary beneficiary must be the same person.
Well, next time you want to buy a life insurance policy on one of your loved ones, you now know what not to do.
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High cash value life insurance

whole life insurance for teenagers
May 13, 2021 by Dan Kampani No Comments

A cash value whole life insurance policy can be a great option for younger population. These life insurance plans not only work as a life insurance policies but also accumulate deferred cash over time. The insured can use this cash to fulfil whatever he or she needs and wants in the future.
The premium of a whole life insurance plan for a depends upon how the policy is designed. Something else also needs to be kept in mind when looking to set it up for a teenager.
There are two kinds of whole life insurance plans in the market:

  1. Non-participating whole life
    2. Mostly stock companies offer non-participating policies the annual profits are not shared and no dividends are paid to the policyholders.
  2. Participating whole life
    3. Almost all mutual companies offer participating whole life. Every year, they allow a portion of the company’s profits to be paid out in the form of policy dividends as refunds. This allows an accelerated deferred cash accumulation overtime.

The premium for a $500,000 participating policy for a male in good health is $305.37 monthly. Whereas the premium for the same policy for a female is $265.79 monthly.
The non-participating policy premium is usually lower. For example, it is $197.12 for a male and $177.32 for a female.

Single Premium Whole Life

For how long you want to pay the premium depends entirely on you. A whole life can be from a single premium whole life to any number of years that you desire to pay. Once the premiums are paid, you no longer put anything into the policy. But your cash value keeps increasing over the years. In a participating plan, even the death benefit increases over time. This gives a kind of inflation protection to the beneficiary.

For example, a single premium for $500,000 non-participating whole life for a 19 years old non-smoker female in excellent health is $48,425. For a 19 years old male, the same policy will cost a single premium of $56,485.

It is important to understand the difference between these two whole life insurance plans. It is even more important if the target of a whole life policy is to accumulate as much cash value as possible over time.

Participating whole life plans are primarily sold by mutual life insurance companies. A few of these carriers include Penn Mutual, Mass Mutual, and New York Life. Since these companies don’t have stockholders, part of the gains they have for a given year is shared with the policy holders. These are called dividends. As a result, the cash value accumulation is much larger in participating cash value whole life insurance policies.

Non-participating whole life policies do not offer dividends. These plans offer an interest rate of usually between 2 – 3%. Because of this, the cash value accumulation is not that sharp. That is the reason why these plans are less expensive compared to participating whole life plans.

Whole life insurance 1

Also keep in mind that whole life insurance plans can be and should always be custom-designed to suit your need and affordability.

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