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September 2022

Estate Planning

Christopher Drew Featured on The Balance to Discuss Estate Planning

By Estate Planning

Christopher Drew, the founder of Drew Capital Group, was recently featured in an article from The Balance to discuss the importance of early estate planning.

At Drew Capital Group, we understand that even opening the conversation about an estate plan can be a terrifying idea. It’s a plan for the inevitable, but that doesn’t make it any less vulnerable or unsettling. Nevertheless, an estate plan is extremely important, which is why The Balance turned to our founder, Christopher Drew, for insight, firsthand accounts and testimonials to their value.

As families age, caretaking responsibility often falls on children and other family members. While half of that responsibility includes acts of service, the other half relies on the emotional and mental part of the relationship. Chris Drew believes that family members with a grasp and understanding of their loved ones’ wishes can cut down on awkward discussions they may not be interested in having.

The process can also be simplified by starting the planning process early. First and foremost, as we age, we may experience some sort of physical and mental decline. A great deal of stress can be avoided by getting affairs in order while you or your parents are operating at peak efficiency.

It can also be tremendously helpful to avoid planning out of necessity. For example, a major life event can force some families to confront their problems before they’re mentally prepared to deal with them. “It’s a reality that can make financial futures more complicated, which is why it’s ideal to start discussing financial matters and wishes for after death early,” Drew said.

Other reasons to create and maintain a proper estate plan include the avoidance of court proceedings, the simplification of the process, the preservation of wealth and the closing of the racial wealth gap. A consistent, periodic updating of beneficiaries can ensure that your assets fall into the hands of exactly who you intend to pass them to, and the discussion shouldn’t be avoided out of fear or shame.

The article also notes that simply opening the conversation can be difficult, so it offers a few tips to those looking to get ahead of the curve. First, for adult children, it may be advantageous to consult siblings. Equal division of assets may sound ideal, but it can vary based on needs and desires. Additionally, initiating the discussion could be smoother with a united front.

Dialogue can also begin with simple questions with good intentions, as to show parents that you’re focused on alleviating stress and promoting their legacy. At the end of the day, estate planning is about them, and it should be focused on eliminating difficulty in the planning process as opposed to personal gains. Some strategies to keep the conversation focused include using relatable examples and focusing on tax benefits, assuring them that you’re looking to protect more of their hard-earned money.

To read the entire article and learn more tips about estate planning, click here.

If you have any questions about beginning the conversation or crafting the right estate plan for your situation, please give us a call. You can reach Drew Capital Management in Tampa, Florida at (813) 820-0069.

This material is provided as a courtesy and for educational purposes only.  Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation. Advisory services offered through Drew Capital Management, a Member of Advisory Services Network, LLC. Insurance products and services offered through Drew Capital Group. Advisory Services Network, LLC and Drew Capital Group are not affiliated.

Life Insurance

4 Recent Innovations in Life Insurance Policies

By Life Insurance

Life insurance is no longer constrained to the inflexible policies our parents held. Here are some of the latest additions and innovations to give you more options than ever.

Today’s life insurance policies are not the policies our parents and grandparents grew up with and purchased. They offer more features and more customization, at a price lower than many consumers expect to pay.

In fact, a recent study showed that more than 50% of people assume that the cost of life insurance is three times higher than it actually is [1]. Furthermore, 44% of millennials, a group whose net worth continues to rise more rapidly than any other generation [2], overestimate the cost of term life insurance by more than six times.

Price, however, isn’t the only barrier holding people back from looking at what life insurance has to offer. Lack of information, explanation and time to research options, combined with the fact that no one enjoys thinking about and planning ahead for their own death, can make life insurance a tough subject.

New life insurance policy features are designed to quell those worries, as insurance companies look for more ways to build client-oriented policies. Here are some of the latest innovations in the life insurance industry:

  1. Cash Value Component and Living Benefits

Life insurance used to be exactly what it might sound like: insurance for your life. In the event of their unexpected death, policyholders wanted to protect their families, usually by purchasing term life insurance. Term life insurance covers policyholders for a predetermined period of time, typically for a low monthly rate.

Now, carriers offer whole and universal life insurance, which are permanent policies with a tax-deferred cash value component that allows retirement planners to create another avenue to build a nest egg, or savers to save for other things, like college or self-funding a business startup venture. Though the cash value component often increases the monthly premium costs, with these types of policies, the cash value can grow at a rate guaranteed by the claims-paying ability of the insurance company.

One advantage of universal life as opposed to whole life is flexible premiums, allowing you to increase or decrease your premium and the amount that goes toward your cash value. Indexed universal life, a type of universal life insurance, can offer principal protection with market upside potential in correlation with a market index or indexes. (It’s important to understand that indexed universal life is a contract between a consumer and an insurance company, and unlike variable life insurance, isn’t actually subject to stock market risk.)

Permanent life insurance policies that can build cash value can be a good option for healthy younger investors with time and low likelihood of death in the near future. Depending on their situation, healthy retirees can also sometimes benefit from single-premium permanent life insurance which can provide tax-advantaged retirement income.

  1. Long-Term Care Hybrid Policies

Just as no one enjoys planning for their own death, no one likes to imagine needing long-term care. Unfortunately, 70% of people currently age 65 or older in America will need long-term care, with 20% needing support for longer than five years [3}. Additionally, Medicare does not cover long-term care, necessitating some sort of plan to pay for long-term care to avoid the accelerated depletion of funds in retirement.

One solution to the problem is a modern life insurance and long-term care hybrid plan. Obviously, the main sticking point and fear when it came to traditional long-term care insurance was the potential for not needing long-term care, and that fear was completely rational and well-founded. Older policies were “use-it-or-lose-it.” If you didn’t end up needing long-term care, all of those premiums you paid through the years were for nothing.

Now, hybrid policies provide flexibility. Policyholders have the ability to use their benefit to fund long-term care if they need it. If they don’t need it, it becomes a death benefit provided to their beneficiaries.

  1. Riders

One of the biggest expansions in life insurance is in the way you can customize a policy to your needs using a wide array of options available as riders that can be added to an insurance policy. A guaranteed insurability rider, for example, allows the policyholder to purchase more coverage without additional medical examination. It can be helpful to have a guaranteed insurability rider if you expect changes in circumstances that would have affected your original premiums.

Accidental death riders are also common, usually doubling the death benefit in the event that the policyholder dies in an accident. Additionally, accelerated death benefit riders can give the policyholder access to the death benefit if diagnosed with a terminal illness [4]. The amount accessed is typically subtracted from the death benefit, meaning that the policyholder’s beneficiaries receive a smaller death benefit, but it’s yet another example of a feature allowing access to funds during life.

  1. Better Support for Policyholders

Whether it be because of life insurance riders or enhanced operations, life insurance does not have to be difficult to obtain. Modern technology, increased access to better medical information and simplified underwriting have helped innovative companies that are always looking for ways to reach broader audiences with better products.

With an independent financial advisor who works with multiple insurance companies, you can find the insurance policy that suits your own unique situation and budget, with the most beneficial features and/or riders for your needs.

If you have any questions about life insurance and the latest advancements, please give us a call! You can reach Drew Capital Management in Tampa, Florida at (813) 820-0069.

 

Sources:

  1. https://lifehappens.org/research/life-insurance-is-on-peoples-minds/
  2. https://www.cerulli.com/press-releases/millennials-want-more-advice-and-are-willing-to-pay-for-it
  3. https://www.annuity.org/retirement/planning/average-retirement-income/
  4. https://www.investopedia.com/articles/pf/07/life_insurance_rider.asp

 

Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

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