Beyond helping clients grow their assets, advisors need to know what’s available to protect their clients’ financial security and quality of life. To that end, this monthly column will look at the many risk management roles insurance can play as part of a client’s overall plan.
One versatile life product is Quantum II from The Hartford, a permanent life policy with an investment component that is structured to allow premiums to do double duty, says David Potter, senior manager of public relations at Hartford Life. Through its investment portion, the cost basis of the policy can be increased, allowing tax-free withdrawal of a greater sum. A client purchasing a policy with a $5,000 annual premium and investing an additional $25,000, for instance, will find that the life insurance contract basis puts them both together, says Potter. Thus, after 10 years the cost basis is $50,000 in premiums plus the $25,000 added up front, totaling $75,000. Life insurance tax treatment allows withdrawal of the basis first, tax free. So if the investment segment of the policy does well, the client can withdraw up to that $75,000 without paying taxes
Quantum II, says Robert Charron of The Hartford’s Nashville office and himself a CFP, can help with everything from required minimum distributions (RMDs) to the funding of buy-sell agreements, citing two real-life examples.