401(k) Savings with Profit Sharing	Use this calculator to show how a 401(k) with profit sharing plan can help you save for retirement..
72(t) Calculator	The IRS Rule 72T allows for penalty free, early withdrawals from retirement accounts. Use this calculator to determine your allowable 72T Distribution and how it can help fund your early retirement.
72(t) Distribution Impact	This calculator is designed to examine the affects of 72T distributions on your retirement plan balance.
Beneficiary Required Minimum Distributions	Use this calculator to determine your Required Minimum Distributions (RMD) as a beneficiary of a retirement account.
Company Stock Distribution Analysis Calculator	If you own company stock in a retirement plan you may be able to take advantage of using the long term capital gains tax rate rather than your ordinary income tax rate on this investment.
Pension Plan Retirement Options	Use this calculator to help decide between joint survivorship and single survivorship pension options.
Required Minimum Distribution (RMD)	Use this calculator to determine your Required Minimum Distributions (RMD) as an account owner of a retirement account. This financial calculator will also look at potential future year’s distribution requirements.
Required Minimum Distribution (RMD) for Current Year	Use this calculator to determine your Required Minimum Distributions (RMD) as an account owner of a retirement account for the current year.
Retirement Income Calculator	Use this calculator to determine how much monthly income your retirement savings may provide you in your retirement.
Retirement Planner Calculator	Quickly determine if your retirement plan is on track – and learn how to keep it there.
Retirement Shortfall Calculator	Running out of your retirement savings too soon is one of the biggest risks to a comfortable retirement. Use this calculator to find a potential shortfall in your current retirement savings plan.
RMD & Stretch IRA Calculator	Use this calculator to help determine how you can stretch out your retirement plan distributions for as long as possible.
Roth IRA Conversion Calculator	This calculator will show the advantage, if any, of converting your IRA to a Roth.
Roth vs. Traditional 401(k) and your Paycheck	See how a Roth vs. Traditional 401(k) might affect your take home pay as well as your retirement savings.
Social Security Benefit Calculator	Use this calculator to estimate your Social Security benefits.

Mortgage Calculator	Use this calculator to determine your monthly mortgage payment and amortization schedule.
Mortgage Calculator with Taxes and Insurance	Use this calculator to determine your monthly mortgage principal, interest, taxes and insurance payment (PITI) and amortization schedule.

Amortizing Loan Calculator	Enter your desired payment – and let us calculate your loan amount. Or, enter in the loan amount and we will calculate your monthly payment!

Home Equity Loan vs. Auto loan Calculator	Use this calculator to determine if a home equity loan makes sense for your next automobile purchase.
Lease vs. Buy Calculator	Should you lease your next automobile or finance it? Find out with this calculator!

Asset Allocation Calculator	Your age, ability to tolerate risk and several other factors are used to calculate a desirable mix of stocks, bonds and cash.
Investment Loan	This calculator helps illustrate the effect of using a loan to purchase an investment or appreciable asset. Using debt as leverage to purchase investments can magnify your return. The downside is that you also increase your risk.
Investment Savings and Distributions	Use this calculator to see how long your investment savings can last once you begin taking distributions.
Municipal Bond Tax Equivalent Yield	Income generated from municipal bond coupon payments are not subject to federal income tax and often are exempt from state taxes. Use this calculator to estimate the tax-equivalent yield (TEY) for a municipal bond.
Taxable vs. Tax Deferred vs. Tax Free Investment	This calculator is designed to help compare a normal taxable investment, a tax deferred investment and tax-free investment.

1040 Tax Calculator	Enter your filing status, income, deductions and credits and we will estimate your total tax. Based on your projected tax withholding for the year, we can also estimate your tax refund or amount you may owe the IRS next April.
Estate Tax Planning Calculator	Knowing your potential estate tax liability is a great place to start your estate tax plan. Use this calculator to estimate your estate tax liability.
Flexible Spending Account (FSA) Calculator	Use this calculator to see how participating in Flexible Spending Account (FSA) contributions can help you pay less tax, and increase your net take home pay.
U.S. 1040EZ Tax Form Calculator	Many people can use the 1040EZ tax form instead of the more complicated 1040 to calculate their taxes. Containing only seven required inputs, the 1040EZ is one of the quickest forms to calculate your tax bill.

College Savings Calculator	Use this calculator to help develop or fine tune your education savings plan.
Compounding and Your Return Calculator	This calculator demonstrates how compounding can affect your savings.
Don’t Delay Your Savings!	Waiting to begin your savings plan can have a huge impact on your results. This calculator helps show you how much postponing your savings plan can really cost.

Basic Financial Calculator	This works just like a pocket financial calculator. In addition to arithmetic, it can also calculate present value, future value, payments or number of periods.
Home Budget Analysis	Analyze your budget, see where your money goes and find out where you can improve!
Life Expectancy	This calculator can give you an idea of your life expectancy based on your current age, smoking habits, gender and several other important lifestyle choices.
Net Worth	This calculator helps you determine your net worth. It also estimates how your net worth could grow (or shrink!) over the next ten years.
Student Budget	This calculator is specifically designed to help students understand their expenses and income while attending a university, college or other full-time educational institution.

Comprehensive Life Insurance Analysis	How much life insurance do you need? This comprehensive life calculator includes detailed net worth analysis, budgeting and college savings helps you find out.
Disability Insurance	Use this calculator to determine how much disability insurance you may need to cover expenses if you are unable to work due to illness or injury.
Health Savings Account (HSA) Contribution Calculator	This Health Savings Account (HSA) calculator determines the amount you are allowed to deposit into an HSA account for the current tax year.
Health Savings Account (HSA) Savings Calculator	Use this calculator to help you determine how much your Health Savings Account (HSA) will be worth over time.
Health Savings Accounts (HSA) Employer Benefit	This calculator helps estimate the value of creating a High Deductible Health Plan (HDHP) with Heath Savings Accounts (HSA) for your employees.
Human Life Value	One of your most important assets is your ability to earn a paycheck. This calculator is designed to help you understand today’s value of your future earning.
Immediate Annuity Calculator	Estimate what your monthly payments might be from an immediate annuity.
Life Insurance Calculator	Find out how much life insurance you really need!
Long Term Care Calculator	Long term care is needed by those who can’t perform the basic tasks required to take care of themselves. This calculator can help you determine if you are financially prepared for this impending expense.
Variable Annuity Calculator	How can a variable annuity help you save for retirement? Use this calculator to find out.

Business Valuation – Discounted Cash Flow Calculator	This tool calculates a business valuation based upon the discounted cash flow methodology – illustrating how changes in projected growth rates and capital assumptions impact the business Net Present Value.
Equipment Buy vs. Lease Calculator	Should you lease your equipment or finance it? Find out with this calculator!
Financial Ratios Calculator	This calculator helps you to zero in on areas of your business that may need attention. Areas such as solvency, liquidity, operational efficiency and profitability.

There’s a Hebrew proverb that says, “A good person leaves an inheritance to their children’s children…”  The implicit truth here is that wise management of affairs goes beyond concern for the current generation.  This wisdom of the ages should apply as well when high-net- worth clients are planning for death taxes, especially when the first generation is uninsurable!

In a nutshell, estate tax planning involves two steps: 1) implementing all workable strategies to reduce the anticipated tax bill to the lowest level, then 2) insuring against the rest with life insurance coverage on the first-generation client – usually a grandparent.

But what happens when all the gen-one clients are medical declines?

Most tax and legal advisors recommend that the best stop-gap measure against long-range depletion of the estate is insurance on the next generation (the children of gen-one) to fund any tax liability when gen-two’s net worth is passed to the third generation (the grandchildren).

The best way for gen-one to pay for coverage on gen-two may be to lend the money to the owner of the policies on gen-two – usually an irrevocable trust whose beneficiaries are gen-two and gen-three.  The note held by gen-one for the loan is payable only upon the death of the gen-two insured(s) many years in the future.

This has two advantages for gen-one.  First, the transaction doesn’t currently require any use of gen-one’s lifetime exemption to protect from gift taxation the money paid for premiums.

Second, down the road when the value of the note is included in the estate of gen-one at death, it could benefit from a deep valuation discount since repayment won’t occur until the death of gen-two.

Three considerations, before I get outta Dodge for the day:

This concept is often referred to as generational split dollar, or something similar. In the past it has been viewed with caution because of some unfavorable rulings.  But last year the Tax Court in the case of Levine v. Comm. gave it a green light along with guidelines that serve as a virtual blueprint for attorneys drafting the arrangement.  In Levine the $2,300,000 valuation of a $6,500,000 note was upheld saving the estate over $1,500,000 in estate taxes.
Financially underwriting gen-two is more complex to the extent it involves convincing the carrier of the likelihood of gen-two’s receipt of an anticipated inheritance.
Even when gen-one is insurable the concept should be considered when, for all the planning, there are still considerable death taxes anticipated at the death of gen-two.

Call with questions, material requests, or other considerations on this or any planning case you have with CPS – tom@cpsadvancedmarkets.com or 706-354-0401.

Some carriers like to claim that your clients don’t need Long-Term Care (LTC) protection beyond the average length of a care need.  But preparing for only the average length of a care need can leave a large gap.

The Story of Averages

The average length of an LTC need is typically longer for women than men (3.7 years vs 2.2 years1).  However, in a survey of leading long-term care insurers, that story of averages doesn’t hold up.

With five of the seven carriers, men met or exceeded the length of claim for women, with each exceeding a million dollars!  Planning for the average would’ve only covered a fraction of the cost.

The belief that average lengths of care are sufficient could create one of the most devastating financial decisions in life.

Addressing only the average care need excludes the possibility of a life-long diagnosis like Alzheimer’s or Parkinson’s.  Lifetime protection is the only way to ensure that every client has exactly the amount of protection that they need, whether it’s for two months, two years, 20 years or more.

Your clients aren’t average, and their LTC protection shouldn’t be either.  Contact us to learn more about Continuation of Benefits options, including Lifetime, to help your clients be protected against costly LTC needs.

Largest LTC Insurance Claims Paid through December, 2018

CO
Largest Claim (Male)
Total Cost
Largest Claim (Female)
Total Cost

1
14 years, 2 months
$2,276,381
16 years, 6 months
$2,329,333

2
19 years, 3 months
$2,205,800
15 years, 4 months
$2,636,417

3
16 years, 2 months
$2,091,083
9 years, 10 months
$1,727,594

4
15 years, 8 months
$1,700,000
14 years, 6 months
$2,000,000

5
14 years, 3 months
$1,461,256
11 years, 7 months
$2,012,385

6
15 years, 4 months
$1,413,934
15 years, 6 months
$1,499,601

7
13 years, 2 months
$1,179,502
18 years, 1 month
$1,316,417

Source: http://www.aaltci.org/long-term-care-insurance/learning-center//ltcfacts-2019.php#2019end Published 2019

During the months of December, January, and February, we typically see the bulk of MLB athletes purchase disability coverage, so we thought it fitting to share a case study of a super star baseball player.

The Outfielder / Designated Hitter was in his last year of his current contract, approaching free agency, and projected to sign a five-year $105 million contract.  The advisor on the case was challenged with securing an adequate amount of permanent total disability to safe-guard the player against a career-ending injury or illness.

The premium was roughly $250,000 plus taxes and fees.

Client

A professional baseball outfielder and designated hitter on the cusp of signing a multi-million-dollar contract.

Situation

The young and healthy MLB super-star was in his last year of his current contract, approaching free agency, and projected to sign a five-year $105 million contract.  The player saw the need to protect his high performing status should he become significantly injured or sick prior to signing his next big contract.

Assessment

The advisor, working with the player’s agent and financial advisor, was challenged with securing an adequate amount of permanent total disability.  The permanent total disability coverage would protect the player in case of a career-ending injury or illness.

Solution

A $25 million permanent total disability policy designed to pay a lump sum.

Result

The advisor, agent, financial advisor and player were all thrilled to have obtained a comprehensive policy.  With the policy in place, the player could focus on playing the sport he loves knowing that he was protected against a career-ending injury or illness.

If you’re currently working with a high-income earner ($500k+ annually) who is an all-star in their own field, it is very likely they have exceptional income exposures.

Please feel welcome to share this case study with your centers of influence and baseball fans.  Contact your Disability Insurance Specialist for assistance today.

Non-combustible tobacco products are those that do not require burning the tobacco for consumption.  Vaping, or electronic cigarettes, is a type of non-combustible tobacco that is heated at a lower temperature to create an aerosol for inhaling.

Generally, vaping is rated the same as combustible tobacco; at smoker rates.

There is a special program offered by one of our carriers that can allow non-tobacco rates for vaping if an additional biomarker lab test checked by the carrier is negative.

If eligible, the rate class can be improved from tobacco rates to non-tobacco rates with a one-class downgrade.  For example, a Preferred Tobacco rating to Standard Non-Tobacco.

To qualify:

Tobacco use must be non-combustible only; nicotine delivery devices (vaping), chewing tobacco and snuff
No use of cigarettes or cigars in the past 10 years
A tobacco combustion biomarker ordered by the carrier is negative

Contact our expert Underwriting Team to find out more about this special program.

With the current economic and health challenges in America, many individuals are justifiably concerned about ensuring they protect themselves and their families against the unexpected.  And individuals are more open than ever to exploring ways to protect their future.

Advisors are uniquely positioned to help clients through times of uncertainty by offering income protection solutions, such as Individual Disability Insurance (IDI), that guard against an unforeseeable event.

By sharing a few essential details about income protection, advisors can help clients understand the true value of IDI, how it works and who needs it.

Communicating IDI Benefits

One of the most important aspects to communicate is that Individual Disability Insurance (IDI) can be an effective, long-term income-replacement solution.  Just as life insurance pays beneficiaries for a loss, IDI can pay a monthly benefit, tailored to a policyowner’s total income, in the event of a serious illness or injury.

People rely on their whole income to maintain their financial security, which includes their base pay, any incentive pay and bonuses. Although many companies offer group long-term disability (LTD) coverage, clients should be aware that it often doesn’t cover all sources of income, and it is often taxable and typically only provides 40-60% of income replacement.  It also likely does not cover bonuses or incentive pay.

For higher-income earners, Group LTD can be capped at an amount that is much lower than what is needed to replace a client’s monthly income.  Should these individuals experience a disabling event, they would still be expected to keep up with their higher recurring expenses.  Also, most employer-based disability coverage is only maintained while the employees are working for that employer.  IDI is portable income protection, which stays with the individual throughout their career no matter where they work.

Everyone has monthly expenses, which often include mortgages, car and loan payments, and other recurring costs.  Highlighting that expenses are recurring even in the absence of income can help clients realize how valuable IDI can be for their financial stability.  Advisors can help paint the picture for clients that if they are unable to work, these expenses would remain, with possible new expenses arising due to their illness or injury.  IDI helps protect the income that clients are using to pay for these monthly expenses, maintain their lifestyles and support their families.  This is even more essential during unpredictable events like we’re experiencing now.

By providing meaningful solutions that address clients’ individual needs, advisors demonstrate how individual disability insurance can provide valuable protection and increased financial stability for clients.

What if you could offer your clients 8.15% guaranteed for 3 years with a taxable investment today? Would they jump on that opportunity?

Assuming a 35% client tax bracket, that 8.15% rate is the same as a 5.30% guarantee for 3 years on a tax deferred annuity!

See below for a comparison:

Tax Deferred Annuity

Taxable Investment

Year
Deposit
Yield
Annual Gain
Yearend Value

Year
Deposit
Yield
Annual Gain at 35% tax Bracket
Yearend Value

1
$100,000.00
5.30%
$5,300.00
$105,300.00

1
$100,000.00
8.15%
$5,297.50
$105,297.50

2

5.30%
$5,580.90
$110,880.90

2

8.15%
$5,578.14
$110,875.64

3
5.30%
$5,876.69
$116,757.59*

3
8.15%
$5,873.64
$116,749.27

Contact us for details on how to take advantage of this incredible rate environment!

*16,757.59 remains tax deferred until withdrawn

Think Pink.  Think Compassion.  Think Care.  Think Ahead.

October is Breast Cancer Awareness Month.  Agents and brokers, reach out and talk with your clients about what they can do today to make things easier should the unexpected happen.

While the chances of surviving a critical illness such as cancer, heart attack, or stroke are greater than ever, living with the condition can create severe financial hardships for many of our clients.

Traditional health insurance plans cover medical expenses, but costs such as insurance deductibles, child care, travel to and from treatment facilities, and short term home health care must often be paid out of pocket by the patient.

A real life story:

I recently spoke with a broker in Maryland who was diagnosed with Breast Cancer.  She had the tumor removed successfully by a full mastectomy and had just finished up a bout of radiation and chemotherapy.  But although she was feeling better, she was unable to work full time and the treatment affected her finances dramatically – business, household, and medical expenses continued to build up.

It’s stories like these that remind us just how invaluable a Critical Illness Policy can be.

Critical Illness Insurance pays a tax free lump sum payment on diagnosis of any one of a list of serious illnesses – including cancer, heart attacks, or stroke.

And since claims statistics suggest we are five times more likely to suffer from one of these than we are to die before we reach age 65, you can think of it as putting a client’s premium dollars in a safety deposit box.

If the client is diagnosed with one of the 12 covered illnesses the policy will pay the face value.  If they die of one of the covered illnesses the policy will pay the face value to their beneficiary.  If they die of any other reason, 100% of all premium paid will be returned to the beneficiary as tax free death benefit.

And there are plans to fit any budget.  A Female, age 45, with $50,000 in lifetime coverage, can get coverage for only $57.46 a month.  In addition to the lifetime version of the product, there is a choice of 10, 15, 20, & 30-year coverage periods.

Contact us today for more information.

Football is all about strategy – an effective game plan is essential for getting your team closer to the goal line.  On the field of impairment risk underwriting, its carrier vs. carrier and the final score can be unpredictable.

Think of an underwriter as your quarterback – calling the right play at the right time to get your case into the end zone.

Take a look at this case study:

We were presented with a 58-year old male, non-smoker, seeking $1 million of UL coverage.  At a comprehensive routine physical one year ago, he was diagnosed with mild carotid stenosis and an ultrasound finding of a single thyroid nodule.  Other medical history includes neuropathy, mild osteoarthritis and acid reflux.  A follow up thyroid ultrasound 6 months later revealed new thyroid nodules, although too small to biopsy.  After consulting with a specialist for a second opinion, additional imaging was done and the specialist determined the nodules to be clinically insignificant.  No biopsies were done.

Took a loss with Carrier #1 as they declined to offer.  Tried a Table D with Carrier #2 – no go.  Carrier #3 delivered more bad news at a Table 3.

Then, touchdown on Carrier #4 – Standard NT!

Score big on the insurance gridiron – our Underwriting Team, we’ll help you get your tough cases placed.

The best subtitle for this article would probably be, “New Horizons in Financial Underwriting!”  But first, let’s take a short break to capture a parent-child moment in a typical American home:

Father: “Son, I want you to be good at school today.”
Son: “I’ll be good if you give me five dollars.”
Father: “That’s ridiculous! When I was your age I was good for nothing!”

All humor from the Father’s unintended meaning notwithstanding, the vignette illustrates an accepted and common truth within a family unit, i.e. certain things are expected from the kids in the household for which they do not receive cash compensation.

And when allowances are paid in return for completion of chores and acceptance of other responsibilities, the amount of money most often does not represent even the minimum wage available for similar tasks out in the marketplace.  But at least the parents understand that their seemingly underpaid offspring are well reimbursed by such things as a roof over their heads, medical care, free Wi-Fi and afternoon snacks.

Non-cash compensation can also come into play when justifying coverage on a key person in a business

Most carriers start with ten times salary, but also consider other elements in the employee’s overall package, e.g. the cost of health insurance, retirement plan contributions, club memberships and afternoon snacks.

But another component of pay that most carriers will consider is any equity interest in the company.  Most acknowledge that the employee is taking less traditional compensation in return for some ownership.

Valuing that element of “pay” for purposes of its inclusion in the “10x formula” is a little more elusive and beyond the scope of our talk today.  The same should apply in family businesses where the second generation is working for less, knowing that someday they will own the business.  If there was no future hope of ownership they would go elsewhere for more money.

The problem underwriters have in building future equity into the equation is that the ownership interest is not “in hand” and who knows what will happen?

Underwriter hesitancy comes from comparing a key person need with a different financial justification involving future ownership – insuring against anticipated estate tax liability.  Carriers, generally, will not allow a second generation to build an anticipated inheritance into their net worth calculation when purchasing coverage to pay estate taxes – because it might never happen.

This is not a bad argument given that the hope for ownership is not creating a present financial need.

But, this is not the case with an underpaid “key kid” working for the family store

1) The son or daughter is taking less than he or she is worth, 2) the business is getting services at a current lower rate, and 3) it would cost more than what is presently being paid to hire a replacement who isn’t motivated by possible future ownership.

The fact that the inheritance may never occur is not a contingency that affects the very real (and very measurable) need for more coverage than ten times compensation would suggest.  This should be a consideration in the financial underwriting process.

Call us regarding any key person cases that we can help you place for your client.  If the circumstances for justification are of a Sweat Equity on the Come nature, we will help you blaze a trail in the exciting world of financial underwriting.  And who knows, as a result – Maybe someday your name will be in lights/ Saying Johnny B. Goode tonight. 

Make contact at 706-354-0401 or tom@cpsadvancedmarkets.com.