HLplans “100% Peace-of-mind” Financial Plan HLplans “100% Peace-of-mind” Financial Plan HLplans “100% Peace-of-mind” Financial Plan

HLplans Q&A

10 Myths about Life Insurance

1. I am very healthy, I don’t need Life Insurance.

2. My agent told me, I only need to pay for my Whole Life policy for 10 years.

3. My Life Insurance policy benefits someone else, I can not use it.

4. My employer got Life Insurance for me already, I don’t need another one.

5. Term Life is better than Whole Life.

6. Whole Life is better than Term Life.

7. My wife doesn’t work. She doesn’t need to buy Life Insurance.

8. I don’t need Disability Income Insurance. If I am disabled, government will help.

9. I don’t need Long-Term Care (LTC) Insurance. Government can take care of me.

10. I don’t need LTC Insurance because I am still young. LTC is for the elderly.

Mr. Liu is an engineer,48 year old and very healthy. He has a stable job and wife stays home。He would like to own a life insurance policy to protect his new born son。What kind of life insurance policy is best for him?

posted Oct 16, 2009 2:14 PM by Hong Lu [ updated Oct 23, 2009 10:49 AM ]

First of all, Mrs. Liu can buy a 30-year term policy to protect his family until the age of 78. Total face amount is recommended to be 5 times of his salary, for example, $500,000. Using Metlife 30-year term life as an example, annual premium is $1,389 (or $125/month). Premium is guaranteed not to change for 30 years. But Mr. Liu also would like to save for his son. Since Mr. Liu is very conservative, we choose a $150,000 whole life policy, annual premium is $3,327 ($286/month). This policy contains two parts, the guaranteed part and the non-guaranteed part. The guaranteed part is $150,000 life insurance coverage up to age 100 and guarantee 4% interest. The non-guaranteed part is dividend which can be used to increase cash value and life insurance coverage. According to 2009 dividend pay-scale, we project the policy will accumulate $249,885 cash value and $343,172 life insurance when Mr. Liu reach the age of 80. Together, the two policies provide total of $600,000 life insurance coverage before the age of 78 and at least $150,000 life insurance after the age of 78. Mr. Liu can have 100% peace-of-mind with this kind of financial plan.

Dividend in whole life is not guaranteed. At age 80, the guaranteed life insurance benefit is $150,000 and guaranteed cash value is $98,441.

Mr. & Mrs. Shen are both 62 year old; their son is 35 year old。Besides their savings in the bank, they have $400,000 in their 401(k) retirement account。How should they plan their retirement wisely?

Posted Oct 16, 2009 2:08 PM by Hong Lu [ updated Oct 23, 2009 10:49 AM ]

They will transfer their $400,000 to Allianz and purchase Fixed Index Annuity called Endurance 15. In the first 10 years, withdraw $25,000 every year from the annuity account. Off that amount, $15,000 will be used to fund two Universal Life policies from AGLA. One with the face amount of $200,000 is for Mr. Shen. Annual premium is $7,500. The other with the face amount of $220,000 is for Mrs. Shen. Annual premium is also $7,500. The other $10,000 can be used for pocket money. From the 11th year, based on historical return, they can start withdrawing about $27,950 a year to be used as retirement income for the rest of their lives. If the market performance well, the annual income may increase accordingly. In addition, their son will receive at least $420,000 life insurance proceeds, free of federal income tax. If Mr. or Mrs. Shen became critically illed, or terminally illed, or chronically illed, they can file claims to accelerate life insurance benefit up to $200,000 and $220,000 respectively. Finally, the original $400,000 not only is used for their retirement, but also can be left to their son.

Income from retirement account is usually subject to income tax. Here, Mr. and Mrs. Shen choose to pay tax out of their savings in the bank. Tax is a complicated subject; please contact professional CPA for advices.