Using Social Security benefits to maximize a legacy
If your clients are fortunate enough to not need some or all their Social Security benefits for retirement income, using that money to purchase a life insurance policy can help them provide a larger legacy for children, grandchildren or a favorite charity.
Strategy in action
Bill and Debbie, both turning 66 at the end of this year, have accumulated substantial assets and will be receiving pension payments. They never even considered Social Security as a source of retirement funds. In discussions with their financial professional, they discovered that they will receive an estimated $64,000 in pre-tax Social Security benefits, which will equal $40,000 after taxes.
Bill and Debbie decide to use $20,000 of that money to fund an indexed universal life insurance policy on Debbie’s life to provide benefits for their four grandchildren.
See how much more they can pass to their grandchildren
Bill and Debbie could have simply passed $20,000 per year to their grandchildren, or they could have invested that money. Instead, they used it to purchase a life insurance policy. See the difference in their legacy!
|Approach||Annual Contribution||Over 20 years|
* Projected return is 5% before tax, 3.02% after tax.
** Assumes Social Security amounts are contributed to life insurance in all years.
This is a supplemental illustration authorized for distribution only when preceded or accompanied by a basic illustration from the issuer. The basic illustration contains values using the same underwriting assumptions as this supplemental at both guaranteed charges and guaranteed interest rates and contains other important information. The values represented here are for a $1,000,000 IUL Protect policy on a 66-year-old female preferred non-smoker. The values represented here are for non-guaranteed and assume current charges and a current interest rate of 6.16%. If guaranteed rates and charges are used, the policy would fail in year 25 (at age 91). A client's values will be different based on gender, age and health.
Financial Professional materials
Please be advised that this webpage is not intended as legal or tax advice. Accordingly, any tax information provided is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed, and clients should seek advice based on their particular circumstances from an independent tax advisor. Neither Equitable nor its affiliates provide legal or tax advice.
Life insurance products are issued by either AXA Equitable Life Insurance Company (New York, NY) or MONY Life Insurance Company of America (LOA), an Arizona stock corporation with its main administration office in Jersey City, NJ and are co-distributed by AXA Network, LLC (AXA Network Insurance Agency of California in CA; AXA Network Insurance Agency of Utah in UT; AXA Network of Puerto Rico, Inc. in PR) and AXA Distributors, LLC, 1290 Avenue of the Americas, New York, NY 10104. When sold by New York based (i.e. domiciled) financial Professionals life insurance is issued by AXA Equitable Life Insurance Company.