Wealth Shield Consultants

05/19/2026

03/05/2026

Agent Jason Bowers. Schedule My Consultation https://calendly.com/wealthshieldconsultants/financial-consulting

03/02/2025

Understanding your life insurance is crucial for ensuring your family's financial well-being. I specialize in helping families appreciate their policies and realize the benefits throughout life's journey.

01/22/2025

The Importance of Reviewing and Updating Your Life Insurance Policies.

By Jason Bowers Jan 21, 2025. Life Insurance Agent, Retirement Consultant.

Life insurance is one of the cornerstones of financial planning, providing protection for your loved ones in case the unexpected happens.

However, many people purchase a policy and then forget about it, assuming that it will continue to serve their needs for the long haul.

In reality, your life insurance policy is something you should review and update regularly to ensure it aligns with your evolving circumstances.

In this blog, we’ll explore the key reasons why reviewing and updating your life insurance policies is essential,
with a focus on the importance of considering Living Benefits, which cover terminal illness, chronic illness, critical illness, critical injury, and Alzheimer’s disease.

Life Changes and Evolving Needs

As your life progresses, your financial needs and responsibilities change. Major life events such as marriage, the birth of children, home purchases, career changes, and retirement significantly impact the amount of coverage you require.

A policy that was sufficient when you were single may not meet your needs once you have a family to support. Regularly reviewing your policy ensures that you have the appropriate coverage for your current situation.

For example, after having children, you may want to increase your coverage to ensure that your family will be financially secure in your absence.
Similarly, if your children have grown up and become financially independent, you may be able to reduce your coverage or reallocate funds to other areas of your financial plan.

Changes in Income and Debt Levels

Your income and debts are dynamic factors that can change significantly over time. If you’ve received a salary increase, taken on new financial responsibilities (such as a mortgage), or paid off a significant amount of debt, it’s important to reassess your life insurance policy.

The coverage you initially purchased may no longer be enough to maintain your family’s lifestyle or pay off outstanding liabilities in the event of your death.

Conversely, if you’ve paid off significant debts or your income has increased, you may not need as much life insurance. Reviewing your policy helps you avoid overpaying for unnecessary coverage, which can free up funds for other financial priorities.

Living Benefits: A Modern Approach to Life Insurance

Traditionally, life insurance was meant to provide financial protection in the event of death.
However, modern life insurance policies have expanded to include Living Benefits, which allow policyholders to access a portion of their death benefit while still alive in the event of certain qualifying conditions.

These include:

Terminal Illness: If you are diagnosed with a terminal illness, you can access a portion of your life insurance payout to cover medical expenses, living costs, or other needs. This benefit can be a financial lifeline during difficult times, allowing you to focus on your health without worrying about the financial strain.

Chronic Illness: If you are diagnosed with a chronic illness that severely impacts your ability to perform daily activities, living benefits may provide financial relief. This can help cover costs related to long-term care or other specialized treatments.

Critical Illness: This benefit provides financial support if you’re diagnosed with a life-threatening illness, such as cancer, heart attack, or stroke. The funds can be used to cover medical bills, treatments, or recovery costs, easing the financial burden during a challenging time.

Critical Injury: In the event of a serious injury resulting from an accident, living benefits can provide funds for medical treatment, rehabilitation, or other expenses associated with your recovery process.

Alzheimer’s Disease: As Alzheimer’s disease becomes more common, some insurers now offer living benefits for those diagnosed with this progressive and debilitating condition. This coverage helps manage the expenses of long-term care and ensures that those with Alzheimer’s can access the care they need.

These benefits are particularly valuable because they provide coverage not only in the event of death but also during periods of severe illness or injury.
As healthcare costs continue to rise and life expectancies increase, living benefits can offer peace of mind knowing that you’ll have support when facing a major health crisis.

Policy Terms and Conditions May Change

Insurance policies are not static. Life insurance providers periodically update the terms and conditions of their policies, which can impact your coverage.

For instance, some insurers may introduce new riders or benefits, while others might adjust their premium structures. It’s important to stay informed about any changes that could affect the value of your policy.

If you’ve had the same policy for many years, it may be worth comparing it to current options in the market to see if there are better or more affordable alternatives.
Insurance companies also adjust premium rates based on risk factors, which can sometimes result in lower premiums for long-term policyholders.

Tax Considerations

The Lifetime Income Benefit Rider (LIBR) is an optional add-on to permanent life insurance policies that guarantees a steady income stream for the policyholder’s lifetime, typically starting at age 60 or 65. It allows policyholders to access the cash value via policy loans, to provide tax free retirement income.

Key Features:

Guaranteed Lifetime Income: Provides income for life, starting at a chosen age.

Flexible Payout Options: Monthly, variable, or lump sum payments may be available.

In summary, the LIBR ensures a reliable income stream in retirement while being tied to the policy’s cash value and death benefit.

Beneficiary Updates

Life events such as marriage, divorce, or the death of a loved one should prompt an update to your policy’s beneficiaries. It’s important to ensure that your life insurance beneficiary reflects your current intentions.

For example, if you divorced and forgot to remove your ex-spouse as the beneficiary, your policy may inadvertently pay out to them instead of your children or new spouse.

By regularly reviewing your policy, you can confirm that your beneficiaries are up to date and that your policy will provide the intended financial support to your loved ones.

Peace of Mind

The ultimate goal of life insurance is to offer peace of mind, knowing that your loved ones will be taken care of if something happens to you.

Regularly reviewing and updating your policy ensures that it continues to meet your needs and provides the financial security that you intended when you first purchased it.

Knowing that your life insurance policy is aligned with your current life circumstances can alleviate stress and give you confidence in your financial plan.

Conclusion

Your life insurance policy is not a “set it and forget it” financial product. As your life changes, so should your coverage.
Whether it’s due to life events, financial shifts, changes in the insurance market, or the need to update your beneficiaries, reviewing and updating your policy ensures that your loved ones will be properly protected.

Adding Living Benefits to your policy can further enhance the security and flexibility of your coverage, providing essential support if you face a severe health issue or injury.

Make it a habit to reassess your life insurance needs regularly and consult with an insurance professional to make any necessary adjustments. Doing so will give you the peace of mind that your policy will serve you and your family when it’s needed most.

Was this helpful?

https://calendly.com/wealthshieldconsultants/30minBy
Jason Bowers Jan 21, 2025

01/02/2025

Coverage gaps are still growing...

Roughly 22% of existing life insurance policy owners in the United States now say they do not have enough coverage to meet their family's needs.

Source: 2024 LIMRA and Life Happens Insurance Barometer Study

07/03/2024

The Power of Living Benefits in Life Insurance. Terminal, Chronic, Critical Illness or injury, and Alzheimer`s. Contact me to see if you qualify.

Living benefits with life insurance and annuity solutions that can provide additional benefits should a qualifying terminal, chronic or critical injury occur.

02/08/2024

How different types of retirement accounts are taxed.

As people in their working years plan for the future, many retirement savings options can help create income to provide financial security during their next chapter. Part of the retirement planning process includes reviewing how contributions and income payments are taxed. Understanding the tax rules that can impact each type of retirement account can help you choose which options work for you and possible strategies for minimizing taxes in retirement.

What is the difference between pre-tax and post-tax retirement accounts?

There are critical differences between pre-tax and post-tax retirement accounts. Pre-tax retirement accounts, like 401(k)s and IRAs, mean that the money contributed to these accounts and potential earnings are not taxed at the time of contribution. “When retirement arrives, and withdrawals begin, taxes will then need to be paid since the money withdrawn is now taxable income,” shared Tyler De Haan, Certified Financial Professional and Director of Advanced Sales at Sammons Institutional Group, a member of Sammons Financial Group. “Post-tax retirement accounts, like a Roth IRA, require the contributions made to the account to be taxed. Then in retirement, assuming the five-year rule is met, those qualified distributions will be tax-free since taxes have been paid."

When choosing a pre-tax retirement savings account, contributions can be made without losing additional income today. However, this means an individual must cover taxes on retirement withdrawals when income can be less predictable. On the other hand, post-tax retirement options may save a person less in the present, but retirement funds will not be subject to taxation upon withdrawal.

Pre-tax retirement accounts.

“Since money is taxed once withdrawals are made down the road, choosing a pre-tax retirement account can provide an opportunity to grow savings for the future, explore investing, and find ways to create a steady income for retirement,” shared De Haan. If you believe you will be in a lower tax bracket in retirement, which may offer more favorable tax rates. In building a long-term financial plan, there are many retirement accounts and income sources that offer pre-tax options:

How pensions are taxed?

Most pensions are funded with pre-tax dollars, so typically, retirees are not taxed until they begin receiving payments. The amount owed can depend on several factors, including if that income is subject to tax. If pension payments are received periodically, the retiree may be taxed at their regular income tax rate, whereas cashing in on a lump-sum payment from the pension often requires paying the total tax due when filing the tax return for that year. Sometimes, a pension can be converted to a lump sum and rolled into an IRA.

How Social Security benefits are taxed?

If there is no other substantial income besides Social Security there may not be any federal taxation. However, a retiree will be required to pay 85% of their Social Security benefits if they file:
• File a federal tax return as an "individual" and your combined income is more than $34,000
• File a joint return, and you and your spouse have a combined income that is more than $44,000

Additionally, if a retiree is married and files separately from their spouse, they will likely only be required to pay tax on 85% of their Social Security benefits.

How annuities are taxed?

If an annuity is purchased with pre-tax funds, it can offer tax-deferred growth and a way to supplement retirement income in the future. Not paying taxes while an annuity is in its accumulation phase can allow the money to compound over the years instead of going toward taxes. Once an annuitant enters retirement and begins receiving distributions, all or a portion of the payments can be taxable.

How an IRA is taxed?

Similar to a 401(k), contributions to a traditional IRA are not taxed, and earnings can grow tax-free, but when withdrawals begin, those funds will be subject to income taxes. Early withdrawals before age 59 ½ are generally subject to a 10% penalty, but there are exceptions to this rule.

How a 401(k) is taxed?

Contributions to a 401(k) often come out of a paycheck and reduce taxable income while a person still earns, typically resulting in fewer taxes being paid throughout the working years. Just remember that once retirement arrives and money is withdrawn, income taxes will need to be paid at that time.

Post-tax retirement accounts.
Some individuals may choose a post-tax retirement account because they prefer to pay taxes upfront and avoid paying them later in retirement. This strategy can help make retirement income more predictable since taxes on contributions are already paid. This may be desirable if the person feels financially secure in their day-to-day earnings to cover taxes but is worried it may be more challenging when they’re on a tighter budget after leaving the workforce.

How a Roth IRA is taxed?

Different from a traditional IRA, Roth IRAs are funded with after-tax dollars, so contributions are taxed immediately and are not typically reported on a tax return. Another critical difference is retirees generally have to take required minimum distributions (RMDs) from traditional IRAs at age 72. Roth IRAs do not require withdrawals until after the owner passes away, so money can be left to continue to grow without penalty.

Helping to minimize taxes in retirement.
“An important part of retirement planning includes exploring ways to minimize taxes and understanding the limits and requirements mandated for each retirement option,” adds De Haan. “Working with a tax advisor can help you navigate general tax rules, early withdrawal tax penalties, and RMDs more easily, and they can explain ways to reduce a tax bill before and after retirement.”

To explore the various retirement savings accounts available, it can be helpful to connect with a financial professional to discuss which options would make the most sense for your financial situation. Often, including pre-tax and post-tax options in a retirement plan can create a more diversified financial portfolio and ensure all income gaps are filled for the future.

Contact https://wealthshieldconsultants.com/contact/ to book a free consultation to find out more about lowering your taxes in retirement.
________________________________________
Neither North American Company for Life and Health, nor any financial professionals acting on its behalf, should be viewed as providing legal, tax or investment advice. Please rely on your own qualified tax professional.
The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.
The views and opinions expressed by Tyler De Haan are his views and opinions as an individual and do not reflect the views and opinions of North American Company for Life and Health®.
B2-NA-12-23