Life Insurance and Annuities

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Life Insurance and Annuities

Do you have a “cash value” life insurance policy?


A good percentage of our population owns some form of “cash value” life insurance.  When we say cash value, we are typically talking about whole life, universal life, variable life, and indexed universal life.  Many clients over time end up with $50,000, $100,000, and $200,000+ in cash value in their policies.


If you have a cash-value life insurance policy, do you know if the cash value is protected from creditors in your state?   Most people do not.   To determine if life insurance or annuities are protected in your state, please click here.


This is sad to say, but the majority of life insurance agents do not know if cash value life insurance is asset protected in the state they live in, and even worse, they do not understand the concept of asset protecting such a valuable liquid asset.


To keep this section brief, the following are words to live by:


If you live in a state where life insurance is NOT asset protected, you should figure out a way to asset protect it.


How do you asset-protect life insurance in a state where it is not asset-protected?  Through a simple LLC structure (the explanation of which is outside the scope of this website).  Please contact a “Rated” advisor for further information or contact the APS™ at Email Us.


Side Note:


Clients for years have funded thousands of dollars each year into cash value life.  The discussion about whether it is a good idea to fund life insurance as a “post-tax” investment is outside the scope of this material, but do know that a significant amount of time we see clients in the “wrong” type of policy that will not maximize their investment potential and minimize their risks.  If you have questions regarding the correct type of life insurance policy for you, we recommend that contact a “Rated” advisor who has the“G” (global) rating and can review your policy.  We would recommend that if you have not had your cash value policy reviewed in the last two years, you do so soon. Also, if you are not familiar with indexed equity life insurance (a form of universal life one of which credits 140% of the S&P 500 annual returns), you can read up on the product by clicking here.


Do you own Annuities?


Millions of Americans own annuities (variable, fixed (which would include equity-indexed annuities)).

An annuity by design has cash in it. There may be a surrender charge, but for the most part, an annuity is a vehicle that is a liquid investment. As such, it’s an investment that a creditor would want when trying to collect on a life insurance policy.


Annuities are very difficult to asset protect.  They can not be owned by a corporate entity or multi-member LLC due to the fact that the annuity would lose its tax-favored status.  Therefore, we recommend that if you are going to buy an annuity as an investment, the first place you should look for the money to fund an annuity is an ERISA-qualified retirement plan (which is federally asset-protected) or an IRA in states where IRAs are asset protected.


If you have questions about protecting your annuities, please contact any “Rated” advisor for help or contact the APS™ at Email Us


For information on the various types of annuities and which one is best for you from a financial standpoint, please contact a “Rated” advisor who has a “G” (global) rating.

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