6-20-26 Candid Coffee - Beyond Protection: What Life Insurance Can Do for You

Life insurance primarily transfers mortality risk to ensure income replacement, immediate estate creation, and tax‑efficient transfers to heirs; whole‑life policies and structures like ILITs are commonly used to pass proceeds outside probate and could regain importance if rising federal deficits lead to lower estate‑tax exemptions.

Advisers stress that insurance decisions should be 'planned, not sold'—clients are encouraged to work with a fiduciary who provides data‑backed recommendations and complimentary policy reviews because life products are complex and must be tailored to each household.

Advisers use a term‑then‑permanent framework: term insurance is the default for income protection (often supplementing employer group term that typically covers up to one salary), but buyers of multi‑decade term (15–30 years) must anticipate materially higher renewal premiums at expiry and consider individualized conversion or permanent options.

Permanent policies (whole, variable, universal, hybrids) accumulate cash value via investment subaccounts or index‑crediting and offer tax‑deferred growth and tax‑favored loans that can provide liquidity instead of selling investments—but clients must avoid exceeding IRS seven‑pay (MEC) limits because that converts distributions to taxable LIFO treatment even though the death benefit generally stays tax‑free.