“Most of us are beyond ready to get back to the normal we knew more than a year ago. And for financial advisors, that means helping your clients prepare for the possibility of taxes returning to higher rates. As clients have questions about taxes, you have an opportunity to protect them with tax-efficient solutions.
Most of us are beyond ready to get back to the normal we knew more than a year ago. And for financial advisors, that means helping your clients prepare for the possibility of taxes returning to higher rates. As clients have questions about taxes, you have an opportunity to protect them with tax-efficient solutions.
There’s also a good chance that these same clients need life insurance, which happens to be a great resource for providing that tax efficiency we just mentioned.
To get started, think of your high-income clients. The easy solution for providing insurance is to look at a term policy. It’s relatively inexpensive, and the application process keeps getting simpler. But that only gets you halfway there — it doesn’t solve the problem of tax efficiency.
Instead, consider a cash value life insurance policy that provides the needed insurance protection and allows them to accumulate money for retirement on a tax-advantaged basis. Let’s go into a little more detail about why this strategy makes sense
Currently, high-income professionals are paying record low taxes. Consider a family of two working professionals, each making $150,000 per year, for $300,000 Adjusted Gross Income. In this example, the family falls into the 24% marginal tax bracket, which, adjusted for inflation, is the lowest it’s been in the past 70 years (see the chart below). In 1981, to put it in perspective, their marginal tax bracket would have been 64%.
Cash value life insurance can be used to hedge against a “return to normal” in terms of taxes for clients in this demographic. And under our new administration, we know there is discussion around the significant chance that taxes will increase in the near future.
Find out more about how cash value life insurance can help your high-income clients create a tax-diversified financial plan. Contact us today. Our experts are here to walk you through the basics and design the plan that’s right for each unique situation.
At Palladium Group, we are Success, Insured.
*This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax advice. You should consult your own tax advisor before engaging in any transaction.