Articles of Interest
Week of June 15th, 2020
I found a number of interesting articles. These three caught my attention.
Your Life Insurance Covers COVID-19. If You Need Coverage, Move Quickly.
Barrons , Nick Fortuna, March 30th, 2020
In conjunction with the first article, this discusses the pandemic effect on coverage.
We did receive calls and emails from clients asking if they were covered if they passed away from COVID. The answer is of course, yes. There are no exclusions on individual life policies, just group life insurance coverage. Now however, companies are being more strict in issuing policies to individuals that involve foreign travel. These are not exclusions, just underwriting considerations.
Thinking About Lending Money to Family? The IRS Has Something to Say About That
The Wall Street Journal , Laura Saunders, May 11th, 2020
An interesting article about how to take advantage of the low IRS AFR rates.
These low rates make a number of planning techniques more attractive on a relative basis. These affect positively on Grants, Loans to Family trusts, Spousal access trusts (Slats), charitable giving, etc. There is an interesting tax interplay between taking advantage of discounts on assets and step up of cost basis upon death.
The life insurance industry is financially strong with stable reserves. However, we have seen pressure on new life insurance premiums due to the very low interest rates and uncertain consequences from the COVID pandemic. The COVID cause and effect is minimized due to the average older ages of the decedents and the fact that they are not usually carrying large amounts of life insurance. Also, they are generally out of the work force, and therefore not covered by group life policies. There is also a mortality offset since when someone passes away, life insurance companies experience a corresponding positive balance sheet affect, due to freeing up reserves and annuity and retirement benefits ceasing.
Many advisors feel that now is a good time to purchase insurance before companies increase rates across the board.