Help!!! What Do I Do with Life Insurance Money?

[fmintar1]

She's 37, so she's young enough. A portion going into an IUL *might* work... but not for immediate liquidity needs. This would be building another nestegg for herself and a long-term savings plan. If she's working, then definitely. That's her own plan using her own income.

But I wouldn't put life insurance proceeds back into a life insurance product.

I missed that part where she needs immediate liquidity. Then yeah, IUL won't work...however, she could buy lottery tickets and hope for the best

From all of the replies that I've read, I came to the assumption that all of the immediate liquidity involves risk that the client have to bear. Again, I am not sure how annuity works yet, but I can sense that it is the only solution that doesn't involve risk. I mean...there has to be a solution where there is immediate liquidation with no risk...

 

[pfg1]

But I wouldn't put life insurance proceeds back into a life insurance product.

Unless she has no life insurance, then absolutely examine if some of it should go there. She's now a single parent.

 

[Golfnut2112]

I agree with you completely on the solution. Securities type of account is very risky. I would suggest putting the money in an account where the risk bearer is not the individual. Putting money where there is no risk involved is the best solution.

I would assume IUL is the best savings plan for her. The risk is solely covered by the insurer. But I would also assume that she is no longer young, so I believe IUL is not the best solution either. I have never worked with annuities previously, so I have no say in annuities either. But what I do know is, security account is not an option at all.

So...bump

The recommendations kept getting better!!!

----------

No way man, not at that age. She is way too young to put it all in the bank and turn it into a sinking fund.

And just because its in Securities, does not mean she is taking on more risk than an annuity. Lets ignore the suitability/tax issues of the annuity since we agree on that.

Short Term Treasuries carry extremely little risk. Even the funds.
For the pending income need she could even do TBills which carry literally zero risk by definition.

And since she likes the idea of steady income to pay for the kids school.... then that screams Bonds or Preferred Stock. Both would create income and have a very low risk for principle loss.

Lots of options to keep it safe. But at just 37, she needs appreciation, especially if she needs the funds to help pay the bills over the next 20 years.

jmho

You are right on the money with your statements!! It seems like most people have no idea what a conservative portfolio is and think if people don't buy an annuity they will lose most of their money in the next market downturn.
Also thanks again for the help you gave me on an IUL, I'm starting to do more of that business

 

[leonard]

Unless she has no life insurance, then absolutely examine if some of it should go there. She's now a single parent.

No one has mentioned what may be a good route for her, but no $ to be made for you. Ask the insurance company what rate they will pay if the proceeds are left with them.

And i agree strongly with pfg1.
She needs life insurance more now because she is a single mother. Buy term for 30 years. Depending upon her earning ability, or if the proceeds were quite large, then you may want to look at max funding an iul.

 

[sshafran]

I told my wife that if I pass away, take 1 million and buy 10-12 good rental properties.

I see no other option working better than that....

 

[ccbaxter]

Okay, I'll play run the scenario for the client we know little-to-nothing about. (Simply isn't enough information from the OP--does client work? Income? How much? Private school--for a four year old? Is this kid going public school or he is Ivy track? What kind of asset base? Income producing or white elephants driving expenses? Yada Yada Yada.)

I sell life insurance. I have a client that (presumably) believes and understands the need for life insurance. And has a four year old dependent. There's almost no way I'm not selling a life insurance policy.

Maybe look first at a life/LTC hybrid. Think long term, and Mommy's at the age where she needs to be thinking about that stuff because she probably doesn't have a clue. I'd want to make sure that STC and DI are covered somehow. If needed. That's not necessarily an insurance thing, just a "who and how will the kid be taken care of if something happens to Mommy" kind of thing--immediate family can be good, but if you don't have those kind of social resources, you have to make up the difference with money. To the extent income/assets are dependent on Mommy's health, or otherwise need to be protected, that should be reviewed.

Current income? An SPIA will work. Maybe I present life insurance as a college funding vehicle.

There's a lot I can present for her consideration.

 

[NIAMAN]

This is one of the better threads I have seen. Good ideas, and solutions presented, good questions raised. It is surprising how many varied and sometimes contradictory solutions are proposed.

 

[Golfnut2112]

This is one of the better threads I have seen. Good ideas, and solutions presented, good questions raised. It is surprising how many varied and sometimes contradictory solutions are proposed.

Most of the solutions you have seen posted here are inappropriate and some are downright ludicrous. This lady does not need any type of annuity or an IUL based on what the OP posted. What she needs is an investment professional to do a risk analysis and build her a portfolio based off of that. I do agree with the one post of maybe adding TERM insurance on her.

 

[pfg1]

The thing is, on a post like this there is no where near enough info to make an informed recommendation. I agree, an annuity is probably not a good fit. Life insurance may be needed as I mentioned earlier, but we don't know what she has now or if she's insurable. We also don't know what bills/debts and other $ she has and where. There could be many good solutions for her, starting with eliminating bad debt, setting up an adequate emergency fund, and shoring up her life insurance. Then what is done after that is based on the wants/needs and the other factors involved.

A question like this always brings up alot of scenarios and ideas and makes for good debate, but its really loaded from the start because without knowing all the details its kind of a moot point to try and give detailed suggestions.

 

[NIAMAN]

Very good point, I agree. So many different scenarios as to her situation are possible. If nothing else, this is a reminder to ask lots of questions before making a recommendation !