Modified endowment contract update

Palm Beach Post (FL)

Over the past five years, we have been recommending liquid modified endowment contracts as a strategy to safely grow money without stock market or interest-rate risk. These insurance contracts, which grow tax-deferred, can be designed without upfront loads or back-end surrender charges and full liquidity. However, unlike deferred annuities, modified endowment contracts provide an income-tax-free death benefit. Certain modified endowment contracts also provide a sizable tax-free, long-term-care benefit if the insured is unable to perform two out of six activities of daily living. This is an extremely valuable benefit as the population is living longer and The future need for long-term care is expected to increase.On the growth side, the contracts earn interest (currently up to 8.5% or no cap with a spread) in the years the S&P 500 is up but do not lose in the down years, and all gains are locked in annually. Historically, the S&P 500 is up about 70% of the time. After insurance costs are deducted, the net expected return is about 4.5% to 5%. Additionally, certain contracts promise a minimum interest rate of 2.5% regardless of market conditions. However, those insurance costs, as noted previously, provide the owner with a large, tax-free life insurance benefit. This vehicle is very attractive for those looking to obtain full access to their money, high-risk adjusted returns, cover potential long-term-care expenses or leave their heirs a larger inheritance. The two insurance companies that have been offering the fully liquid contracts have announced that they will be phasing out the full liquidity features on contracts on Dec. 21. After that time, modified endowment contracts will still be available, but they will have either an upfront load or a surrender charge.Therefore, if you are interested in the many features of the modified endowment contract, and you also prefer no-load vehicles with no surrender charges, you should take advantage of this window of opportunity before it closes on Dec. 21.

*Cash-value policies are now subject to the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), which could limit the tax benefits of withdrawals on these policies Keith Singer is an attorney and Certified Financial Planner and he offers Advisory Services through Singer Wealth Advisors, a Florida Advisory firm. Past performance does not guarantee future results. This material is for information purposes only and does not take into account the investment objectives, financial situation or particular needs of any individual.

______________________________________ Singer Wealth Management 2 Locations: 1515 S. Federal Highway, #211, Boca Raton, FL 33432 500 S. Australian Ave., Suite 600, West Palm Beach, FL 33401 Phone: 561-998-9985 Website: www.singerwealth.com

Email: [email protected]

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