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Life Insurance — What You Need To Know (Podcast)

Something Personal Episode 8: Life Insurance — What You Need To Know

Something Personal logo. Many people think of life insurance as a way to protect people, like your children, who depend on you financially. This assumption has basis in reality, but life insurance has other uses too, and what type you need and how much can vary depending on your goals. Whether you’re considering your first policy or looking to review your approach, this episode is for you. Palisades Hudson’s executive vice president and chief operating officer, Shomari Hearn, returns to “Something Personal” to guide you through the basics of deciding why you need life insurance, what sort of policy you are looking for, and the details you will need to understand to find the right policy for your situation. Shomari and host Amy Laburda also discuss how to review your existing policy, what to do if you need to make changes, and some of the ways life insurance can complement your estate planning.


About the Guest

thumbnail of Shomari Hearn headshot. Shomari D. Hearn, CFP®, EA, has been part of the Palisades Hudson team since 1998. In 2005, he established the firm’s first branch office in Fort Lauderdale, Florida; that location, where Shomari is still based, has since become the firm's headquarters. As the firm's first-ever executive vice president and chief operating officer, Shomari holds executive responsibility for all of the firm’s operations and for strategic initiatives, and he continues to provide a wide range of services directly to our clients. He is among the authors of the firm's book Looking Ahead: Life, Family, Wealth and Business After 55 and Chapter 9, "Life Insurance," is the basis for this episode. He previously appeared on "Something Personal" in the show's fifth episode, "Financial Planning With, And For, Your Family." For Shomari's full biography, click here.

Episode Transcript (click arrow to expand)

Amy Laburda 00:05
Welcome to “Something Personal,” the financial planning podcast that discusses death so much, you just might confuse us with a true crime podcast. Now, if you did, that's OK. Stick around, because today we're talking about life insurance. So that might actually come in handy for understanding some of your true crime podcasts, once you get back to those. I'm Amy Laburda, the editorial manager at Palisades Hudson Financial Group. Joining me today,

this time to discuss life insurance, is our executive vice president and chief operating officer, Shomari Hearn. Thanks for coming back, Shomari.

Shomari Hearn
Yeah, thanks for having me back.

Amy Laburda
So you co-authored a chapter about life insurance in our firm's book Looking Ahead. That particular book is really aimed at people who are approaching or in retirement. But people of all ages might be listening to this podcast, so let's back up a second. Can you talk a little bit about how someone's relationship to life insurance might change over the course of their lifetime?

Shomari Hearn 01:00
So I think, for most people, I would say the need for life insurance typically begins when they have children or other family members that are dependent on their income. So they want to maintain or obtain life insurance in order to provide for the protection against potential loss of income. Should something happen to them — say, they die prematurely — they want to know that their loved ones are still going to be taken care of.

And then as time goes on, they'll maintain that life insurance during their working years. And then, once they reach retirement, they can decide at that point whether or not to continue to maintain that life insurance. Maybe they get rid of it, or they keep it but now it's more of maintaining a policy for wealth transfer, making sure that they leave something behind for their loved ones.

Amy Laburda
Makes sense. So in general, people who have dependents — are there other people who might want to think about life insurance?

And are there other things they might want to use it for, besides just income replacement and wealth transfer?

Shomari Hearn
Sure. So as I mentioned before, and you touched on, right, there's protection against loss of income at the personal level. But also there can be at, you know, when there's a business, right? So it's a little less common, but I would say if you own a business, you may want to insure yourself or, say, a key employee who is responsible for

bringing in new business or generating a significant amount of business revenue. So, similarly, you want to protect the business by ensuring that person, or you as an owner, or any other owners that you have that's part of the business. Because again, it will protect the business, but also ensure that the business can continue to run after, say, you're gone or that key employee is gone.

In addition to that, there are certain people who may have a significant amount of their wealth tied up in illiquid assets, such as real estate or a closely held business. They'll want to obtain life insurance in order to cover the estate taxes that may be due. Because the last thing you want to do is have to sell one of these illiquid assets in order to raise money

to cover the estate taxes. Especially — it'll likely be at an opportune time, which may result in you having to take, or the estate, rather, having to take a discount, receive a discounted value for the assets that they will need to sell in order to raise the cash. You may think, well, currently the federal exemption amount, lifetime exemption amount, is roughly $13 million

per person. So most people are like, “Well, I may have illiquid assets, but I don't have that much.” But you also have to consider what state you live in. So even though at the federal level, the exemption amount is very high, at the state level, certain states like New York, Connecticut, Oregon —- they also have estate taxes, and they have exemption amounts that are lower than the federal exemption. So, just have to be conscious of that. And that goes with part of, in conjunction with, your estate planning. And then lastly,

there's just using life insurance as an effective means of transferring wealth to your heirs and your children, grandchildren and so forth.

Amy Laburda
Great. So lots of uses for life insurance. Anyone who's listening who's shopped for life insurance knows there are different types. Is that because you're meeting these different needs?

Shomari Hearn
Yes. So I think, you know, just depending on what you need the life insurance for. So in the situation where there's...

You're just protecting against the potential loss of personal income, right? You may want a term policy. Or if similarly, with a business, and you're protecting against the loss of potential business income, similarly, you know, a term policy would likely be the most effective route to go. A term policy, as its name implies, means that there's … the policy or life insurance coverage is in place for a specific period of time. It’s not expected to

be there throughout your lifetime, but just for a specific set of time, right? So going back to when you're protecting against potential loss of income, that's typically during your working years, right? You're protecting against if you die prematurely, you know, your salary and wages or the compensation that helps take care of your loved ones goes away. Similarly with a business, also, you know, you may…

that business may go on for a certain amount of time or your involvement in that business may only be for a certain amount of time. Or similarly with that, if it's a key employee that you're insuring, right? Maybe they're already in their 40s. Maybe they plan to work another 20 years or so. So maybe you just need that coverage for, say, 20 years. Versus when you need life insurance to cover things like potential estate tax liabilities or to transfer wealth, you want that,

those policies to be in place, or your life insurance policy to be in place, for your entire lifetime, right? So that would imply a permanent life insurance or … and there's different types of permanent life insurance, but you would want to have that type of insurance in place to ensure that when you do pass away, that those death benefits are available to cover whatever, either estate tax liabilities or wealth transfer, that you have in your plan.

Amy Laburda 06:38
So without getting too deep into the weeds, you mentioned there are different kinds of permanent insurance. What are some of the main types people might be looking at?

Shomari Hearn
Yeah, I would say there's multiple variations, but the three main types are traditional whole life — and they vary, in terms of the amount of flexibility. But I would start off with traditional whole life, which has a — It's basically a combination of a term policy

and also a savings or investment account. With traditional whole life, these policies are much more expensive than, say, a term policy, because again, you're insuring against something that is inevitable, right? So the likelihood that it pays out is almost certain, assuming you maintain that policy, therefore it's going to be much more costly. With a whole life policy,

what happens is, it's pretty restrictive in terms of the policy premiums that are paid annually, they are pretty much set. The death benefit is set. But it's the least amount of risk to the policyholder. As long as you pay your premiums for the most part and the financial strength, claims-paying ability of the insurance company that you're working with is strong, then you know that the policy will be there,

you know, when you need it. Then there's, I would say, universal life insurance. That one unbundles the insurance and the savings or investment component. That gives a little more flexibility because then you can use some of the investment earnings within the policy to pay for policy premiums, right? So it can allow you to be able to say, not have to

pay a set amount of premiums each month or each year to maintain that policy. And then the third component, or option, would be a variable universal life insurance policy. That one is the most flexible. That one also, with regard to the investment component, the policyholder gets to select the types of investments that are held in the investment component.

And they operate similar to mutual funds. They're more costly, but they operate similar to mutual funds. And depending on if those investments perform well, you might be, as the policyholder, may be able to, in some cases, reduce your policy premiums that you pay out of pocket, because the investments are performing so well, or may even be able to stop paying premiums at a certain point in time.

Amy Laburda 09:31
So with permanent life insurance, it sounds like there's sort of a balance between security and flexibility in the choices that you're picking. Is that fair?

Shomari Hearn
Yeah, that's definitely fair. And I think it's important to just consider the risks that are involved when you start looking at universal life or variable universal life, versus traditional whole life. Just hopefully the insured or policy owner just fully understands what type of policy they're getting.

Amy Laburda 10:01
So you've sat down, you figured out what you need the insurance for. That's probably pointed you at least in the direction of one kind of policy or another, if not also factoring in your own preferences and your bigger financial picture, all those things. So, you sorted that out either on your own or with an adviser maybe. Now you've got to shop. Now you have to actually find a policy. So how would you advise someone to start going about actually picking a particular company and a particular policy?

Shomari Hearn
That’s a great question. I think

one is, especially when it comes to permanent life insurance policies, I think it definitely benefits you to work with a reputable insurance agent, just because there's so many options. There's certain assumptions baked into different policies and so forth that you need to be working with someone who will be able to lay out all the different options to you, be able to explain them.

And as a result of that, you may also even want to bring in a, work with a fee-only financial advisor, right? Bringing in this third party can help assess whether or not the insurance agent is providing you with policy options that will address your needs and that they're, those policies that they're offering, really take into account realistic assumptions.

Right? Because I guess one thing that I didn't talk about was the fact that with permanent life insurance policies, what the insurance agent or the insurance company will provide are what they call policy illustrations. And those show how the policy is expected to perform throughout the existence of the policy. But there's a ton of assumptions that can be built into these policy illustrations, you know, to make them look as favorable

as possible, right? So that financial adviser can come in and say to the insurance agent, “Well, I want you to run the policy illustrations assuming these specific assumptions,” right? So that it's clear, it's easier to assess how this policy may perform in various economic situations.

Amy Laburda
Right. So you have the fee-only adviser, who has no skin in the game financially as to

what you pick, to give you sort of that extra set of eyes, more expertise there.

Shomari Hearn
That's right.

Amy Laburda
So when you're working with them, if you're looking at particular companies, what sort of things are you going to look for with an insurer?

Shomari Hearn
Certain things you want to look for, and this is what a financial adviser would look at, is assessing the financial strength of the insurance company. So they're going to look at the rating agencies:

Moody's, Standard & Poor's, AM Best, and also Weiss. And they have different rating scales, in terms of how they assess the financial strength of insurance companies. So for example, with AM Best, you want to look for an A-plus rating; for Standard & Poor's, a AA-minus is a good rating, or anything above that. Similarly, with Moody's is AA3.

Anything at that level above that usually indicates that the insurer has a strong financial footing. Weiss is a little different than those other three, because it solely operates based off of public information. Meanwhile, the first three that I mentioned, they're actually paid by the insurance companies to issue these ratings. So it's a bit of a conflict of interest.

So you want to look at both types, ratings from both the ones that the insurer pays for versus Weiss, which is solely based on public information. You also want to look at what type of insurance company it is. So there's different types. There's… The two main types, however, are mutual insurance companies and then stock insurance companies.

So with a mutual insurance company, the policyholders are the ones who actually own the company. So in terms of when, as the mutual insurance company generates profits, it returns those profits to the policyholders in the form of dividends or reductions in premiums, which is nice to have if you get that. Obviously with stock insurance companies, it's just like a company that's publicly traded.

Their goal is to maximize profits for the benefit of their shareholders and not looking necessarily at, focusing on providing the best return to the policyholders. However, that doesn't necessarily mean you don't want to go with a stock-based insurance company, just because at the end of the day, in order for them to continue to provide good returns for their stockholders,

they also have to provide a quality product to customers as well. So it kind of goes hand in hand.

Amy Laburda
Right. So in addition to the strength of the company overall and the type of company it is, since permanent life insurance policies have an investment component, I assume you're also going to want to look at the investment performance for these kinds of policies and products too.

Shomari Hearn
That's true. And again, I think this is where a financial adviser will come in handy

in this process. is in terms of just evaluating the historical investment performance of these insurers. And in addition to that — that's only one factor. And of course, just like in a traditional investment realm, past performance is not necessarily indicative of future results, but it still can help to look at how this insurer has performed, or that their investments have performed, historically. But there's other factors to consider as well,

versus looking solely at investment performance. There's looking at the general expenses and commissions that are paid out. There's looking at three-year lapse ratios, for example. Oftentimes you think with an insurance company, insured or policyholders let the policies lapse, that could be a good thing, right? Because then the insurance company doesn't have to then pay out insurance benefits.

Meanwhile, during the time that they maintained the policies, they got to collect premiums. But at the same time, there's a couple of things that come into play there. One is, if the policyholders let the policy lapse, let's say within the first couple of years, there's a fair amount of money that the insurance company has to lay out upfront with any new policy, paying out commissions and so forth.

And if there's a lot of people that are canceling within the first couple of years, then that actually is a net loss to the insurance company. The other thing is also looking at, well, if there's a high percentage of policy lapses, typically people who are healthy are the ones who allow their policy to lapse, which can then cause what's called adverse selection, which means that people who are unwell are not

likely to let their policy lapse, because they expect that they're going to need the coverage and it's probably going to pay out in the near term. So if the majority of the insurance company's policyholders, or actually the insureds, are unwell, then that can be very costly to the insurance company. They don't have enough healthy people to essentially balance that out. So there's a few other factors that the financial adviser would take a look at as well. Just look...

Another example might be nonperforming, looking at nonperforming assets, right? So the insurance companies, because they know that they have to pay out death benefits on an annual basis, they're not being very aggressive in the types of investments that they hold, right? So they're primarily investing in bonds, mortgage-backed securities, certain real estate, but, you know, they have to monitor how those investments are performing. And if they're not performing

well, or there's a number, a high percentage of them that are not performing, that can mean potential financial risk to the insurer in terms of being able to make claims or pay out claims. So these are the various factors and other considerations that you want to look at when you're selecting the insurer. One thing else I'll mention as well is, historically,

the amount of life insurance companies who have essentially gone out of business, or rather, I would say, been unable to pay life insurance claims, has been very low. But it's not zero, right? So, and of course, with life insurance, the reason you're getting life insurance is you're trying to address a risk that is an important one, and you don't really want to gamble with selecting, going with a particular insurance company

based solely on price, right? Just because, say, that insurance premium is very low in comparison to the others, there may be a good reason for that. So again, that's yet another reason why working with a fee-only adviser, it will be helpful in assessing that situation. And then another thing that I'll mention too is when you're … With term policies, it's a little more straightforward, right? There's no investment component. So there's...

That can be a lot more straightforward. People may decide that they just want to go search online, depending on the amount of coverage that they need, and so forth. They may just decide that, you know, “It's easy enough. I don't necessarily have to go through an agent. I can, you know, do some research online and obtain a term policy.” But I would say if you're considering needing permanent life insurance, that you definitely work with an agent and an adviser.

Amy Laburda 20:30
OK, so you, and potentially your adviser, you’ve done all this research, looked at lots of projections, done the whole song and dance. You've got your policy; you selected it; you signed on the dotted line. Say you even set up automatic payment for your premiums. You're golden. You set it and forget it. There's nothing else to do, right?

Shomari Hearn
[laughing] No.

Amy Laburda
Sorry, listeners, I did try, but I guess it never really is.

Shomari Hearn
That's true.

So I mean, again, with term policy, again, straightforward, there's no investment component. So, I mean, theoretically, again, you still want to look at the insurance company every so often, every few years just to make sure, OK, this insurance company is still operating, they aren't having issues with paying out death benefit claims. But other than that, there's not much you necessarily need to do outside of that, other than maybe looking at, you know,

reassessing personally whether or not you need more insurance, and so forth. But when it comes to permanent life insurance policies, you want to revisit those policies, not only looking at how the policy is performing, but also how the insurance company that issued the policy is performing as well. But especially when, going back to the policy itself, like I mentioned earlier, there's

many assumptions that are built into those policy illustrations that are given to you when you first purchased the policy, right? So they assume like, OK, in five years, the cash value or the investment component of it should be at this level, you know, and then, you know, with the expectation that, OK, now, and you're still paying your premiums like you're, you were scheduled to, but then

you want to look at, say, reassess in five years and say, “OK, well, did it actually meet that value that we were expecting in terms of cash value or investment savings value?” And what you want to do is, again, request policy illustrations from the agent under similar assumptions that you assumed when you first purchased the policy. So even more of a need for working with a financial adviser to help you assess the performance,

because if things are not performing well, it can be a warning sign, right? So you don't want to wait until the last minute, where you're being notified, say 10 or 15 years out that, “Oh, the policy hasn't performed the way that you anticipated. So we're going to have to significantly increase your policy premiums, otherwise the policy's going to lapse,” right? You definitely don't want to get caught flat-footed. So

reassessing every few years, three to five years or so, is ideal.

Amy Laburda
So say it's bad news, and you're not happy with how your current policy is performing. What are you looking at then, as next steps?

Shomari Hearn
There's a number of things that you should be considering, right? One is, “Well, when I first obtained this policy, it may have been 15, 20 years ago. Obviously, I was much younger, probably in better health. So

the cost of me getting a policy to replace that older existing policy now is going to be more costly.” And what that means financially for you, whether or not you're able to support a much higher premium payment. The other thing to consider is whether or not you're even still insurable, right? So again, because of age and health, you may be in a situation where you can't, you may not be able

to pass the health assessment aspect of obtaining a new policy. In that case, if you're not insurable, then you may wind up being in a situation where you need to either stick with the existing policy you have, or maybe consider reducing the amount of coverage, if you want to go with a new insurer, just because of your budget. But at least some

coverage is better than no coverage. So that's another thing to consider as well. Also, you want to consider, too, the fact that there's a lot of upfront costs with obtaining a policy. You've already paid that on the initial policy. So you would have to do that all over again with the new one. So there's just a number of different factors. But again, I think, and

I keep repeating this, sounds like it's a commercial, but you definitely want to work with a financial adviser to help you assess that. You want to work with the agent, but also definitely with the financial adviser because you need that third party that's independent, doesn't have skin in the game, that can really help you assess the situation. Because at the end of the day, the majority of insurance agents are paid on commission, right? So, you know, getting, you know, having you purchase a new policy,

it generates a lot more commission for them, especially upfront.

Amy Laburda
Sure. Well, so this entire episode has been a little bit on the death side, but we can't avoid the taxes. If you're leaving an existing policy, are there tax implications of that choice?

Shomari Hearn
There can be. In a situation, again, it's a permanent life insurance policy. You know that there's a cash value or an investment component. If the cash value or savings component of the policy

is higher than the total premiums you've paid into the policy, then that difference is taxed as ordinary income if you surrender that policy. So there can be income tax implications. There are certain workarounds with that. You could, for example, do what's called an Internal Revenue Code Section 1035 exchange, where instead of taking...

just surrendering the policy and then taking whatever cash value is left. If you're going into or purchasing a new policy, you do this exchange, where it goes directly into the new policy. You can avoid that tax consequence.

Amy Laburda
So if you're happy with your policy, or at least if you decide to keep it, when those benefits are paid out, will the people — either your family or your business, if that's what you're doing — owe taxes on those benefits?

Shomari Hearn
Typically the answer to that is no. But

with life insurance, there isn't, you know — when the beneficiaries receive the death benefits, there's no income tax consequence to that. But it can depend, when it comes to estate taxes, whether or not there could be some estate tax exposure. And the reason is an insurance policy, if you, the insured, owns that policy directly, you know, in your own name, it's included

as an asset, as part of your total estate. So if your estate is, I mentioned earlier that the federal exemption amount was roughly $13 million. If your estate, for example, was say, were $12 million, but then you had a $5 million policy, well now you're over the exemption amount and now there's some estate tax exposure. But there's also

effective planning that you can do to avoid that. And by doing so, you would set up what's called an irrevocable life insurance trust. Ideally, you would set up the trust first and have the trust take out the insurance policy. In that case, the trust is both the owner of

the policy and also the beneficiary, or direct beneficiary, of the policy. Alternatively, if you do have an existing life insurance policy, you can still transfer ownership of that policy into the trust. The difference there is, though, you have to outlive that transfer by three years. If you don't, then a policy, or its death benefit, will be included in your estate as if you never made the transfer.

Amy Laburda
So if you've put a policy in this trust,

presumably you still have to pay the premiums, or the trust does, and the trustee, I assume, will not want to just shell out and pay those for you. So how do you arrange that in such a way that has maximized your planning benefit?

Shomari Hearn
Yes, that's a great question. Yeah, typically the trustee doesn't want to be responsible for coming out of their own pocket to pay for the premium. So as part of that planning, if you're the person who,

or the insured, or whoever is obtaining the insurance, if they're setting up the trust and having the trust on the policy, they want to fund the trust with enough cash or assets to be able to pay for those policy premiums. That can be done a number of ways, maybe upfront. You can potentially make an additional sizable gift to the trust, or in most cases, people may just make annual gifts

to that irrevocable trust. And those gifts are used, in the form of cash, are used to then pay those premiums. But even there, you have to do some effective planning. You want to try to avoid making taxable gifts. So each taxpayer, currently, the annual, what's called the federal annual exclusion amount, is $17,000 per person. You want to

you know, if you can, you want to stay below that amount in order, you know, when making gifts to avoid any gift tax implications. There can be some, again, effective planning that you're working with a financial adviser to help you determine, because if you have a large policy, those premiums could be well in excess, on an annual basis, of $17,000. But that's when you potentially, you're looking through to the beneficiaries of that trust. So say there's five,

you know, family members or, you know, beneficiaries of that trust. That can apply to, that $17,000 can apply to each of them. The thing with that, though, is when you make that annual gift to the trust, typically in order for it to qualify for that annual exclusion amount, it has to be an immediate gift. And meaning that the beneficiary has potentially … can use it immediately.

But typically if it's going to pay for life insurance premiums, they may not get a benefit of, you know, those gifts to the trust until, you know, 30-plus years later, or longer, when the insured person dies and you know, they receive the trust, receive the death benefits. So what you have to do in that case is, when you make the gift, the gift has to be available immediately to those beneficiaries for say…

typically it's like 30 to 60 days. And the trustee needs to notify those beneficiaries of that trust to inform them that yes, a gift has been made to the trust. You know, if … Please let me know if you want to receive a distribution for your share of this gift. Of course, the trustee or the financial adviser will explain to the beneficiaries of the trust that it's not necessarily in their best interest to take that gift out

during that window that they get each year, because of the intended purpose of the life insurance. But yeah, you have to make that window of opportunity for them to withdraw within, say, 30 to 60 days each year in order to be able to take advantage of the annual exclusion amount.

Amy Laburda
It's my… Every episode, I have to just emphasize that

communication is always a key part of what we're doing, because it feels like —

Shomari Hearn

Amy Laburda
– this is certainly one where if they understand what the gift is for, they can leave it alone, but they need to understand at the beginning.

Shomari Hearn
That’s right.

Amy Laburda
Some of our listeners may be beneficiaries of life insurance policies. How do you collect once the insured has died?

Shomari Hearn
If you're a direct beneficiary, what will happen is you need to obtain a copy of, or a

certified copy of, the death certificate of the insured and reach out to the insurance company that issued the policy as a beneficiary. They'll send the packet that you have to complete with certain information. You submit that, along with that death certificate. And then usually, you know, the insurance company, once they process the claim, you know, will pay it out within, probably within a relatively short period of time.

Amy Laburda
Is there anything different you need to do if you're the

beneficiary of a trust, or will the trustee generally take care of that part of it?

Shomari Hearn
Yes, the trustee, in that case, will handle that process. The beneficiary of the trust basically doesn't really need to do anything at that point. It's more so the trustee's responsibility to reach out to the insurance company, or insurance companies, inform them that the insured has passed away, request those documents in order to submit a claim. The trustee will obtain a certified copy of the death certificate

and submit that information. And then, after that, it just really depends — you know, the death benefit will be paid out to the trust. The trustee will have to, if it didn't already have a bank account or investment account set up for the trust, will need to establish that account to receive those death benefits. And then it just depends on the provisions in the trust document to determine how the trustee will manage or administer the trust thereafter,

whether or not they'll make … just essentially dissolve the trust and then distribute the assets out to the beneficiaries. Or, in most cases, the trust can be beneficial to the creator in the sense that they'll be able to control those assets from the grave, right? Because when they set up that trust, they put in certain provisions, in terms of explaining to … who the trustee is, how they want those

those assets to be managed once the death benefit has been received. And then, you know, on what terms will they distribute assets to the beneficiaries? Maybe they continue to keep it in trust long-term and just make maybe annual distributions to the beneficiaries, or pay certain expenditures of the beneficiaries like housing or medical, health, other health expenses, education expenses, and things like that.

Amy Laburda 35:22
So we talked about, earlier in our conversation, involving a family financial planner in your selection process. From the flip side, as a financial adviser yourself, when you talk to clients about life insurance, how do you sort of situate it in their big financial picture? How do you encourage them to think about their insurance choices?

Shomari Hearn
So I think, when I'm working with a client and my colleagues are working with clients, we're looking at their complete financial picture, right? And it...

And just looking at, oftentimes it may be the client may not even realize that they have this exposure or they just hadn't been considering the need for life insurance, because they're so focused on tax planning, whether it's income tax planning, estate planning, and managing their investments because they want to be able to retire at a certain age, and so forth. So as part of my responsibility, is pointing out to them that, “OK, you also, you have a number of dependents that are relying on your income.

You may have young children that you also will need to put through college, and so forth. So you want to make sure that you have adequate life insurance.” It's one of a number of important tools when you're helping the client achieve their financial objectives.

Amy Laburda
So are there any other burning life insurance tips or things to consider that we didn't touch on today that you wanted to talk about?

Shomari Hearn
Life insurance

is certainly, like I had mentioned before, it’s an important tool. It's …Because you want to be able to provide for your family if you were to die prematurely. I think, especially when you're younger, you really feel like you're invincible, nothing will happen to you, but unfortunately things do happen. So you want to make sure you have adequate insurance.

And then again, there's other reasons that you may need life insurance as well. So, you know, just making sure that, you know, you work with an adviser to help you figure out what your needs are. The adviser will tell you if, you know, if you only need a certain amount of coverage or maybe you just don't need coverage yet, right? But they'll be able to help you with that process. But it's also, again, an important tool as part of your …

helping you and your family achieve your overall financial objectives.

Amy Laburda
Great. Well, thank you so much for joining me, Shomari. It was great to talk to you again.

Shomari Hearn
Oh, thanks. It’s always a pleasure.

Amy Laburda 37:58
“Something Personal” is a production of Palisades Hudson Financial Group, a financial planning and investment firm headquartered in South Florida. Our other offices are in Atlanta; Austin; the Portland, Oregon metropolitan area; and the New York City metro area. Something Personal is hosted by me, Amy Laburda. Our producers are Ali Elkin and Joseph Ranghelli. Joseph Ranghelli is also our director, editor and mixer. Our firm has written two books:

Looking Ahead: Life, Family, Wealth and Business After 55 and The High Achiever’s Guide to Wealth, which offers advice for younger professionals, entrepreneurs, athletes and performers. Both books are available on Amazon, in paperback and as e-books.