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It’s not complicated, but the math is stunning. A 45 year old female doctor wants to know, “what would it cost me to guarantee I leave a million-dollar legacy?” (her Mom had just died leaving a modest estate).

Nearing her peak earning years she said, “And let me pay it off in 10-years, like an expensive car, I don’t want to be paying on it when my kids hit college. I want it done, paid off.”

I showed her a $1 million-dollar Joint, 2nd-to-die policy for she and her 50 yr old husband would cost $2,500 monthly ($30K) for ten years – $300K total. Expensive? Yes – but look closer at the numbers. At age 56, she could change her mind, cancel it and put $358K back in her pocket – $58 more than her total premiums paid – but lose the now $1.3 million death benefit.

Of, course, she’s more likely to live into her 80s and die around 90 – where she’d now have a (without paying any further premiums) $7 million Legacy death-benefit – or cancel the policy for $6 million in cash.

The $2,500 monthly for ten years was more than she wanted to spend. So, she opted instead for a one-time only Single-Premium of $180,000 on her life. It immediately guaranteed her $1,000,000 legacy (5.5 times the premium), and a $1.9 million legacy @ age 90, or $890K cash).

Nothing can immediately leverage you charitable gifts, and create an instant Legacy like the right Life Insurance. What legacy could you leave? What legacy will you leave?


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Video Presentation #2: Stagnant Capital-Preservation Assets

Hi, I’m David Rockett, The Charitable Steward. This will be my second videos. These presentations (about 4 minutes each) lay out the beauty of my approach – each captured by a simple picture. We started with the place and usefulness of Term Insurance and you might want to watch it if you haven’t already. http://www.youtube.com/watch?v=hG_p213EV8o

Picking up where we left off – your 20-Year Lever Term Insurance will run out between age 55-60, and your children are mostly grown and maybe gone. You have some assets and wonder if you have out-grown your need for Life Insurance. Or, you might just need to reduce your coverage from $1 million dollar policy when your children were young – to a short 10-year level Term Policy of only $250K. (at age 56 it would cost you about $518 annually or $46 monthly).

So let’s look at your assets. Chances are high at this point in your life you have an investment portfolio of some value. Look at this potfolio as a pie-chart. The Rule-Of-100 gives us a starting point for deciding how to divide things up. If you never risk your age to investment loss, then you just subtract your age from 100 and that tells you what you can risk. If you’re 35 – then you can safely risk 65% of your portfolio to investment loss in growth investments. This leaves 35% (your age) in safe, no-growth capital that you never subject to market risk. It’s over here in the Preservation-Of-Capital category.

The reason for this is natural. A 35 year old couple has more time to recover from a significant market loss. The reverse is also true for a 65 year old investor. He risk less , or 35% and perserves 65%. Of course, this just a guide and there are obvious exceptions. A 35 year old welder with three young children making $20 per hour,  might not take the same risk as a single, 35 year old tax-attorney from a wealthy family takes. So there is plenty room for variation. The Rule Of 100 just gives us a place to start.

For our purposes, consider the 60-year old who’s term insurance is just running out. His kids are all grown and he has a $1M portfolio. $400k growth investments are still at risk of market loss – but $600k are in no-growth assets designed to preserve capital. Now, my focus is NOT on the growth side. Let’s instead look closer at your Preservation-Of-Capital assets. Typically, these are M-Mkt Accts, CDs, various bonds, perhaps some Annunities, real-estate, even some precious metals. Remember, these are NOT growth investments. Your concern here is Captial Preservation, or emergency and future spending. These assts might mostly become Legacy-Assets, ultimately intended for children, grand-children, churches and your favorite charitable causes.

My unique proposition for most investors is that they add Single-Premium Life Insurance as a incredibly and useful tool for these assets. There are just too many solid benefits to ignor: 1) The interest-rate is above the CD and money market rate, often comparable to corp. bonds, 2) It is tax-deferred in the insurance contract – no 1099, 3) It is completely assessable for emergency/spending 4) It is safe in the right stong insurance company, and best of all 5) It has the Super-Sized Leverage of the life insurance contract!  But that, is the topic of our Third Video. Stay tuned — you will be amazed at what’s possible!

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