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Katt & Company is a national fee-only life insurance advising firm. The June 2002 Forbes magazine, and a July 16, 2003 Wall Street Journal article, name Peter Katt as one of only four nationally recognized advisors. The Forbes article states that, "…advisers are well worth the money… These savants are working for no one but you…" For references please contact us. Life Insurance Issues: A Review Several times a month an advisor calls asking about the subject of one of my earlier columns/newsletters. Usually they express appreciation for the piece and ask if I have a more recent commentary on it. This is a good time to confirm or update my views on various important life insurance issues. Columns/newsletters can be found at www.peterkatt.com. I am including links to the mentioned pieces. Estate Planning Life Insurance
- Most recent comments published November 2008 in the Journal of Financial
Planning (JFP). There are three distinct reasons to use life insurance
- liquidity, wealth-transfer and inheritance equalization. Except for
less confidence that estate credits will rise, my views are the same regarding
estate planning life insurance. Life Settlements - Overview of my thinking
found at March 2008 JFP. Life settlement is a murky swamp, so proceed
with caution, especially when clients are approached to buy life insurance
for the purpose of selling it for a large profit two years later. This
seems to be falling apart. Life Insurance Policy Valuation - So-called
springing cash values has been a favorite technique in luring clients
into tax avoidance schemes using life insurance. Treasury has fought back
with specific valuation requirements. My March 2007 JFP column continues
to be my best guidance on this issue. It appears that the developers and
sellers of such schemes are trying to get around proper policy valuations. Policy Replacements - Careful analysis should
be done to determine the advantages and disadvantages of possible policy
replacement. My May 2009 Perspectives provides some examples of how possible
replacement can be viewed. Premium Financing - The idea client's premiums
can be offloaded onto an investor may make a sale easier but it doesn't
stand up to an astute analysis. My July 2004 JFP column provides several
examples of premium financing analysis. VUL - VUL is an inherently flawed life insurance
concept because of investment volatility. There is really no way to cure
a level death benefit design because clients can never know how much premiums
should be. But VUL can be a part of a life insurance program with a proper
design and astute management. My July 2008 JFP column describes how VUL
can work. Policy Loans - Managing policies with or
acquiring loans is challenging. An analysis needs to be done to determine
whether a loan or cash withdrawal is better for the particular situation. Policy Reviews - Life insurance needs to
be actively managed to maximize its value. This is especially true of
UL that requires the policyowner to make management decisions. Most recently
I addressed this in July 2009 Life Insurance Perspectives newsletter. Life Insurance During Economic Stress - In
hard economic times clients look for ways to lighten the financial load
and life insurance has a role to play. My May 2009 AAII Journal column
shows four helpful ways of managing life insurance in such periods.
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