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Note: Nothing in this publication is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.]

Volume Six Number Seven July 2008

Adult Education

Adult Education continued from Home Page ...

Insurability

     Single, young adults are immortal. At least according to the advertising wizards on Madison Avenue and the entertainment gurus in Hollywood. A more realistic picture of youthful immortality, however, can be found in the obituary section of any newspaper. For a variety of reasons, young adult Americans should consider a permanent life insurance policy as part of their long-term financial plan.
     The best time to secure a permanent life insurance policy is at the earliest insurable age. When it comes to life insurance, health actually buys the policy, money merely pays the premiums. And premiums are lower the younger the insured. However, injuries and illnesses can cause even a young adult to be rated (e.g., pay more for the insurance due to less than average health) or to be uninsurable. [Note: For these reasons, some parents acquire permanent life insurance for their minor children to guarantee their later insurability as adults, as well as to pay funeral expenses in the event of premature death.]
     In addition, permanent life insurance builds equity within the policy contract on a tax-advantaged basis, making it available in the future for personal financial independence through withdrawals or loans. Once the young adult marries, the death benefit feature of the policy can provide valuable financial security for their family. This could make a radical difference in the quality of life for the loved ones they leave behind.

Special Needs

Parents of children with special needs face unique challenges in providing for the daily special needs of such a child while both parents are alive. Additionally, they also must consider how to protect any inheritance after the parents are deceased and their children with special needs become young adults. Properly protected, this inheritance can help provide an essential financial safety net to help ensure their future personal independence.
Nevertheless, special legal planning is required to protect the inheritance of a young adult with special needs, their access to important assistance programs and the potential future needs of other family members. Careful planning may ensure the inheritance complies with the letter and spirit of various rules governing eligibility.

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