Capital Creation Tools

In retirement income planning, when we talk about Capital Creation Tools we are referring to insurance vehicles that produce either a lump sum or a stream of capital upon a certain event.  Part of the retirement income planning process includes protecting against various risks.  Those risks could be living too long....dying too soon....becoming disabled before your reach retirement... or requiring long term care.

The most common Capital Creation Tools are:

  • Life Insurance
  • Disability Income Insurance
  • Long Term Care Insurance

The most used Capital Creation Tool is life insurance.  Life insurance produces a lump sum of capital (life insurance proceeds) upon a certain event (the death of the insured).  This lump sum of capital can be used by the beneficiary to help provide for a wide variety of needs....Paying off the mortgage, putting food on the table, assuring a college education, buying out a business partner, donating to an institution, etc. Life Insurance helps to assure that financial needs and objectives are met.  

Disability Income Insurance is one of the most valuable yet most underutilized Capital Creation Tools.  Disability Income Insurance produces income for you in the event of your disability.  Think about the people you know.  Do you know a young professional stricken by a disease or accident who can no longer work?  We all know or have heard about the father or mother confined to a wheelchair due to a freak accident.  Disability Income Insurance provides a stream of capital to that individual as a replacement of wages.  Some form of Disability Income Insurance should be considered to be a part of every working person's financial plan.      

Long Term Care Insurance is an incredibly valuable Capital Creation Tool.  It is not unusual for a one year stay in a nursing home to cost over $50,000.  Consider what a 3 or 4 year stay would cost and you can easily see why Long Term Care Insurance is a vital necessity.  An entire lifetime of hard work and savings could be wiped out if an extended stay in a nursing home is needed.  You can protect yourself by using the stream of capital a Long Term Care insurance policy will provide.

As part of Your Retirement Income Strategy we will review and, if necessary, recommend ways to mitigate or eliminate some of the risks you will face during your retirement years.