Smart Strategies for "Leave Behind" Money: A Tax-Efficient Approach for Your Clients

mother and father with baby meeting with agent

July 18,  2025
Published by: Christy Downs

Welcome to Coffee with Closers, the weekly podcast and webinar series from FFP Insurance Services! Hosted by our leadership team—Ira Gottshall, Ed Ledford, Charles Durfee, Christy Downs, and Saul Bejarano—we aim to provide life insurance agents with valuable training, sales ideas, and marketing strategies.

In a recent session, we discussed how to efficiently pass on wealth, especially with recent, temporary tax law changes offering increased standard deductions for older individuals. This presents a unique opportunity to make your clients' "leave behind" money work harder.

Many clients hold significant assets in qualified accounts like IRAs, which become fully taxable to beneficiaries. A powerful strategy to mitigate this is the annuity-funded life insurance approach:

  1. Strategic Transfer: A portion of qualified funds is used to purchase a single premium immediate annuity (SPIA).
  2. Systematic Funding: The SPIA provides guaranteed annual payments over several years (e.g., 7-10 years).
  3. Tax-Efficient Conversion: These annual payments then fund a paid-up whole life insurance policy.

Why this is tax-efficient:

  • Reduced Current Tax: Annual annuity payments, though taxable, often fall within the client's lower tax bracket or increased standard deduction, minimizing immediate tax outlays.
  • Tax-Free Legacy: The life insurance death benefit passes to beneficiaries generally income tax-free, converting a fully taxable qualified asset into a tax-advantaged inheritance.

This strategy effectively shifts a potential future tax burden for heirs into a managed, present-day process with a tax-free outcome. It's essential to differentiate between "live on" money and "leave behind" money to apply this strategy appropriately.

To explore how this and other strategies can benefit your clients, connect with your FFP Insurance Services team.

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Disclaimer: This blog post is for informational purposes only and does not constitute financial or investment advice.