Insurance Planning

Most of my clients arrive at insurance planning conversations the same way: an agent has shown them a proposal (usually for a permanent life policy) and they want a second opinion from someone who isn’t selling them anything. That’s the work I do here. I’m not licensed to sell insurance, I don’t earn commissions on policies, and I have no financial interest in whether you buy what you’re being shown. What I can tell you is whether the coverage actually solves a problem you have, whether the structure is set up to deliver the benefit you think it will, and whether the tax and estate treatment is what the proposal claims.

I’m Lawrence Israeloff. I’m a Certified Financial Planner™, a CPA, and an attorney based in Melville, NY, and I’ve been doing this kind of coordinated planning work for clients across Long Island and the New York City metro for over two decades.

What insurance is actually for

Insurance is for risks that would seriously damage your financial picture if they happened – risks too big to absorb out of savings, too unpredictable to schedule around, and too consequential to your family or business to leave uncovered. Anything else is a product looking for a buyer.

Worked through that filter, the conversations I have with clients usually concentrate around a few real questions:

  • Will my family be okay if I die early? This is the income-replacement question, and for most working clients with dependents the answer involves term life insurance – a defined coverage amount for a defined number of years, priced to cover the period when others depend on the income. The math is usually straightforward: how much would replace the income, for how long, and at what cost. Where it gets more complex is for high-net-worth clients with estate-tax exposure, business owners with buy-sell funding needs, or families where one spouse has substantially uneven earnings.
  • What happens if I can’t work? Disability is statistically more likely than premature death during working years, and the coverage gap here tends to be larger and less well-understood than the life insurance gap. Group disability through an employer typically replaces only 50-60 percent of base salary, doesn’t cover bonuses, and may be taxable if the employer pays the premium. For physicians, attorneys, business owners, and other high-income professionals, individual disability policies with own-occupation definitions usually fill the meaningful gap – but the policy language matters enormously, and not all “own-occupation” definitions are equal.
  • What about long-term care? This is the hardest of the three to plan for and the one clients are most often quietly anxious about. Traditional long-term care insurance has gotten harder to find and more expensive to hold; the carrier landscape has shrunk significantly over the last decade. The realistic options now are typically traditional LTC insurance for those who can underwrite into it at a reasonable price, hybrid life/LTC products that solve some of the “use it or lose it” problem of traditional policies, and self-funding for clients with sufficient assets who’d rather hold the risk themselves. There’s no universally right answer; there’s only the right answer given a specific client’s age, health, family history, and asset position.

Where the legal and tax work matters

Insurance ownership and beneficiary structure can quietly undo otherwise sound estate planning. Some of the recurring places I find issues when reviewing existing coverage:

  • Policies owned by the insured. A life insurance policy owned by the person whose life it insures gets included in their taxable estate at death. For estates above the federal exemption (or above New York’s substantially lower exemption) that can mean a sizable portion of the death benefit goes to estate tax rather than the intended beneficiaries. An Irrevocable Life Insurance Trust (ILIT) is the standard solution, but it has to be set up correctly and funded with attention to the three-year lookback rule under IRC §2035 if an existing policy is being transferred in.
  • Beneficiary designations that conflict with the will. Insurance proceeds pass by beneficiary designation, not by will. I’ve reviewed estates where a will divided assets equally among three children but a $500,000 life policy still listed an ex-spouse from a marriage that ended fifteen years earlier. Designations need to be reviewed every few years and updated whenever the family situation changes – divorces, remarriages, deaths, births.
  • Buy-sell agreements funded with the wrong policy structure. Cross-purchase buy-sells, entity-redemption buy-sells, and hybrid structures each have different optimal insurance arrangements. Cross-purchase between two owners means each owns a policy on the other; with three or more owners the policy count grows quickly, which is where trusteed cross-purchase or insurance LLC structures become useful. Entity redemption is simpler in some respects but creates basis issues for the surviving owners. Funding mismatches between what the agreement says and what the policies actually do are common and often go undetected until a triggering event.
  • Tax treatment of proceeds. Life insurance death benefits are generally received income-tax-free under IRC §101, but the rules have specific exceptions – transfer-for-value rules, employer-owned life insurance under §101(j), and modified endowment contract treatment for policies that fail the §7702A seven-pay test. These come up more often than people expect, and they’re easy to trigger inadvertently in business contexts.

What I do, and what I don't

I provide written analysis of existing coverage, second opinions on proposals, ownership-and-beneficiary structuring, and coordination with your estate plan and tax situation. I help you decide what coverage you actually need, what type of policy fits the need, and how it should be owned and structured to deliver what you’re paying for.

I don’t sell insurance. I’m not a licensed agent or broker, I don’t earn commissions, and I don’t have a preferred carrier. When you’re ready to buy, you’ll work with an independent agent or broker – I can recommend ones I’ve seen do good work for other clients, but the placement is between you and them.

The clients who get the most value from this arrangement are the ones who already have an agent or are about to buy a policy and want an independent set of eyes on it before they sign.

Who I work with

Insurance planning conversations come up most often in connection with other work – estate planning, business succession, M&A transactions, retirement planning. The clients I do significant insurance work with tend to include families with estate-tax exposure (federal, New York, or both), business owners structuring buy-sells or key-person coverage, professionals with concentrated income who need disability and possibly LTC coverage, and retirees evaluating long-term care options as part of broader wealth-preservation planning.

Long Island, NYC, and the surrounding metro

I work out of Melville, NY and serve clients across Long Island, the five boroughs, and Westchester. New York’s estate tax cliff and the state’s specific rules on insurable interest and trust funding make local knowledge useful here. For broader regulatory context, the National Association of Insurance Commissioners (NAIC), the CFP Board, and the IRS guidance on life insurance taxation are reasonable starting points. None of those replace advice tied to your situation.

Let's talk

If you’ve been handed a proposal and aren’t sure what to make of it, or if you have coverage in place but haven’t reviewed it in years, that’s typically when this kind of review pays for itself. Schedule a consultation and we can work through what you have, what you need, and where the gaps are.