December 2021 - Page 2 of 2

Annuity Maximization: Repositioning Deferred Annuities to Fund Life Insurance

September 26, 2026December 13, 2021 by Tim Fuller

Retired couple relaxing on a porch at sunset, representing guaranteed annuity income

Many clients own deferred annuities they no longer need for retirement income and simply plan to leave them to the kids. Annuities are excellent accumulation tools, but they are an inefficient way to transfer wealth. Annuity maximization repositions that money into a tax-free life insurance death benefit.

Key takeaways

Heirs pay ordinary income tax on the gain in an inherited deferred annuity, and larger estates may also owe estate tax on its value.
Annuity maximization converts the deferred annuity to income, then uses that income to pay premiums on life insurance, often owned by an ILIT.
The strategy fits clients who are insurable and do not need the annuity for their own retirement income.

A deferred annuity is a great way to accumulate for retirement but an inefficient way to pass wealth to the next generation.

The problem with leaving a deferred annuity to heirs

At death, the gain in a deferred annuity is income in respect of a decedent. Beneficiaries pay ordinary income tax on it at their own rates, with no step-up in basis. For clients whose estates exceed the federal exemption, the annuity’s value can also be subject to estate tax at 40%. Our article on the $15 million estate tax exemption explains who is still exposed.

How annuity maximization works

The deferred annuity is exchanged or annuitized into a single premium immediate annuity (SPIA) that pays income over a chosen period.
The client uses the after-tax income to pay premiums on a life insurance policy, or gifts it to an irrevocable life insurance trust (ILIT) that owns the policy.
The policy is sized to replace or exceed the annuity’s value.
At death, heirs receive an income-tax-free death benefit instead of a taxable annuity.

Who is a good candidate

Clients who do not expect to need the annuity for income
Clients who are insurable at reasonable rates
Those who want a larger, more predictable legacy
Clients comfortable using annual exclusion gifts to fund an ILIT

Clients who want to keep more control might pair this with a grantor trust design. Their attorney should confirm the right structure.

Points to review before recommending it

Surrender charges on the existing annuity
The tax cost of the SPIA income, which includes a portion of gain
Any living benefit or death benefit riders being given up
Underwriting results, which should be known before the annuity is changed

Our case design team can run side-by-side comparisons of keeping the annuity versus repositioning it.

Frequently asked questions

How are inherited non-qualified annuities taxed?

The gain above the owner’s cost basis is taxed as ordinary income to the beneficiary. There is no step-up in basis at death, unlike many other assets.

Does the client need to use an ILIT?

Not always. For estates well below the federal exemption, the client may own the policy directly. An ILIT is useful when estate tax exposure or control over distributions is a concern.

Should the annuity be changed before the life policy is issued?

No. Complete underwriting and have the life policy approved first so the client is never left with the tax cost of the change and no coverage.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

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Long-Term Care Planning for Couples With No Children

September 25, 2026December 9, 2021 by Tim Fuller

Adult daughter and her aging mother sharing a warm moment while discussing long-term care planning

Parents often assume a child will step in if they need care. Couples without children don’t have that default, which changes how they should think about long-term care.

Key takeaways

Couples without children face the same risk of needing care, but have no built-in family caregiver.
They’re more likely to need paid professional care and to rely heavily on each other.
Planning early protects both spouses’ quality of life and assets.

No child on call means the healthy spouse becomes the caregiver — or the care has to be paid for.

The same risk, a different situation

The need for long-term care doesn’t depend on income, marital status, or family size. But clients without children can’t count on an adult child to coordinate or provide care, so their plan has to be deliberate.

The challenges they face

More need for professional care: without a child on call, paid help is likely to fill the gap sooner.
A heavier load on the spouse: the healthy partner often carries more of the caregiving, which can affect their own health and finances.
Who manages the care: someone needs to coordinate providers and decisions, especially if both spouses need help.

Starting the conversation

Ask how they want to live: where, how independently, and who they’d want involved. Couples without children often have more freedom and resources, and a planning mindset that makes them strong candidates. Policies with care coordination services can be especially valuable. See what modern LTC policies cover beyond nursing homes.

Frequently asked questions

Do couples without children need long-term care insurance?

Often more than others, since they don’t have an adult child to provide or coordinate care.

Who takes care of you if you have no children?

Usually a spouse first, then paid professionals. Long-term care insurance helps pay for professional care and coordination.

What LTC policy features help couples without children?

Care coordination services, home care benefits, and shared or joint benefit options can be especially valuable.

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Reviewed by Tim Fuller on 2026-09-25

Tim Fuller

President, SRS Inc.

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Family Care Benefit: Disability Coverage When Clients Care for a Loved One

September 25, 2026December 8, 2021 by Tim Fuller

Disability insurance protects against income lost to the insured’s own illness or injury. But what if a client has to cut back at work to care for a seriously ill child, spouse, or parent? Some policies now cover that too.

Key takeaways

More than 60 million U.S. adults provide care to a loved one, often while working.
A compassionate family care benefit, included at no extra cost on some individual DI policies, helps replace lost income.
One carrier uses a 20/20 guideline: benefits are payable when the client works 20% fewer hours and loses 20% or more of income.

The 20/20 guideline: work 20% fewer hours to care for a family member, lose 20% or more of income, and the benefit can pay.

The caregiving reality

Tens of millions of working adults care for a family member. Many have to cut hours or take time off, losing income just when expenses rise. Traditional disability insurance doesn’t address that, because the insured isn’t the one who is sick.

How the family care benefit works

At one carrier, the benefit is included with an individual DI policy at no extra cost. After a benefit waiting period, it pays if the insured works 20% fewer hours and loses 20% or more of income because they’re caring for a family member with a serious health condition.

Who and what qualifies

Family members: parent, spouse, domestic partner, or child (including adopted and stepchildren).
Serious health condition: the family member is receiving inpatient hospital, hospice, or residential medical care; needs substantial supervision due to severe cognitive impairment; can’t perform two or more activities of daily living; or is terminally ill with life expectancy of 12 months or less.
The condition must begin after the policy’s effective date, and documentation of income and the family member’s condition is required.

Terms vary by carrier and state.

Why it matters in the sale

It’s a feature most clients have never heard of, and one that resonates with anyone who has cared for a parent or child. It also pairs naturally with long-term care planning conversations.

Frequently asked questions

Does disability insurance pay if I care for a sick family member?

Some individual DI policies include a family care benefit that pays when you lose income caring for a seriously ill family member.

What is the 20/20 rule for the family care benefit?

At one carrier, benefits are payable when the insured works 20% fewer hours and loses at least 20% of income due to caregiving.

Which family members qualify for the family care benefit?

Typically a parent, spouse, domestic partner, or child, including adopted and stepchildren.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-25

Tim Fuller

President, SRS Inc.

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Grantor Trusts: How Clients Can “Have It Both Ways” on Estate and Income Taxes

September 25, 2026December 7, 2021 by Tim Fuller

“You can’t have your cake and eat it too” is usually good advice. Grantor trusts are the exception: properly structured, they let a client move assets out of their taxable estate while still being treated as the owner for income tax purposes, and that combination works in the family’s favor.

Key takeaways

Assets in a properly drafted grantor trust are outside the grantor’s taxable estate, including all future growth.
The grantor pays the trust’s income tax, which lets trust assets grow untouched and is effectively an additional tax-free gift.
Grantor trusts also offer creditor protection and, through a spouse’s interest, indirect access to trust property.

Every dollar of income tax the grantor pays on the trust’s behalf is, in effect, an extra gift to the heirs — with no gift tax.

The estate tax side

Property in the trust isn’t included in the grantor’s taxable estate, so both the original gift and all appreciation after the transfer escape estate tax. For clients above the $15 million exemption, that growth can be worth far more than the original gift.

The income tax side

For income tax purposes, the trust’s income, gains, and losses flow through to the grantor’s personal return. That has two advantages: the grantor can manage the tax using their own tax position, and trust assets aren’t depleted to pay taxes. Paying the trust’s tax is effectively a gift to the beneficiaries that doesn’t use any annual exclusion or lifetime exemption.

Other benefits

Trust assets are protected from the grantor’s creditors.
A married grantor can keep indirect access to trust property by giving the spouse a lifetime interest.
Grantor trusts are well suited to owning life insurance and to sales of appreciated assets. See how sales to grantor trusts work with life insurance.

The catch: no step-up in basis

The IRS confirmed in 2023 (Revenue Ruling 2023-2) that assets in a grantor trust that aren’t included in the grantor’s estate don’t receive a step-up in basis at death. Heirs inherit the original basis, so highly appreciated assets may carry a built-in capital gain. Some trusts include a power to swap assets back to address this, which should be planned with the client’s attorney.

Frequently asked questions

What is a grantor trust?

A trust in which the creator is treated as the owner for income tax purposes, while the assets can still be outside their taxable estate if properly structured.

Why would a grantor want to pay the trust’s income taxes?

Paying the tax lets trust assets grow untouched and is effectively an extra gift to beneficiaries that isn’t subject to gift tax.

Do grantor trust assets get a step-up in basis at death?

Not if they’re excluded from the grantor’s estate. The IRS confirmed this in Revenue Ruling 2023-2.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-25

Tim Fuller

President, SRS Inc.

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Charitable Giving With Life Insurance: Leveraging a Gift to Charity

September 26, 2026December 6, 2021 by Tim Fuller

Gifts to universities, hospitals, faith-based organizations and other nonprofits are a meaningful way for clients to use accumulated wealth. A large direct gift can substantially reduce what passes to family. Funding a life insurance policy owned by the charity lets clients make a larger future gift at a fraction of the current cost.

Key takeaways

Instead of giving a large sum today, the client donates premium dollars and the charity owns and is beneficiary of a policy on the client’s life.
The client’s net worth is reduced only by the premiums, which may be deductible for clients who itemize, subject to limits.
The charity must be willing to own the policy, and premiums must be paid in full and on time to protect the death benefit.

Donating premium dollars rather than a lump sum can turn a modest annual gift into a much larger legacy for a cause the client cares about.

The trade-off with direct gifts

A direct gift reduces the client’s net worth dollar for dollar. For clients who also want to leave a meaningful inheritance, that trade-off can limit how much they are willing to give. Life insurance separates the size of the gift from the size of today’s outlay.

How charity-owned life insurance works

The client donates cash each year equal to the premium.
The charity applies for, owns and is the beneficiary of a policy on the client’s life.
The charity pays the premium with the donated funds.
At death, the charity receives the full death benefit.

Because the charity owns the policy, the client may be able to deduct the premium gifts as charitable contributions.

Design and tax points to confirm

Deductions. Income tax deductions apply only to gifts to qualified charities, require itemizing and may be subject to percentage limits and phase-outs. The client’s tax advisor should confirm the benefit.
Short-pay designs. A limited-pay premium schedule reduces the risk of the gift falling short if the client stops giving.
Consistent funding. Each premium must be paid in full. Smaller donations can reduce the death benefit or cause the policy to lapse.
Charity policies. Some organizations will not own life insurance or have specific requirements, so confirm early.
Insurable interest. State rules on charitable insurable interest vary, and carriers will review them at application.

Balancing charity and family

Many clients want to support a cause and still leave a meaningful inheritance. Combining charity-owned coverage with a family gifting strategy can serve both goals. Contact our team to compare designs for the charitable portion of a plan.

Frequently asked questions

Can a client deduct premiums on a policy owned by a charity?

Generally, cash given to a qualified charity that owns the policy can be deductible if the client itemizes, subject to IRS limits. The client’s tax advisor should confirm the treatment.

What happens if the client stops donating?

The charity may not have the money to pay premiums, and the policy could shrink or lapse. Short-pay designs reduce this risk.

Can the client name the charity as beneficiary of a policy they own instead?

Yes. That keeps flexibility but generally does not provide a current income tax deduction for premiums. The death benefit is still removed from the taxable estate through the estate tax charitable deduction.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

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Why Referrals Are Your Best Source of New Clients

September 26, 2026December 2, 2021 by Tim Fuller

Everyone agrees referrals are a strong way to find new clients, yet many advisors hesitate to ask. Reframed correctly, asking for a referral is a compliment to your client, and it is one of the most efficient ways to fill your calendar with qualified prospects.

Key takeaways

Asking for referrals acknowledges that your client made a smart decision and invites them to share it.
Referred prospects come with built-in credibility and are easier to reach than cold leads.
The best time to ask is right after you have delivered value, with a specific description of who you help.

For every appointment you earn through hours of cold calling, you should be able to get several referred leads from a single good client meeting.

Why asking feels hard, and why it shouldn’t

Many advisors worry that asking for names will seem pushy. Consider it from the client’s side. You are telling them they made a sound decision and asking whether people they care about might benefit from the same conversation. Most clients are glad to help when the request is framed that way.

Five reasons referrals outperform other leads

You start on favorable terms. A shared connection makes it far more likely a prospect will take your call and book a meeting.
You borrow credibility. Your client valued your work enough to recommend you, which establishes trust before you speak.
Your confidence goes up. Calling a referred prospect is much easier than a cold call.
You spend more time advising. Less time prospecting means more time in front of people who are ready to talk.
Prospects can be qualified in advance. Your client can tell you about the person’s situation so you are prepared for the first call.

A simple script you can adapt

Here is a version for long-term care conversations:

“I’m interested in meeting people much like you, people who are concerned about protecting their retirement savings, not becoming a burden to their children and staying in their own homes. I’d really appreciate the chance to share with your friends and relatives some of what we went over today. Who do you think we could help?”

Adjust the concerns to the product you just placed: income protection for a disability client, family security for a life client and so on.

Making referrals a habit

Ask at the moment of greatest value, such as policy delivery or a completed review.
Describe your ideal client specifically so names come to mind.
Ask for a little background on each person and permission to mention your client’s name.
Follow up with a thank-you, whether or not the referral buys.

Educational material helps too. Sharing facts such as current long-term care costs gives clients something useful to pass along. Contact SRS for client-approved pieces you can use.

Frequently asked questions

When is the best time to ask a client for a referral?

Right after you have delivered clear value, such as at policy delivery, after a claim is paid or at the end of a helpful review meeting.

How many referrals should I ask for?

Rather than a number, ask who comes to mind that shares a specific concern. Describing the need helps clients think of the right people.

What if a client says they can’t think of anyone?

Thank them and let them know the door is open. Offer a short article or handout they can share if someone comes to mind later.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

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Disability Insurance Riders That Help Cover Clients’ Medical Bills

September 26, 2026December 1, 2021 by Tim Fuller

Even clients with good health insurance can face medical bills well beyond their deductible after an illness or injury. Some individual disability income policies offer riders that add benefits aimed at those costs, often for a modest additional premium.

Key takeaways

Health insurance deductibles are only part of the cost; copays, out-of-network care and non-covered expenses add up.
Riders on some DI policies add benefits for loss of daily living activities, critical illness diagnoses and accident-related medical costs.
Rider availability, benefit amounts and state approval vary by carrier, so confirm current details before presenting.

The right riders can turn a basic disability policy into a more comprehensive plan for little additional premium.

The medical cost gap most clients overlook

Clients often budget to meet their annual health insurance deductible, but a serious illness or injury can bring copays, coinsurance, travel, equipment and other costs that health coverage does not pay. At the same time, a disability can cut off the income used to pay them. Our article on income protection covers the core need.

Three types of riders to know

One carrier’s income protection policy offers riders like these. Details differ between carriers and states.

Activities of daily living (ADL) or catastrophic benefit rider. Pays an additional monthly benefit on top of the base benefit if the insured cannot perform two or more activities of daily living without stand-by assistance, or is cognitively impaired.
Supplemental health or critical illness rider. Pays a lump sum, in one design equal to six times the monthly benefit, upon a covered stroke, cancer diagnosis or coronary bypass surgery.
Accident medical expense rider. Reimburses accident-related medical expenses up to a per-accident maximum, such as $5,000, with a lifetime maximum of up to ten times that amount. It can pay even when the injury does not result in a disability claim.

How to present the riders

Start with the core recommendation: the right policy type and monthly benefit for the client’s income.
Before the meeting, share educational material explaining how medical expense protection works alongside income protection.
Show the added cost of each rider next to the benefit it provides so the client can decide what is worth including.
Be clear about limitations, including exclusions and states where riders are not approved.

Where these riders fit

These riders are most compelling for clients with high-deductible health plans, limited emergency savings or physically demanding work. For clients whose employer coverage leaves gaps, see our article on the group disability insurance gap. Contact our disability team for current rider availability, state approvals and sample illustrations.

Frequently asked questions

Do DI medical expense riders replace health insurance?

No. They supplement health coverage by helping with out-of-pocket costs and adding cash benefits in certain situations. Clients still need primary medical coverage.

Does the accident medical expense rider require a disability claim?

In the design described here, no. It can reimburse accident-related medical costs even when the injury does not qualify as a disability. Confirm terms with the specific carrier.

Are these riders available in every state?

No. Availability varies by carrier and state, and features change over time. Our team can confirm what is currently approved for your client.

50+ Years in Business60+ Top-Rated Carriers★★★★★ Rated by Advisors

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Connect on LinkedIn →

Annuity Maximization: Repositioning Deferred Annuities to Fund Life Insurance

The problem with leaving a deferred annuity to heirs

How annuity maximization works

Who is a good candidate

Points to review before recommending it

Frequently asked questions

Tim Fuller

We’re Here to Help

The same risk, a different situation

The challenges they face

Starting the conversation

Frequently asked questions

Tim Fuller

We’re Here to Help

Tim Fuller

We’re Here to Help

Tim Fuller

Tim Fuller

Tim Fuller

Tim Fuller