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Making gifts to institutions, like universities, hospitals, faith-based organizations, or non-profits, is a great way to utilize accumulated wealth and enhance your client’s legacy.

Giving directly can significantly reduce the amount of assets ultimately passed to family members and other loved ones.

Discount the cost of the gift through a Life Insurance policy

If your client donates directly to an institution, it would reduce their net worth by the amount gifted. Instead, consider donating the premium amount needed to fund a Life Insurance Policy to the institution.  The institution then uses the donations to purchase the Life Policy on your client.

This would reduce your client’s current net worth by just the premium amount and may qualify them for a current income tax deduction.  This strategy is a smart way to leverage assets for charitable giving.

It’s important to consider that the charitable organization must be willing to use the donated premium to purchase, own, and be the beneficiary of the Life Insurance Policy.

Federal Income tax deductions apply only to gifts to a charity or charitable organization, require itemizing, and may be subject to limits and phase outs.  The design of the Life Insurance plan should be considered on a short pay basis and each premium must be paid in full because any variation in donation amount will affect the death benefit and could potentially cause the policy to lapse.

Clients that have a high net worth and have a personal need to aid a charity hope to take advantage of the tax benefits of such a donation, so they must consider the various options.  Help them understand the benefits of a charitable gift using Life Insurance today.

Please contact your Life Sales Marketing Manager for more information on this sales idea or any other Life Sales information.

If everybody knows referrals are a good way to find prospective clients, why does asking for them seem so hard?

Many producers think a request for referrals will come across as imposing or rude.  But think of it this way: asking clients for names of people who are just like them actually can be considered a compliment.

When you ask for referrals, you’re acknowledging your clients made a smart decision and you’re simply asking them to share the results of that decision with others.

For example, in your search for prospective Long-Term Care clients, you might say:

I’m interested in meeting people much like yourself – people who are concerned about (protecting their retirement assets, avoiding becoming a burden to their children, remaining in their homes, etc.).  I would really like the opportunity to talk with some of your friends and relatives – to share with them some of the same information we’ve gone over today.  Who do you think we could help?

Asking people you already know to provide you with the names of people they know, will allow you to spend less time locating qualified prospects and more time selling to them.

Here are the 5 Reasons Referrals Are Your Best Sales Opportunities

You approach prospects on a favorable basis.  Having a friend or acquaintance in common greatly increases your odds of setting an appointment.
It gives you credibility.  Your client obviously felt the service you provided was valuable enough to share with others.  And that helps to establish your value.
It can boost your confidence.  Making calls to referred prospects is a whole lot easier than making cold calls because you’re approaching people on familiar, comfortable and favorable terms.
You can devote more time to selling.  For every one appointment you get through hours of cold calling, you should be able to get at least three referred leads from a single sales interview.
You get more well-qualified prospects because they can be qualified in advance.  Asking for as much information as possible from the person providing the name allows you to be well prepared when you call a referral.

For more information or prospecting tips, contact your LTC Specialist today.

Injuries and illness happen, and even when your clients have medical insurance, out-of-pocket medical bills can pile up, putting a strain on their financial security.

Clients may budget to meet their annual deductible in their medical insurance plan, but many are not prepared to handle the additional medical bills that can go beyond their deductible.

3 Solutions to Get Your Clients Medical Bills Covered:

Clients considering an Income Protection policy now have the option to add additional protection in the form of a Long-Term Care, Critical Illness and/or Accident Medical Expense Benefit Rider which can provide additional protection to cover medical expenses for minimal or no cost at all.

The Activities of Daily Living (ADL) Rider or Catastrophic Benefit Rider pays an additional monthly benefit in addition to the scheduled monthly benefit if your client is unable to perform 2 or more Activities of Daily Living (ADLs) without stand-by assistance or if cognitively impaired.
The Supplemental Health Benefit Rider is similar in many ways to a traditional Critical Illness policy.  This rider will pay a lump sum benefit equal to 6 times the monthly benefit if the insured has a stroke, diagnosed with cancer, or has coronary bypass graft surgery.
Accident Medical Expense (AME) Rider reimburses your client up to the maximum benefit ($5000) in medical-related expenses incurred by accidents only.  This rider pays even if there is no diagnosis of disability due to the injury.  The rider has a total lifetime benefit up to 10 times the max benefit for a potential benefit of $50,000

4 Ways to Present to Your Clients:

We offer customizable flyers, pre-approach letters, and client approved handouts – available to you, to provide your clients or prospects to generate interest.
Prior to your appointments, consider sending your clients some educational pieces related to Income Protection and how the Additional Medical Expense protection works.
At your appointment, first determine the Disability Insurance (DI) policy type and monthly benefit needed to meet your clients’ needs.  When appropriate point out the features and the affordability of the added protection can be and the benefits it can provide.
The riders are very affordable and can turn a basic disability policy into a comprehensive plan for little or no additional premium.  Some riders will automatically pay a Lump sum benefit and others will reimburse your client for medical expenses.  There are some limitations and the riders are not approved in all states.

Please contact us for more specifics on how these benefits can enhance a product offering.

Gifting is an important tool in designing many types of Advanced Markets cases.  Gifts can create opportunities but may also generate complications for producers and clients.

Questions you may be asking are, “How will knowing more about the gift rules help me in my career?” or “How will gifting help my client achieve their goals?”

Because your clients have the opportunity to realize significant financial and emotional value in making gifts, you will want to be knowledgeable about gifting.  The financial and emotional value clients experience through gifting can be enhanced with Life Insurance.

Generally, it’s not difficult to convince clients that they need insurance, but it’s hard to find the money to pay the premium.

Gifting may be the answer for getting the necessary premium dollars.

With Life Insurance, gifts serve a similar purpose.  A client may gift cash to an adult child so that child may purchase a policy on the parent/giver.  When the giver dies, the child receives a tax free death benefit that can pay for services or items that the giver may have previously supplied.

Consider This

For example, a father has three children, but only two of whom have interest in owning real estate that has been in the family for generations.

To equalize his estate, the father gives cash to the non-business heir, Jill, so she can buy a Life Insurance policy on him.  At the father’s death, the real estate can move to his two children that are interested in owning it, Jill receives cash from the policy’s death benefit while keeping the death benefit out of the father’s taxable estate.

Regardless of whether the gift is given for financial or emotional reasons, gifting can be a big part of a strategy to get clients closer to their desired goals.

For more information about gifting call your Life Sales & Marketing Representative.

With medical advancements, people are able to survive critical illnesses which may in the past have resulted in a death.  While your clients can rest easy knowing they have a higher chance of survival if they receive an unsettling diagnosis – they also have to afford living with the condition, which can create a severe financial strain if they are not properly covered.

For clients who are looking to protect themselves from the financial burden medical expenses would bring, there is Critical Illness Insurance.

Critical Illness Insurance offers a tax-free lump sum payment on first diagnosis of any one of a list of serious illnesses – including cancer, heart attacks, or stroke.

With comprehensive benefit plans and affordable costs – you could find coverage to fit any client’s budget, with benefits up to $500,000.  For a total of $57 a month, a female, age 45 could receive a $50,000 lifetime benefit with the option to choose 10-15-20- or even 30-year coverage periods.

With Critical Illness Insurance, your clients’ premium dollars are, in essence, being put into a safety deposit box, which can be collected in one of three ways:

The policy will pay the face value in the event your client is diagnosed with one of the 12 covered illnesses, including cognitive impairment or Alzheimer’s Disease
The policy will pay the face value to your beneficiary in the event your client passes from one of the covered illnesses
100% of all premiums paid towards the plan will be returned to the beneficiary as a tax-free death benefit if your client passes for any other reason

While most critical illness policies have a reduction of benefit at age 65 – we have contracts that extend the full benefits out to age 70. In addition, any benefits after age 70 would still pay a full benefit for cognitive impairment or Alzheimer’s Disease.

Traditional health insurance plans, while the most common form of protection, will only cover hospital and pharmaceutical expenses.  However, additional costs, such as insurance deductibles, childcare, insurance premiums, and short-term home health care would be billed directly to your client – who should be recovering, not stressing about how they will pay the bills.

Critical Illness Insurance is one of the best kept secrets in the industry and provides advisors a great opportunity right now to meet more clients, help more families and increase sales.

Look to your clients with a family history of Cancer, Heart Disease, or Hypertension.  They are very likely to be interested in purchasing protection.

The likelihood of surviving a critical illness grows every year, as does the threat of being diagnosed with one.  Contact your Disability Insurance Specialist for detailed information about a plan that meets each of your clients’ needs and budget.

Nothing saps the thrill of owning a sassy new automobile more than the increased premiums on the car insurance that are about half the amount of the monthly payment on your Little Deuce Coupe.

And those nifty printer/scanner/copier/faxing machines that they are practically giving away at Paper-clips ‘R’ Us don’t seem so nifty when you replace the ink cartridge(s) for the first time at a cost about equal to the original purchase price.

The phenomenon of deferred-sticker-shock can put the bite on what might otherwise be a nice insurance sale to fund a buy-sell agreement.

As an example:

Three young, non-smoking, healthy entrepreneurs, let’s call them Sharon, Caroline and Andrea, operate a promising LLC taxed as an S-Corp.  They agree to buy out the estate of any that might prematurely pass for $1,000,000.  They take out a policy on each for that amount to fund the buy-out.  On each policy the two non-insureds jointly own the policy on the insured, e.g. Sharon and Caroline own the policy on Andrea.

So Andrea dies and the $1,000,000 from her policy is used to buy her interest from her estate.  That’s all good as far as it goes.  But what happens to Andrea’s interest in the two remaining policies?  Well, because they were owned jointly, Sharon is now the sole owner of the policy on Caroline and vice versa.  The problem is that the shift in ownership caused by Andrea’s death is probably a transfer-for-value.  Up to one-half the death benefit could be subject to income tax if paid.

The most common exception to the TFV rule is an ownership change between partners.  The problem here is that the ladies’ company is taxed as an S-Corp and there may be reasons they don’t want to change to partnership taxation.  And the cost of creating a partnership simply to handle the insurance may be several times the annual premium on the insurance, all to avoid a tax hit that will only occur if a second death occurs while they are still operating the business.

Perhaps the best you can do is to suggest they discuss with their tax advisor the feasibility of an ownership reset if a first death occurs.  This would involve 1) transferring the remaining policies back to the insured (another TFV exception that also cleanses the policy of the taint of the TFV), 2) the creation of a partnership between the survivors (at least the cost is incurred only when needed), and 3) exchanging the policies to establish cross-ownership without any TFV issues.

The suggestion should be reduced to a writing that they can take to their tax advisor and that you can also keep in your file to document that you raised the issue.  We can help with that and also explain the problem to the client and their advisor.  Give us a call regarding this and any planning questions that come up, especially in your clients’ buy-sell planning.

Long ago in the pre-Tesla days of electric car design, a cartoon in the Saturday Evening Post (whatever that is) showed a salesman breaking down the cost of an electrical car to a prospective buyer:  “. . . and that will be $1500 for the automobile, and $35,000 for the extension cord.”

Are you working with wealthy clients that are at or near retirement age?  If so, some of these clients may be collecting Social Security income benefits that they don’t need.

Life Insurance can be used as a powerful tool to leverage Social Security payments for future generations.

Here is a case study that shows exactly how this concept works using Life Insurance:

A male age 69 and his 65 year old spouse were taking a total of $24,000 annually from Social Security that they didn’t need for income purposes.  Based on their current tax bracket they were netting approximately $14,000 per year.
After meeting with their insurance broker they decided to gift $14,000 per year into an Irrevocable Life Insurance Trust to fund a Survivorship Universal Life Insurance policy.
This allowed them to purchase a 973K Life Insurance policy that would pay out to the trust, helping them create a lasting legacy for their children and grandchildren for years to come.

For this couple the decision was rather simple.  Do nothing with the unneeded Social Security income or leverage that benefit to fund a legacy trust for the benefit of their heirs for years to come.

For more information about how your clients can use Life Insurance to maximize unneeded Social Security benefits call your Life Sales & Marketing Associate.

November is Long-Term Care Awareness Month – a time to raise awareness about the importance of LTC Insurance, and how it impacts the financial future of millions of Americans.

According to the LIFE Foundation, about 70% of people over the age of 65 will require some sort of Long-Term Care during their lifetime.

Many assume that LTC is paid for by their Health Insurance Plan or Medicare, when this is often not the case.

Currently, LTC services in a hospital, nursing facility or at home can cost upwards of $75,000 a year. A lifetime of retirement savings could easily be depleted in only a few short years. Additionally, the emotional and physical strain placed on family members caring for a loved one can be overwhelming.

LTC Insurance protects retirement assets, as it covers the cost of treatment if one develops a chronic illness or becomes disabled and is unable to care for himself/herself for an extended period of time; it also provides families with the peace of mind knowing their loved one is being cared for in a comfortable setting.

Long-Term Care Awareness Month is a great reminder to families to discuss proper planning and the possibility of needing extended care. Families should plan for their future and decide what type of care is necessary in order to maintain the standard of living they are accustomed to.

LTC Insurance should be purchased while young and healthy to ensure a lower premium. Once you obtain coverage, your premium cost is set and cannot be increased unless it impacts an entire class of policy holders. The cost of premium is usually far less than the out-of-pocket expenses one would pay for Long-Term Care services.

For more information about Long-Term Care contact your LTC Specialist today.

Improve your Disability Income (DI) sales with any or all of the numerous marketing assets we have available for your immediate use.

We are here to help you design and add customized marketing materials to your catalog of DI sales tools.

Some of the marketing tools we offer include:

E-mails – Several Disability-focused topics are available to help generate interest with your clients. It’s a perfect opportunity to market a topic and attach a customized proposal.
Customizable Marketing Materials – We’re delivering on your requests for customizable materials to use in your local market. Using Adobe Reader, you can customize designated sections of several DI marketing materials.
Byline Articles – These are an excellent way to increase your credibility and position yourself as an industry specialist. They’re ideal for submitting to local publications and for use in newsletters.
Approach Letters – Use these for targeted mailings to prospects. Marketing material inserts are available to supplement the mailing.
Testimonials – One of the more popular approaches to selling Disability Insurance is to provide a “real life” story. Several testimonials showcasing the importance of income protection are available.
Client Seminars – Ideal for the worksite or for your own seminar, these presentations cover topics such as the Disability Triple Threat, The Need For Disability Insurance and much more.
From Here to Security – This is a comprehensive educational program to help share the importance of income protection. Many different types of materials are available, including a consumer education booklet and an interactive needs-based calculator.

For access and more information about these Disability Income Insurance marketing tools, contact your Disability Income Marketing Representative today!

This article speaks to a ready market.  Why?  Because statistics suggest that 80% of all small and mid-sized businesses in the country have made no adequate plans for transition in the event of one owner’s retirement, long-term disability, or premature death.  And “adequate” includes being properly reduced to writing.  All the understandings and oral agreements in the world are not worth the paper they should have been written on.  Tell every transition-planning resistant client that they go to bed every night not knowing who will be their business partner when they wake up!

In addition, and perhaps most critically, there are no arrangements regarding the rights of a co-owner if another owner decides to sell out to a third party.  Again, ask every transition-planning resistant client you have how they would like to get out of bed only to find they are in bed with their competitor.

But the focus here is only about one planning concern when purchasing life insurance to fund the agreed-upon buyout of a deceased owner: avoiding an unmanageable multiplicity of policies.

It usually makes sense to structure the buy-out outside the company through a “cross-purchase” agreement among the owners

This assures that the full purchase price will be reflected in the increase in basis of the surviving owners.

In a cross-purchase each owner must own a piece of the insurance on all the other owners to buy a proportionate share should any other die first.  If there are only two owners it’s a cake-walk.  Each has a policy on the other. But things get exponentially burdensome as the number of parties increase.  Three owners would require 6 polices, 4 owners need 12, and on it goes.

If the business is a partnership or an LLC taxed as a partnership there is an easier way

Simply purchase one policy on every owner and have each held by the non-insured owners jointly-with-right-of-survivorship.  On the death of one of the joint policy owners the rights to the death benefit are automatically reapportioned among the survivors.  And since they are “partners” the reallocation of interests in the policy does not raise transfer-for-value issues.

But all must understand that anytime personally owned policies are used to fund a buy-sell agreement things only go smoothly when everyone fulfills their obligations – i.e. the estate sells the interest of the deceased owner and the survivors use the death proceeds to make the purchase from the estate, all under the terms of the agreement.

If the parties to a buy-sell are uncomfortable with personal ownership or the business structure doesn’t lend itself to protection from possible transfers-for-value (C-Corp, S-Corp, or an LLC taxed as a C-Corp or an S-Corp) then the policies are commonly held in an LLC or a partnership created for that purpose.

Contact me with any questions that arise in your casework involving business transition planning, and ask for our simple 4-page summary of business planning issues including the considerations that should be addressed in a well-constructed buy-sell agreement – either call at 706-354-0401 or email at tom@cpsadvancedmarkets.com.