Blog

Most people envision themselves living a long life, investing and planning throughout their working years to create a financially secure future where they can enjoy spending time doing their favorite things.

As part of your client’s financial planning process, it’s important to understand the potential impact that needing long-term care may have on their assets, their family, and their future.

The reality is, as people start to live longer, the greater the likelihood is that your clients will require long-term care.

The costs associated with long-term care are significant

While it can take decades to accumulate the assets they’ll need to retire comfortably, just a few years of paying for long-term care may threaten a lifetime of savings.

If you’ve ever been in a care-giving situation, you understand the physical and emotional toll it can take.  While providing care to loved ones is an act of compassion, placing these burdens on spouses, children and other family members can create a significant emotional and physical strain, and is something that many people would like to avoid.

Don’t wait to address your client’s long-term care needs

Incorporating Long-Term Care Insurance into financial plans today can help protect assets, reduce the burden of care that would otherwise fall on family members, and enable clients to receive care in the setting they most prefer, including their home.

Perhaps the greatest benefit: Long-Term Care Insurance allows loved ones to care about, rather than care for, each other.

We’re here to help you design a plan that is both affordable and the best solution for your clients’ needs – contact your LTCi Sales Rep for guidance.

The need for an income protection plan is not limited to the Executive, Doctor or Attorney earning in excess of $150,000.  According to the U.S. Census Bureau the average annual income in the United States was $51,017 from all occupations.  Average everyday working people (Middle America) are just as dependent on their income to provide for themselves and their families as anyone in the higher tax brackets.

The opportunities are endless – reach out to your clients, friends, families, fellow club members and co-workers.  Ask if they have an income protection plan in place should they get sick or hurt.  Offer them an affordable plan to protect them and their family.

Of the advisors I speak with every day, Life Insurance Agents, Health Insurance Agents, and P&C Brokers – 92% are not talking to their clients about income protection and how affordable it can be.

You can differentiate yourself as an advisor just by offering valuable coverage to your clients that likely no one has ever spoken with them about.

Did you know?

The premium for a 45-year-old Office Clerk for $2,500 monthly benefit is only $45.96 per month?  There are affordable plans even for part time Dental Hygienists and Registered Nurses working as little as 24 hours per week.

Talk about opportunities, there are over 192,800 Dental Hygienists in the US earning an average annual income of $70,000 http://www.bls.gov/ooh/healthcare/dental-hygienists.htm) and 2.7 million Registered Nurses earning approx the same income. http://www.bls.gov/oes/2011/may/oes291111.htm

Never let premium be the reason your client’s income is left unprotected from an injury or sickness.  The new affordable DI plans can fit most any budget.  The premium for a 35-year-old Dental Hygienist for $2,500 monthly benefit is only $45.08 per month.

You are at the frontline to educate your clientele about the vital need for income protection in the event of an injury or sickness.  Your clients want to buy Income Protection, but they need someone they know and trust to ask them about it.

Discuss income protection insurance with all your prospects and clients, because they may not understand the risk of losing their income should an injury or an illness strike.

For marketing tools and sales ideas, contact your Disability Income Sales Expert today.

Come gather ’round people/ Wherever you roam/
And admit that the waters/ Around you have grown . . .
For the times they are a-changin’

For those long-enough-in-the-tooth to remember, it is hard to believe that Bob Dylan wrote and released these iconic lyrics more than half-a-century ago.  Beyond his concern for the social issues of that time, we recognize the underlying realty of constant change and the need for adjustment.  And the Federal Tax Code is a prime example.

The possible changes in the tax-law bantered about in Washington may not be as broad in their reach as Dylan’s rising tide, but your ability to discuss the basics as well as the possibilities with any and all clients will solidify relationships and open the door to profitable sales.

For Example

The most talked about possibility is a dramatic reduction of the federal transfer tax lifetime exemption.  In 2020 only 1/10 of 1% of decedents had to worry about federal estate taxes.  But those deaths occurred when the lifetime exemption was a stratospheric (Is that even a word? Spell-check took it!) $11,580,000!  But many of the deceased taxpayers left a surviving spouse where proper planning pushed any potential taxation to the second death.  Also, many were the surviving spouse who had available their prior spouse’s unused lifetime exemption in addition to their own.

There are three reasons an insurance advisor must be familiar with federal estate and gift taxation when changes, even if only in the form of a lower exemption:

1. As the exemption is lowered the number of clients vulnerable to taxes at death increases geometrically as the boundaries for a taxable estate descend into lower and more populated levels of taxpayer net worth.
2. There is an increased possibility that a sizeable policy you are recommending may, itself, put the taxpayer in a potentially taxable situation at death (e.g. consider the 35-year-old who buys a $3,000,000 term policy to protect his/her family from the loss of a $100,000 income for the remaining 30-working-years till retirement).
3. And even in the majority of cases where a taxpayer remains unaffected, an advisor needs to clearly and adequately reassure the client of his or her current non-taxable status.

The good news is that there are only about six tax concepts to discuss that will sufficiently educate clients and alert those vulnerable to the need to take steps before a law change occurs.  And each can be explained in terms so uncomplicated that even an attorney can understand!

These will be discussed in full over the next few articles.  So look for the first in the next, Income and Transfer Taxes: How the Feds Get Your Money When It’s Coming and Going! Again, to quote Nobel Laureate Dylan:

As the present now
Will later be past
The order is rapidly fadin’

A phrase from the famous philosopher named Heraclitus of Ephesus around the year 500 BC. “Nothing in life is permanent, nor can it be, because the very nature of existence is change.”

It’s with this phrase in-mind that we discuss the possible tax changes that may lie ahead; eliminating the step-up in basis, increasing capital gains, and/or reducing of the estate tax exclusion.

Under current law, assets that pass directly to heirs benefit from a step-up in basis.  This means the heir receives the asset valued as of the date of death.  If the heir sells this holding right away, they pay little to no capital gains taxes.

Biden’s proposal would tax an asset’s unrealized appreciation at transfer, referred to as eliminating the step-up in basis.

In addition, the proposal is also set to increase the capital gains tax rate from 23.8 percent to 39.6 percent for high income earners.  When including the net investment income tax, the top federal rate on capital gains would be 43.4 percent.  What would have previously been a tax-free transfer at death is now not only proposed to be taxable, but at a higher rate!

There’s More

Combine that with a reduced estate tax exclusion and it could be a triple-whammy. Currently this exemption is $11.7 million per individual and $23.4 million per couple.  Biden’s proposal is to drop that limit to $3.5 million per individual, in which an amount of the estate above the limit would be taxed at a 40% rate.  To put that in perspective, an estate of $5 million (currently under the $11.7 million limit) would be taxable for amounts over $3.5 million at a 40% rate.

Each one of the proposals, on their own merits, has curious implications.  But the picture looks dramatically different if all three were to happen.

Going forward, the biggest opportunity to avoid tax is the exception within life insurance, as the proceeds are not includible in the recipient’s gross income.  People will need to start rethinking the way they manage their investments, and their estate plans and life insurance will take center stage for those who want a tax-friendly way to pass on wealth.  When structured appropriately it will provide liquidity needed to pay for any taxes at death.

Please call one of our life insurance experts to discuss in greater detail, we are here to help!

Many executives and professionals undergo executive physicals each year.  These types of exams include a comprehensive health review, complete lab panels and cardiovascular testing.  These may be conducted at the individual’s personal physician’s office or through a formal program at major health care facilities, such as Mayo Clinic or Cleveland Clinic.

If your professional client has completed a comprehensive executive physical within the past 18 months, they may be eligible for permanent coverage through a streamlined underwriting process, without the need for an insurance paramedical exam and labs.

• Ages 25-65
• Up to $20 million of coverage
• Indexed UL and Variable UL plans, including Survivorship (spouse must also have had an eligible physical in the past 18 months)
• Preferred and Standard classes
• Executive, Professional, White Collar occupations;  Minimum annual income $200k
• Medical records are required and must include the Executive Physical Exam meeting a minimum criteria of physical measurements with vitals (height, weight, blood pressure reading, pulse), medical history review, full panel blood and urine tests, and cardiovascular testing

Contact our Underwriting Team for assistance or more information.

Originally, the primary reason LTC Insurance was created was because it would help cover the high costs of a nursing home.  But over the years, the policies have changed dramatically.

Now LTC Insurance is a comprehensive product that helps cover the cost of a variety services.

Consider the real-life Long Term Care example of Joe

He had helped care for both his parents for many years.  So, he decided to purchase LTCi to help protect his family from the same responsibilities that he had with his parents.

Later in life, Joe developed an advanced stage of diabetes and several health problems occurred, including blindness and the amputation of his leg.  His LTCi policy helped him stay at home by paying for renovations to his home, including ramps and grab bars.

The care coordinator helped walk Joe and his wife through the types of care he needed and provided a referral list of care providers in the area.  His wife was able to receive caregiver training and a home health care nurse visits during the day while his wife is at work.  LTC Insurance helped Joe stay in his home and have the care he needs.

There are many reasons to obtain Long-Term Care coverage, that can benefit both your client and their family.

To learn more, contact your Long-Term Care Specialist today.

The millennial generation (also known as Generation Y) is defined as people ages 18-35.  Today they represent over 25% of the US population.

Many of them entered the workforce during a time of economic uncertainty and are more risk averse and mindful of their money than previous generations.  They face student loan debt as they start their professional careers post-college.

The young professional market is largely untapped.  With their future earning potential and conservative approach to finances, they make good candidates for income protection and other financial products.

Below you will find unique sales and marketing tips to help you generate significant sales and grow your practice in 2020:

• Emphasize the portability and convenience of having personal income protection coverage.  It’s estimated that millennials will change jobs every three years.  Explain how they are in control to make decisions about their coverage.  Plus, individual disability coverage goes with them – no matter their location or occupation.
• Ask your existing client base about their children and their financial needs.
• Make sure you become part of their financial conversation by asking pertinent questions.  Millennials rely on recommendations and their parents are great sources for information.
• Use social media and videos to communicate the need for income protection.  It’s important to build a presence on websites that millennials frequent.
• Seek out volunteer opportunities in your community.  Young professionals are looking for ways to connect with their local community and businesses.  Volunteering is a great way to connect and make a difference.
• Focus on the affordability of income protection.  In many cases, the cost for a 28-year-old can be less than $40 a month.  Yet it protects people’s greatest asset – their income.  Explain that monthly premiums are often less than they spend on other expenses, such as a cell phone or gym membership.

Here’s where to find young professionals:

• Large employers that boast flexible work schedules and local community involvement.
• Young professional groups.  TIP: Start with a YNPN (Young Nonprofit Professionals NetworkTM) local chapter.  Find a listing of local chapters at www.ynpn.org
• Local chamber of commerce events.  TIP: Many chambers now have Young Professional sub-committees.
• Graduate programs for Select Professionals, such as engineers, architects, pharmacists and attorneys, etc.  Find schools near you at www.50states.com.

Get started working with young professionals today.  There is a large percentage of millennials that want to purchase income protection but do not know where to buy it.  They want to turn to someone they know and can trust to ask questions and to help make a meaningful decision.  They will not go to the internet to purchase their Disability Income Protection.

Ask your dedicated Disability Income Sales Manager about our brochures and marketing pieces you can use to help attract millennial clients.

People of Planning –

Trusts were used long before Wills!  They are still so important today that every insurance advisor should be skilled in a few definitions.

Trust – A creator (or maker or grantor) puts legal title of his/her property in the name of a person (trustee) to hold and manage for the benefit of others (beneficiaries) in accordance with the terms and instructions of the trust document.

An inter-vivos trust is made by the creator during life and a testamentary trust is one established by the creator’s will after death.

Revocable trust – Established by the creator during life. It can be changed or revoked at any time. Property can be added or withdrawn anytime at will.  It provides no tax advantages, nor protects the property from creditors of the creator.  It can keep the property out of Probate Court at death.

Irrevocable trust – Removes property from the control of the creator.  It also keeps it out of the creator’s taxable estate and protects it from the creator’s creditors.

ILIT (irrevocable life insurance trust) – An irrevocable trust set up primarily (or only) to hold a life insurance policy.  But it can usually hold other assets.

Grantor or defective (IDGT) trust – An irrevocable trust where income taxes on the trust flow back to the creator, but the assets remain outside the creator’s taxable estate. Most irrevocable trusts are grantor/defective trusts.

SLAT (spousal lifetime access trust) – An irrevocable trust with a life interest in the creator’s spouse stacked on top of the remainder interest to the other beneficiaries (usually the kids).  This allows the spouse generous access to the assets during her life, but anything left over is not includible in the spouse’s taxable estate.

Dynasty (generation-skipping) trust – All beneficiaries have only a lifetime interest in the trust.  At death their interest is life to their heirs for life and on down the line.  Because all generation’s interests end at death nothing is ever included in anyone’s taxable estate.

You are leaving this email a better person!  Contact me at 706-354-0401 or tom@cpsadvancedmarkets.com with any questions.

Recently the White House announced President Joe Biden’s “American Families Plan.”  Within this proposed bill is a substantial increase to the top federal tax rate on long-term capital gains and qualified dividends.

In the proposal, the rate would increase from 23.8 percent to 39.6 percent for high income earners.  When including the net investment income tax, the top federal rate on capital gains would be 43.4 percent.

Wealthy people are more likely to be investors than poor people and many believe that the current capital gains tax rates are tax breaks for the wealthy.

In today’s political economy, many are calling for the wealthy to pick-up a larger share of the tax burden and this may be a way to level the playing field.

These changes, if enacted, will make it more difficult to retire comfortably.  The challenge, as always, is planning during a time of uncertainty.

Nevertheless, we can be certain of two things:

• The national debt is climbing.
• The government will be looking for ways to increase revenue.

In other words, Biden’s proposed tax increase will likely make tax-deferred accumulation tools more attractive to the high-income earners.

Most advisors traditionally look towards IRAs or deferred annuities; however, cash value life insurance may be a more powerful solution thanks to the tax benefits of life insurance and the recent MEC limit increase allowing the insured to put more money into a policy.

Ultimately, this is life insurance and if an unexpected death were to happen during the accumulation phase the death benefit would be treated as a self-completing retirement plan for the family.  Cash value life insurance is looking more and more attractive!

Please call one of our life insurance experts to discuss in greater detail, we are here to help!

The idea of getting your client examined for life insurance can be a challenge.

Asking for a second exam after one was done in the not so distant past can jeopardize a sale.  Worry no more.

Consider the Following:

A 70 year-old female applied for $10 million of life insurance coverage with another company, was approved, and the policy placed in-force over six months ago.  She now desires additional coverage for the same amount, but does not want to go through another exam.  Her previous exam, lab and resting EKG were completed over nine months ago.

Many of our A-rated carriers will accept the older requirements for up to 12 months, so your client does not have to be inconvenienced by scheduling new testing as long as a non-med part 2 is completed along with the application.

Another of our carriers has some other special guidelines they follow:  They can use another company’s inspection report for up to a year; and for those clients ages 70 and older, they can accept cognitive testing previously done for up to one year in addition to resting EKGs and inspection reports – although they will need a new exam and labs after a 6 month time-frame.

Take advantage of these guidelines when you can, give us a call to discuss the details of your cases – the Underwriting Department is here to help.