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The circumstances surrounding the case weren’t unusual.  A single grandparent wanted to purchase coverage on his five year-old grandchild.  He loved his son and daughter-in-law, the parents of the proposed insured, but felt they might be tempted to access the cash values during tough times if they were given control of the policy.

The agent involved suggested creating a trust for the contract, but the country-time lawyer involved didn’t like living trusts (because, he said, “Nobody ever takes care of them!”) so he drafted a new will for the grandfather with a testamentary trust that could accept the policy on his death and directed that the grandfather be made the policy owner.

Two immediate potential problems should have been considered by the trust-resistant attorney:

First, if the insured child died first then the proceeds would become part of the grandfather’s estate.  Second, if the grandfather died first the policy would be subject to the unnecessary rigors of the probate court before settling into the trust created by the will – perhaps then only to be managed as poorly as all those living trusts the lawyer had experienced.

There’s an old proverb somewhere that says if something can even be worse than anticipated, it probably will.

In this case the policy language had a little surprise for all involved that rendered what would play out even more undesirable and more unmanageable than any imagined!

The grandfather did die first.  His will was submitted to probate and the agent and the executor took steps to have ownership of the policy transferred to the newly activated testamentary trust under the will.

The carrier title department responded [underscoring added]:

We understand that [policy owner] may have provided for these policies in his will, however, the ownership of the policies as stated on the application automatically reverts to the individual insured [the still living minor grandchild].  We must adhere to what the contract states and not what was indicated in his will.  In the alternative, if they want the ownership to change to the parent [of the insured minor] as indicated in the email below, we would need documentation from the court proving who is the legal guardian of the minor’s property which is different than being the legal guardian.  This is something they would have to go to court for and once they obtain the court order, the legal guardian of the property can change the ownership of the policy.  Otherwise, we cannot allow any transactions on the policy until the child is at least 15 years old.

A response like that will tend to take the ginger out of one’s step!  Not only is control of the policy for the next ten years attainable only through a laborious court process, but even then the result would probably be exactly what the grandfather was attempting to avoid – ownership of the policy by the parents of the insured child.

Policy provisions that appoint an insured as a default owner are more common than most agents would think.  The issue doesn’t arise often because the policy owner is commonly 1) the same as the insured, or 2) a party who cannot die, e.g. a trust, or 3) a person younger than the insured who usually doesn’t die first.  But it occurs enough that at least one major carrier has an appointed person who does little more than handle the “Dead Owner” cases.

We rightfully agonize much over the choice of contingent beneficiaries.  The same attention should be given to the need for and choice of contingent owners when needed.  Call with any questions regarding this issue on potential or existing cases.

Term Insurance is often sold to clients who simply want the lowest cost death benefit protection for a specified period of time.  Clients and producers alike will preach the concept of buying Term and investing the savings.

While we’d like to think that clients and the investors hold themselves accountable for this strategy and do invest their cost savings, we know it is more likely that the clients pay for the Term coverage and then spend their savings elsewhere.  The Term Insurance is then forgotten over time only to be revisited once the level Term period has expired and the client does not want to pay the escalated premium.

One way to help your clients effectively plan for their long-term needs is to discuss the Term Conversion option.

Consider this:

By completing a conversion application, the client can change their coverage from a Term plan to a Permanent policy without any additional underwriting.  This is usually allowed up to a certain age (commonly 65, 70 or 75 depending on the provider).  The cost of these conversions is based on the insured’s attained age at the time of the request so the longer your client waits to exercise their conversion option, the more expensive the premium will be.

This should be a topic that you address with your clients on a regular basis to ensure that you do not let the conversion privilege expire and also that you are converting at the earliest, most appropriate time which can save your clients significant premium costs.  It will also ensure that your clients have the coverage in place when they need it most – when they pass away.  Since the average life expectancy is in the mid-80s, more often than not, the level Term policy will expire before your client expires.

Ask yourself if you have a process in place to address your clients who have purchased Term Insurance.  Even if converting their Term plan isn’t the most appropriate course of action at this time, the review discussion may uncover additional needs for insurance or lead to referrals.

We can help you determine if your client’s Term plan has a conversion option and provide you the marketing support needed to turn these cases into permanent sales.

If you have any clients that may be approaching their conversion deadlines or who may be appropriate prospects for a policy review, call us today and we can help get the process started for you.

How much does an insurance company think that your client is worth?  Many times, it is much more than how much your client actually does, and we have their underwriting guidelines to prove it!

Let’s factor in the details that could multiply your sales.

The most common insurance need among clients is to replace the income survivors would have anticipated had premature death not occurred.  The starting point for calculating the amount of coverage a carrier will issue for purposes of income replacement is determined by a multiple of current annual compensation based on the proposed insured’s age.

The multiple decreases with age, understandably, because death denies a person fewer potential income-producing years as they get older.  Multiples vary from company to company.

Consider one of the more aggressive examples:

The table can help you and your clients to realistically focus on just how big a pool of money the survivors would need to survive over the remaining years should a wage-earner pass away.

Carriers will usually only take earned income into consideration unless it can be shown that the insured’s death might have a direct effect on unearned income.  Many of our carriers can insure non-working spouses, too, for an equal amount as the working spouse.  This could yield two sales instead of one.

Please note that each carrier has their own specific guidelines, so contacting the Life Underwriting Team first to get those details will be key.  We’ll do the math for you.  Multiplying those sales never looked so good!

While the cost of long-term care among all providers has increased, the cost of facility-based care has grown at a much greater rate than home care.

While your clients have more choices than ever before, it is vital to be aware of the associated costs in order to build a better asset protection plan.

Consider This:

We have seen long-term care costs march higher year after year.  If you live to 65, there is a 70% chance you will need some form of long-term care services, so creating a sound financial plan for managing future costs is very important.

The majority of claims are paid out for home care or for an assisted living facility, which typically costs much less than a nursing home.  The national median rate for a home health care aide is $20 per hour, with the annual five year growth being only 1.32%.

Assisted living facilities have the highest annual five year growth rate of 4.29%, with the national median rate at $3,500 per month.  A private room in a nursing home is not far behind with an annual five year growth rate of 4.19%, and the national median rate will set you back $240 per day.

As these costs continue to rise, your clients’ assets are at greater risk.  Considering the average three year claim, in 25 years, figuring on a 3% inflation rate, the average claim will reach $840,000 for a private room in a nursing home.  Are your clients prepared for that expense?

Give your LTC Sales Rep a call today to help you design a plan to protect your clients’ assets – their families will thank you for it.

The Simplified Underwriting Program makes it quick and easy for advisors to get Disability Income cases issued more effectively – fewer underwriting requirements will expedite your case.

No exam, no blood, no specimen, and no tax returns required.*

After the basic application has been submitted, your client simply completes a 15 minute telephone interview and the policy is issued within 48 hours.

As one of the nation’s leading Disability Income Protection marketers, we now make available a total of $25,000 of monthly benefit for your Business Owner clients on a simplified underwriting basis.

The policy is non-cancellable, guaranteed renewable to age 65, and issued with a top-rated domestic insurance carrier.

Clients age 50 and under can now purchase $15,000 of Business Overhead Expense (BOE) coverage and include an additional $10,000 of monthly individual protection for a total of $25,000 of monthly benefit. Issue ages to age 64.

The Opportunity

Reach out to your business owner clients who may have an existing group LTD plan in place, or even those who have no plan at all.  Typically I’ve found, group LTD plans all have a maximum benefit payable (or CAP) that can be below 60% of the business owner’s salary and the benefits are taxable.

This additional simplified coverage can make up the gap left by their group plan – and the BOE coverage will reimburse the business owner for his company’s fixed expenses, while he or she recovers from the illness or injury, and keep the business running.

Please contact your Disability Insurance Sales Specialist for marketing support, or to discuss DI sales strategies that fit your business and can increase your bottom line in 2021.

*tax returns required in CA

What’s the best way to attract and retain key people in the face of a government that does, and continues to do, all it can to proscribe or eliminate the advantages of selective benefits?  The non-discrimination and other limitations on qualified plans often make them ineffective for the purpose.

Deferred compensation (or SERPs) and split dollar plans have become too regulation-laden and require too much administration, record-keeping and reporting to jingle any bells amongst most prospects.

What to do?

Among other things, because of its simplicity and its potential flexibility throughout the life of the benefit plan, the section 162 executive bonus arrangement is deservedly getting new levels of attention.  It’s design might be an almost a one-size-fits-all answer to executive benefit needs, but for one concern:  How do the employers truly “handcuff” an executive if they can’t maintain control over and retrieve employer funds paid into the plan?

In its most basic form, an executive bonus plan involves the employee buying and owning a policy on his or her life.  The employer pays the premium, takes a deduction, and reports it to the executive as income, but if the employee walks the policy then the employer investment goes out the door as well.

The “loss of control” problem can be mitigated, if not eliminated, by appending two simple features to the plan:

First, the agreement can include a repayment obligation on the part of the key person under terms spelled out.  The obligation is often phased out over time, giving the arrangement a vesting-like feel to the deal.  This is similar to the conditions often applied to moving expenses paid on behalf of a re-located executive.  Because the employer doesn’t have an interest in the policy, the plan does not unintentionally wander into split dollar territory.  Furthermore, because there is no delayed income being paid, the deferred compensation regulations do not apply.

Second, a simple restriction on policy owner’s rights to policy access can be filed with the carrier.  For the agreed upon period of time, the key person cannot alter, change or benefit from the policy without the permission of the employer – except for the designated beneficiary.  Again, without giving the employer an ownership interest in the policy, it locks down the policy and allows an employer time to exercise the legally enforceable right to recover premiums, if needed.

If this method satisfies a business prospect’s concern for the security of an investment that’s desired under a benefit plan, then an executive bonus arrangement could be the easy answer to attract and keep select employees.

We provide sales and advisor support, documentation, product design, and we can answer your questions related to the presentation and implementation of executive bonus plans.  Give me a call at 706-354-0401 or email me at tom@cpsadvancedmarkets.com to discuss the full width and breadth of the often overlooked advantages of this concept.  I’ll even send you a free Overlooked Advantages Summary!

Your client’s needs are changing each year and the task of making sure that they are adequately insured rests with you, the producer.

There are a number of events that can trigger a need for additional Life Insurance such as the purchase of a home, the birth of a family member, a marriage or divorce and even a promotion at the office.

When these events occur, most people are not thinking about how much additional Life Insurance they might need.  It’s more likely that they are considering how these events are going to affect their day to day life.  That is why it’s essential that you have a system or method of performing a policy review on each one of your clients.

Consider This

When reviewing policies, you may come across clients who have purchased new insurance in recent years but have found that they would like to increase their coverage.  We have a carrier that allows your clients to add a new policy at the same underwriting class as their recently placed policy.

The amount available in the policy is determined by the number of years since the coverage was placed and the approved underwriting rating on the policy.  We can help you determine if the client’s existing plan would make them eligible to enroll in this program.

The need for additional coverage is only one component of a policy review.  We can also review an existing plan to make sure it is still the most cost effective plan for the client.  Perhaps the client’s existing policy has substantial cash value and the client is only concerned with death benefit protection.

Through policy review, we may be able to 1035 exchange the cash value into a new policy, pay the same premium and provide a higher guaranteed death benefit for your client.  Our Policy Review Kit contains sample approach letters and facts to help you get the process started.

Call us today for a copy of the Policy Review Kit or any other policy review related support.

The thyroid is a butterfly-shaped gland located at the front base of the neck.  It produces hormones that regulate heart rate, blood pressure, body temperature and weight.

Thyroid cancer occurs when abnormal cells grow in the thyroid gland.  The incidence of thyroid cancer seems to be increasing as new technology is allowing doctors to find small thyroid cancers that may not have been found in the past.  The most common type of thyroid cancer is papillary carcinoma and has a good prognosis, particularly in individuals less than 50 years old.

One of our A+ carriers takes an aggressive approach to underwriting thyroid cancer and in some cases, can offer Preferred rates.

Take a look at this case study:

• Female, age 43, non smoker
• Stage I papillary thyroid cancer diagnosed and treated 2 years ago
• Completes regular physician follow ups
• May qualify for PREFERRED Non Tobacco rates

Contact our Underwriting Team on your thyroid cancer cases and lets work together to get the offer you need!

Your clients often think they will not be among the 75% of people who need Long-Term Care sometime in their life.  They put it off thinking they don’t need to purchase protection until it actually happens to them.

Unfortunately, waiting to purchase coverage could mean they pay higher premiums or they could even be denied coverage.

Time vs Cost

The two most important factors that determine the cost of an LTC Insurance policy are the age and health of the applicant.  That’s why it is important for you to remind your clients to start planning early while they are young, healthy and able to take advantage of more favorable rates and discounts.

Show your clients the difference in cost and explain to them that waiting even five years to purchase coverage could mean higher premiums, additional underwriting and a decreased opportunity to qualify for preferred rates.

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

Many Americans are living without ample savings – and a lot are living paycheck to paycheck.  When these families are struck with an unexpected illness such as a heart attack, stroke, or cancer, it can cause a serious financial hardship… even if they have health insurance.

The average annual income in the United States is $50,000 – and most health insurance policies carry at least a $5,000 or $10,000 out of pocket max that will easily be reached when suffering from a critical illness.

On top of that, any one of these illnesses will undoubtedly result in an absence from work for an extended period of time – causing the loss of valuable income at a time when they are experiencing increased expenses.

Consider This

This combination of out-of-pocket healthcare costs, loss of income, and mounting household expenses come together to form ‘The Perfect Storm’, which too often leads to a bankruptcy.

Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year-making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data.

Having health insurance doesn’t buffer consumers against financial hardship.

Most advisors sell life insurance to protect their clients should the bread winner not make it home from work one day.  But how can we protect our clients against financial catastrophe if the heart attack, stroke, or serious illness doesn’t amount in a premature death?

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

Claims statistics suggest we are five times more likely to suffer from one of these issues, than we are to die before we reach age 65.  You don’t want to get a call one day, find out something has happened to a client, and regret having never discussed the opportunity to purchase a Disability Income or Critical Illness Plan with them – have the discussion with each of your clients as soon as possible.

Our dedicated DI Sales Reps are well versed on the features and benefits of Critical Illness Coverage – contact us for assistance today.