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A man in Clearwater, FL, claimed to have grown a grapefruit that looked exactly like an orange – except that it was bigger and yellow.  The attempt at comparison is understandable given other features characteristic of both.

What If Clients:

1) Don’t have access to a qualified retirement plan, or
2) Have maxed out on the qualified plan they have, or
3) Are looking for a non-qualified benefit plan for themselves, key employees or others.

Although qualified plans and universal life policies are fruits of a different color, they still look a lot alike when used to provide funds for retirement.

Compare And Consider:

Call today for a ledger illustrating an over-funded UL product that demonstrates an attractive withdrawal strategy during your client’s retirement years to supplement their retirement income from other sources.

Remember:  The biggest asset your clients may have available for their retirement planning could be their insurability!

Long-Term Care and the cost of care can be overwhelming for most.  In the past, traditional stand-alone LTC policies were the only way to insure long-term care expenses.

These days, there are more ways to obtain this valuable coverage – including LTC riders on Life Insurance policies.

Underwriting long-term care risks can be very different than underwriting for life insurance.  LTCi underwriting takes into account medical impairments that impact ability to perform daily living activities.  Whereas, life underwriting is more concerned about impairments that affect mortality, or life expectancy.

In some cases, your client may be eligible for life insurance at a favorable rate class, but may be rated or declined for long-term care.

This recent case study shows how different underwriting mortality vs. morbidity can be:

• 62 year old female
• Seeking $1 million of UL coverage with a Long-Term Care rider
• Non smoker; normal build
• Hypothyroidism diagnosed in 1980; well controlled on medication
• Was seen once by a chiropractor for back pain with improvement
• Diagnosed with scoliosis
• Final underwriting decision: Super Preferred for life coverage; Standard for the LTC rider due to scoliosis and back pain history

Non-traditional long-term care insurance and chronic illness riders are the perfect solution for those impairments that would be declined for traditional LTC riders.  These alternative riders are automatically available on eligible permanent products with little to no additional underwriting.

Whatever the case may be, there is a product we can pivot to, to cover long-term care needs.  Contact your Underwriting Specialist, we’re here to help you sort through the different options and pre-qualify your client for this much needed coverage.

If you are new to the Long-Term Care market or you only sell a few policies a year, it is time to focus your energy on a product that has a lot of potential.  Here’s why:

People need it

LTC Insurance helps people pay for services they may need due to a prolonged illness, accident or the simple process of aging.  Without coverage, those requiring LTC services could use their entire savings to pay for one year of coverage.

People are buying it

According to the American Association for Long-Term Care Insurance, about eight million Americans own a LTC policy with new policies sold every year.  The younger the insured is, the less they pay for coverage so it is better to be prepared and get LTC coverage sooner rather than later.

Abundance of products available

There is bound to be one that suits your client’s needs.

To learn more about LTC and how to approach potential clients, contact your LTC Specialist today.

Over the past couple years you may have noticed we changed the language around Income Protection slightly.  Reason being, in an industry sense it’s Disability Income Insurance – but in a practical sense, Income Protection is for clients who want affordable, simple protection that can help cover bills should they be unable to work due to illness or injury.

For the same reason we don’t refer to Life Insurance as Death Insurance – because no one wants to buy Death Insurance.

The word disability to many is very scary and associates them being incapacitated or stuck in a hospital bed.  When it simply means we just can’t do our job because we got sick or hurt.

So, what is the most effective way to engage your client in a conversation about Income Protection if they got sick or hurt and could not work?

Use these conversation starters:

• How would you protect your income should you be unable to work due to illness or injury?
• How much do you have in savings?
• Do you have enough set aside to make ends meet for a several months if you’re off work?
• Where will the money come from when your savings runs out?

These work great because although clients recognize the need for Disability Insurance (DI), the number of folks who actually get a DI policy is much lower.

I have heard from producers who sell DI as Income Protection that clients are more open to focusing on how they would financially manage a disruption in pay – especially when the majority of Americans don’t have enough in savings.

From there, you can sketch out how Income Protection fits in with their overall financial protection plan and how simple it is to get affordable coverage in just days.  (No medical exams or occupation classes are great examples.)  And once they see how easy the process is, chances are they’ll be sold.

What’s Next?

Simply let your clients know you are in the Income Protection business.  Your clients likely want Income Protection, but just don’t know where to get it.  They want to purchase protection from someone they know and trust – you.  Many clients assume they can only get an employer sponsored plan – unaware they can purchase an individual Income Protection plan if they get sick or hurt.

We have many options for you to use in order to help you get the word out.  Contact your Income Protection Specialist today for options that would be most effective for your business.

A long time ago, in a galaxy far, far away I remember reading an IRS Private Letter Ruling that had about it the worst method an insured/grantor could use to pay premiums on a policy inside an irrevocable trust.

He was the sole owner of a business that each year cut a check directly to the carrier for the total amount due.  The taxpayer was asking for a determination as to whether this quick-and-easy A-to-B transaction for maintaining a policy outside of his taxable estate would be deemed an incident-of-ownership resulting in the inclusion of the benefit in his taxable estate at death.

I’ve searched half-heartedly and unsuccessfully for the ruling.  But if memory serves me well, which it well may not, the Service did some “deeming”, but not in the unfavorable direction of finding an incident-of-ownership anywhere in the works.

It treated the taxpayer’s monetary circumlocution as: first, deemed income to the taxpayer from the company that must be reported as income; second, a deemed gift from the taxpayer to the trust that must be reported as such; then third, a deemed premium payment by the trustee to the carrier – all without giving rise to any incident-of-ownership in the grantor/insured.  Well, how about that?

It’s tempting to jump on such reasoning when it becomes bothersome to set up a trust checking account, or go through the multi-step process of actually gifting money to the trust and hoping that the godparent of the beneficiaries (who graciously offered to serve as trustee) doesn’t forget to pay premiums in the years following his or her retirement to the beach.  But there are some serious concerns created by the convoluted route taken by the premium in the illusive PLR mentioned.

If avoiding gift taxation is dependent on use of available annual exclusions then two things are necessary to qualify for protection.  The beneficiaries must receive notice of their right to withdraw contributions made on their behalf, usually accomplished through timely “Crummey letters”.  More important, the trustee should be in a position to actually fulfill requests from beneficiaries should they choose to exercise their Crummey withdrawal privilege.

If the only asset in the trust is the policy and the cash for premiums that constitute the annual gift merely flies over the trust each year, the Service is in a strong position to argue that the present interest necessary to qualify for the exclusion is only an illusion.

In addition, a properly drafted irrevocable trust implemented to keep death benefits free of estate taxation will only allow and not require a trustee to purchase life insurance on the grantor’s life.  This avoids any argument of grantor control over the policy.  However, if each year, premiums are paid directly to the carrier the grantor has, in effect, forced the trustee to purchase coverage.  So, how do you spell a-u-d-i-t?

Too often shortcuts are taken in the establishment of irrevocable trusts and too often insufficient attention is given to their ongoing administration.  While it is not the legal responsibility of the insurance advisor to see that all is done according to Hoyle, it should be his or her annual practice to make sure that the proper parties are fulfilling theirs.

Contact our Advanced Markets Team with questions you have concerning your casework that involves trust planning or estate and gift tax concerns, at 706-354-0401 or tom@cpsadvancedmarkets.com.

Few challenges demand more of a business owner than passing on the family business to the next generation.  Family members’ lifelong hopes, dreams, ambitions, relationships, even personal struggles with mortality – all figure into managing succession.

Yet managing succession is the task that is most critical to securing the future of private enterprise in the United States.  Rising competition, government regulation, taxes, and other problems notwithstanding, the failure to plan and manage succession well is the greatest threat to the survival of family business.

Hundreds of thousands of businesses across the nation are approaching the retirement or death of their founders or chief executives with no plans for succession or inadequate plans that will fail to produce the desired results.

For those family firms with plans, many will fail because they mismanaged the succession planning process.  No wonder less than one-third of family businesses survive into the second generation, and only about 13 percent make it into the third.

Business owners know the stakes are high.  Ask any group of family business people at seminars around the country to name their number one concern and the answer almost certainly will be succession.

Consider some of the issues Business Owners raise:

“I don’t think Dad is ever going to retire.  What kind of a future does this leave for me?
-The son of a family business owner

“I don’t think I’m ever going to own any stock in the family business.  Why should I continue to participate in it?”
-The daughter of a family business CEO

“I don’t know how I am ever going to get along with my brothers and sisters in the business.”
-One of several children in a family business

As professional advisors often say, “Family businesses have only three problems: succession, succession, and succession.” Aronoff, Craig, et al. Family Business Succession: The Final Test of Greatness. New York:  Palgrave Macmillan, 2011. Print.

Letting go of a business can be challenging for a founder after they’ve spent a lifetime building their company.  Starting the succession plan often is an incredibly painful experience for them to initiate.

How do we get clients to take action as we raise difficult questions and topics to prepare them to transition their business?  We will position you as a trusted, knowledgeable and professional advisor, with a robust suite of advanced planning tools.

Please call your Life Sales Rep to set up a consultation – we will help you understand and implement insurance strategies for your business owner clients.

We know how to elevate your sales.  We are experts when it comes to new and innovative underwriting changes.  We also know which carriers to recommend for your challenging clients.

Bottom line, we find ways to say “yes” to your cases.

We represent carriers that can offer:

• Right away to individuals after treatment is completed for early stage prostate and breast cancer
• Preferred Non-Smoker rates to your clients who use marijuana on a regular basis
• Up to $3 million of term or permanent plan coverage to your healthy clients without any exam requirements, and can still offer their Super Preferred rates
• Standard or even better to your clients with Type 2 diabetes
• Preferred classes to your overweight clients
• Preferred Best rates even if someone’s total cholesterol level is up to 300
• Preferred Best rates for someone who is treated for depression
• Preferred or better for your clients treated for sleep apnea using their CPAP machine on a nightly basis
• Non-Smoker rates to your clients who smoke cigars or pipes or use tobacco chew on a regular basis (even daily!) and have a positive specimen for nicotine

Contact the Life Underwriting Team – get some Preferred Best service as we help you with your next case!

Asset Based LTCi is designed to help protect your clients’ assets by using the safety of whole Life Insurance.

With a guaranteed premium, your clients will receive a guaranteed amount of Life Insurance that can be applied to their LTCi expenses.

Your premium is also credited with a minimum guaranteed interest rate, meaning your cash value is guaranteed to grow each month.  And if your clients were to tire of the product, they have the option to request for a full return of your single premium – providing an increased level of flexibility that most clients are looking for.

Help your clients utilize an existing asset – whether that be money set aside in CDs, savings accounts, or other liquid funds – as the funding.

When recommending an Asset Based LTCi product for your clients, you can be confident that:

• Your client’s premiums will never increase
• The amount of death/ long-term care benefits are guaranteed
• Their money earns interest with a minimum guaranteed interest rate
• They will never outlive their plan benefits when you select the optional Lifetime Benefit feature

Tax Information:

• LTCi benefits are received income-tax free
• Interest accumulation is tax-deferred
• Life Insurance benefit, if unused for LTCi purposes, is payable on a tax-free basis

Flexible Case Design:

• One policy can cover an individual or joint insureds – including spouses, partners, siblings, and even parents/ siblings
• Funding sources can include: CDs, money market accounts, cash, life insurance cash value, annuities, and qualified assets
• Typically designed as a single premium, but clients can pay premiums for 1 to 20 years, or even lifetime payments on a guaranteed level basis

For more information about the many benefits of asset based LTCi, contact your LTCi Sales & Marketing Manager today.

It is the bane of high school mathematics students and a fixture in sidebars illustrating data discussed in a newspaper, magazine or website article: the basic X-Y coordinate graph.

And two coordinates come into play when financially justifying an amount of life insurance coverage applied for.  (The X-Y graph example doesn’t really serve as a good illustration of how they interact in affecting a carrier’s decision, but graphs were the subject with which I wanted to open, so that’s that.)

Basically an underwriter is concerned about two numbers: how much is being applied for and how much is it going to cost.

Amount of Coverage

This speaks to the carrier concern about a person having too much life insurance (a concept hard to accept for a lady-friend of my wife and me who contends that you can never be too thin, never have too many silk dresses, never have too much money, and never get too much Oprah Winfrey).  The carrier doesn’t want your client worth more dead than alive.  The actuarial numbers bear out that people with too much insurance have shorter life expectancies.

Acceptable Amounts of Coverage Vary Based on Need

The most common need is replacement of income lost to dependents when the breadwinner dies prematurely.  Appropriate amounts are usually determined by a formula based on the age of the insured and annual earned compensation.

Amount of Premium

Carriers don’t want insureds spending so much on coverage that it doesn’t leave enough for living expenses.  Absent adequate justification otherwise the limit allowed for premium expenditure is usually 20% of annual income, sometimes adjusted down by the carrier for certain factors.  This concern seldom comes into play at younger ages, because even when large amounts of coverage are purchased it is term insurance and the cost seldom approaches an unacceptable level.

Both often come into play when an insured reaches age 70-1/2 and wants to begin using RMDs from qualified assets to purchase coverage to create a greater legacy for heirs.  There is no earned income to justify coverage.  Most carriers will allow insurance based on a percentage of net worth and then determine that the RMDs are not needed for living expenses by applying a percentage of income formula.

Call with any financial underwriting questions you have, especially when the coverage is for business needs or anticipated estate taxes at death.

By the way, I caught a movie the other night entitled The X=Y Graph.  The plot was predictable and flat, but the special f(x) were good.

In today’s competitive job market, business owners are looking for ways to retain key talent.  Did you know there are Life Insurance based plans business owners can use to reward these vital employees?

An Executive Bonus Plan allows a business owner to select who they reward with no discrimination rules, and have the contributions tax deductible to their business.

Plan implementation is easy, with no IRS approval necessary.

How the Executive Bonus Plan Works:

The Employer:

• Pays the desired amount of life insurance premium.
• Has no ownership rights in the policy on the key person.
• Includes the premium on the employee’s W-2.
• Deducts the premium as compensation and an ordinary business expense.

The Employee:

• Purchases a life insurance policy as applicant, owner, and insured.
• Pays ordinary income tax on the bonus.
• Or, the employer can pay a double bonus – the employer pays the premiums and then a cash bonus to the executive equal to the income tax liability for a zero after-tax outlay for the executive.
• Takes advantage of the cash value accumulation and death benefit for personal needs.

Furthermore, the flexibility of this plan is beneficial if the key employee ever chooses to leave the company – the policy is portable and can be funded by the employee’s personal dollars.

The pros to this plan are simple to understand and administer – it is important to the business owner to recruit, reward, and retain these important employees, and generally the tax deductions to the business owner are a great way to get the conversation started.

Contact your Life Sales Rep today for more on this business planning solution.