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Employers today are constantly struggling to find new ways to attract, motivate and retain the best and brightest employees without having to pay them overly inflated wages.  One way to accomplish this is by offering a competitive employee benefits package.

In a recent study by one of our strategic carrier providers, 61% of employees surveyed said a strong employee benefit package encouraged them to work harder and perform better; 61% said such a package gave them increased incentive to stay with their current employer.

Whether the business has as few as two employees or 100, the ability to incorporate an affordable Individual Disability Income plan into the company’s overall benefit package can be an absolute game changer!

43% of employees surveyed reported that their ability to protect their financial assets due to an unexpected event is of paramount concern.

The Solution

We can provide you with customized Multi-Life and Group Disability Income plans with varying levels of underwriting and discounts depending on the needs of your business owner.

Based on the number of employees and the underwriting program selected, a 20-30% discount and unisex rate classes can potentially increase your client’s savings.

From start to finish, the process is streamlined for both you and your client.  Whether you need assistance with marketing material, quotes, policy review or worksite enrollment, we and our carrier partners are positioned to support you throughout the entire sales process.

Contact your dedicated Disability Specialist today to learn more about how you can help your business owners better retain their employees by offering a more competitive benefits package.

Real old-timers remember the days of one of comedy’s iconic duos, the husband and wife team of George Burns and Gracie Allen.  Any younger connoisseurs of good humor would do well to spend some online-time calling up at least some of their radio, television, and cinema work-product on YouTube or some other source.  But search engines didn’t help me uncover one famous routine, so I will paraphrase:

Gracie: Did you hear that my friend got hit by a car that didn’t have its headlights on?
George: That’s awful! Why didn’t the driver bother to use the headlights?
Gracie: Because it wasn’t dark yet!

Knowing all the facts can certainly change the response to circumstances.

And so it is when talking to a business owner about how much company-owned coverage he or she can get on an important executive. Consider:

The standard key-person formula

Most carriers will allow a business to own coverage on an important executive in the amount of ten times his or her compensation package.  This includes not just W-2 salary, but also bonuses, cost of perks (e.g. club memberships), fringe benefit costs (e.g. health insurance, etc.), qualified retirement plan contributions, deferred compensation, as well as the use of a company car or other business assets.

Stretching the limits a bit

Some carriers will allow a larger multiple for financial justification.  But some might impose a lower multiple as well if it appears unlikely the executive will work for ten more years.  When owner-executives are involved a carrier may allow for part of the proposed insured’s Schedule K income to be taken into consideration.  If the proposed insured is being awarded ownership interests, the value of those interests might be treated as compensation.

Debt can help

Some carriers will allow additional coverage based on a percentage of the company’s longer-term obligations to financial institutions if it can be shown that loss of the executive will curtail the company’s ability to repay.  Sometimes the policy is initiated by a lender’s requirement, in which case the financial institution is secured through a collateral assignment.

Redemption obligations

A major reason a business may be economically burdened by the death of an executive is the existence of an agreement to buy his or her ownership interest in the company from the surviving family.  The agreed purchase price can be added to the amount of coverage sought.  If no agreement exists this might open up a discussion of that planning need with the client.

Company-owned policies are often more easily placed because the limited time for which coverage is needed (till the insured’s anticipated retirement or for the expected period of service) make economical term insurance a good product choice.

Call with questions on or assistance with your next key person or other personal or business planning case at 706-354-0401 or tom@cpsadvancedmarkets.com.

George Burns lost his show-biz and life partner in 1964.  His career continued after Gracie until he passed away 32 years later, just 49 days after his 100th birthday.  So we will end with the signature closing of Burns & Allen:

George: Say good-night, Gracie.
Gracie: Good-night, Gracie!

Your clients need guaranteed life insurance protection today – but life changes, and so can your clients’ life insurance needs.

A unique feature on guaranteed universal life is a return of premium option, included at no additional charge within the policy, which provides clients with an exit strategy, giving them flexibility for their future.

How does this rider work?

Clients purchase a Guaranteed Universal Life (GUL) policy and make the required premium payments – the required premium is the amount that guarantees the death benefit through age 100.  On the 15^th, 20^th and 25^th policy anniversary, clients have a 60-day window where they have the opportunity to surrender their policy and get their premiums returned to them.  If they don’t exercise the rider, there will be no impact on the policy.

4 Cash Benefits For Your Life Insurance Clients

• For Retirement.  A 45-year-old insured receives 20 years of death benefit protection and at age 65 receives her paid premiums back and uses the cash to supplement retirement income.
• For College Costs.  The insured bought two permanent policies and currently has young children.  One of the policies was a GUL policy with the refund option available.  When the children are at the age to attend college, the death benefit needs of the family change. He can surrender his GUL policy in year 15, 20 or 25 and use the cash to help pay for the child’s college education.
• For Business Planning.  The insured owns her own business and has a key employee, Tom.  She purchases a GUL policy to protect her business if Tom died unexpectedly.  In year 18 of 20, Tom resigns – and two years later she will receive all of her premium payments back.
• To Pay-Up Another Policy.  A 55 year old has a need for $5M in life insurance.  He purchases two GUL policies, one for $2M and another for $3M.  When he turns 75, he no longer needs as much coverage.  He surrenders the $2M policy and uses the cash value to pay up the remaining policy.  The insured still has $3M of insurance with no further premiums due.

Contact your Life Sales Rep for more on how the return of premium option can positively impact your clients and your business.

Back in elementary school we called the game Gossip.  You know, everybody got in a circle and the first kid started a story by whispering it into the ear of the person to the left and then he or she passed it on until it had gotten all the way around.  The last person would relate the story to the whole group and everybody would laugh because the final version was so different from the original after passing through so many intermediaries.

Well, think of a brokerage carrier underwriter as the last person.  By the time the paperwork for new coverage arrives at the Mother Ship (AKA the carrier) it has gone through (to name a few) the advisor, the advisor’s staff assistance, a case manager at the brokerage agency and the new business person at the insurance company.  If the story is still clear it is not because it hasn’t had every opportunity to get muddled.

The best way to avoid the delays, confusion and possible declines that might come from ruptures in the convoluted lines of communications is a cover letter submitted with the case.

It doesn’t have to be Pulitzer Prize-worthy, just a clear and concise explanation.

Don’t necessarily count on the brief information requested on the app to paint the full picture for an underwriter.

Expand on the following in a cover letter:

• Restatement and/or fuller explanation of the purpose of the coverage
• Method of the determination of the face amount
• The relationship(s) among the owner, insured, beneficiaries and premium payer
• Full description of applied for and inforce coverage on other family members (if for personal purposes) or other key people (if for business purposes)
• Available documentation available if needed – e.g. trusts, financial information, business agreements
• Any other information concerning circumstances that might raise questions with the underwriter (e.g. where the amount of insurance is more than the standard financial guidelines)

Playwright George Bernard Shaw said, “The single biggest problem in communication is the illusion that it has taken place.”

The Apostle Paul said, “A letter covers a multitude of sins!”

Don’t rely on the illusion of clarity that often hovers over an application as it is passed around the circle.  We have several on board who fancy themselves literary and will help draft and submit the cover letter you need.  Call and ask!

When engaging prospective clients in Long-Term Care planning discussions, many financial professionals focus on asset protection at the expense of other valuable benefits that LTC Insurance provides.

Because LTC planning can be a very emotional process for people, it’s important to be cognizant of the various personal reasons why people buy LTC Insurance protection and to dig for those needs and concerns early in conversations with each client.

Doing so can enable you to better tailor your presentation to their specific needs and create a more efficient and effective sales process.

Here are a few process-driven tips:

THINK – Before you sit down with a potential client, consider the following question: Why do people purchase LTC Insurance?

A few of the most common reasons include:

• to avoid burdening loved ones with care-giving roles
• to have a choice of where they receive care
• to maintain control over important care decisions
• to remain in and receive care in their own home

ASK – During the fact-finding process, isolate your prospect’s most important reason for considering LTC Insurance.

Here are a few sample questions you can use to uncover the need:

• “What is the primary reason that you are considering LTC Insurance?”
• “If there comes a day where you need LTC Insurance, what is most important to you about the coverage?”
• “Getting older, we all face questions about our care and independence.  What is your biggest concern should you ever need care?”

PRESENT – By uncovering the motivation behind your prospect’s consideration of a policy, you now have the ability to tailor your presentation to their specific need, focusing on the value of the policy.

By stressing the benefits of LTC Insurance, prospects will begin to see the policy as more than simply a premium they have to pay every month.

Did You Know?  Many carriers offer additional riders and support services to help ensure that your clients’ loved ones get the care they need.  Contact us for more information.

When is the best time to buy an income protection plan?  Could it be when my client is at the top of their earning years?  Or when they are just starting their career?

The answer is, right now, before any health concerns arise that would preclude them from securing this valuable coverage.  Before the premium is too expenses due to older ages.

Young couples (ages 30 to 50) are very important prospects for income protection.  Start the conversation about income protection with young couples who have bought a home or are starting a family.  This is the best time to build a foundation of financial protection.

Individuals in this age group still have a lifetime of earning potential.  Income is their most important asset.  Their lifestyle and long-term financial plans depend on the ability to work and earn a living.

Example: A 33 year old client earning $60,000 annually will earn $3,463,811 by age 67 with a 3% annual increases.  Many would agree that this is an asset worth protecting.

An illness or injury that keeps your client from working can quickly impact other assets such as savings and retirement funds.

These resources could be depleted depending on the time needed for recovery and return to work.  It could take years to rebuild these assets.

Who to Prospect:

• Single, fulltime wage earners
• New home owners or just started a family
• Primary wage earners in families
• Your current Life Insurance Clients
• Auto policy owners with higher limits

Solution:

• Talk to your clients about the value of their ability to earn an income.  Explain what’s at risk. Potentially a lifetime of earning should they lost that ability due to illness or injury. (whatsmyeiq.org)
• Show how disability income insurance can pay them an income while they recover to help pay expenses and protect their other assets.
• Let your clients know that there is never a better time than now to purchase this coverage.  The premium will never be lower and typically their health will never be better while they are still young.

We have a unique quoting tool (https://cpsinsurance.assurity.com/) and client approved marketing tools to help you prospect your current clients and reach new potential clients.  Contact your Disability expert to learn more about growing this part of your business.

In 1826 the German author Joseph Freiherr von Eichendorff (Jo-Eich for short) published a novella titled (in English) Memoirs of a Good-for-Nothing.  Both he and it are unimportant except for a Latin phrase from the book: Quod licet Iovi, non licet bovi, translated, “What is permissible for Jove, is not permissible for the bull.”  It describes the common double standard when, “what is permitted to one important person or group, is not permitted to everyone.”

Seems a bit unfair, but the expression can be turned on its head: “What is permissible to the bull, is not permissible to Jove.” 

The visibility and responsibilities of those in high places often deny them the flexibility and lack of restraint enjoyed by the common folks in the seclusion and simplicity of their more private lives and smaller worlds.

A good example is in the matter of non-qualified benefits and owners of businesses; but the reversed double standard is caused by the tax law, not because of anyone’s high or low position or estate.

Consider the following assuming a 100% company owner with full-time employees.

Qualified Plans

These include benefits whose cost is immediately deductible to the employer, but for which taxation of those costs is deferred and not recognizable to the plan participants until benefits are actually received.  The most common examples are qualified retirement plans.  The limitations for the owner are, first, that there is a ceiling on how much can be contributed on his/her behalf.  In addition, contributions must be made for qualifying employees, reducing the attractiveness of the plan for owner-retirement.

Non-Qualified Plans

These most commonly take the form of Deferred Compensation (DC) or Executive Bonus (EB) plans.  Here the employer has broad latitude to discriminate regarding participation and the amount of benefits under the plan, but any employer deduction for a contribution must take place and only takes place when that amount is recognizable as income to the benefiting employee.

No Owner Advantage for a Pass-Through Entity

(An S-Corp, partnership, or an LLC taxed as either one)  Premiums paid under an EB plan are deductible to the business, but recognizable on the owner’s W-2 that year.  Any undistributed amounts held under a DC plan are still reported on the owner’s Schedule K-1 for that year.

No Advantage for C-Corp Owner

(Or an LLC taxed as a C-Corp)  Here too, EB premiums are deductible to the company, but reportable on the owner’s W-2.  But amounts held for a DC plan contribution fare even more poorly.  The money held back is first taxed in the company’s corporate bracket.  At distribution there is a business deduction, but the owner gets taxed again in his/her personal bracket.

Perhaps a More Advantageous Alternative

A personally-owned, over-funded life insurance policy acts much like a Roth IRA, but without all of the disadvantages of a Roth.  Let’s talk about that next week.

Winston Churchill certainly understood the privileges of position.  The story goes that one morning several subtle altercations had taken place between him and his long-standing personal valet, David Inches.  Later in the day the following exchange took place:  Churchill:  You were very rude to me, Inches.  Valet:  You were very rude to me, sir.  Churchill:  Yes, but I’m a great man!

Get in touch to discuss how business owners can benefit themselves better or with any other planning questions that arise in your casework, at either 706-354-0401 or tom@cpsadvancedmarkets.com.

Life Insurance is one of the most valuable assets there is – especially when you consider the numerous benefits that a permanent life policy can provide now, while still securing a financial future for loved ones down the line.

Successful individuals between the ages of 30 and 50 with young families will find that permanent Life Insurance is an ideal asset.

If properly structured, permanent Life Insurance can produce:

• Tax free death benefit to loved ones
• Tax deferred cash accumulation and income
• Tax free benefits to pay for long term care expenses

On top of all these benefits, permanent Life Insurance also offers:

• Flexible payments
• No required minimum distributions
• The opportunity to earn premium discounts and rewards – for clients who engage in John Hancock’s innovative Vitality Program

Do you know which clients you should be marketing permanent life insurance to?  Look for clients that seek out value – not just the lowest price on a spreadsheet.  Talk to individuals who are open to new concepts and would be interested in one plan that will address their multiple needs.

Contact your Life Sales Rep to learn more regarding what benefits you could be offering using Life Insurance and a few hundred dollars per month.

We all know the value that Long-Term Care (LTC) coverage provides to your clients.  But there are times when our clients have certain impairments, making it difficult to qualify for a stand-alone LTC policy, or even an LTC rider.

If you have a client who was previously turned down for this valuable coverage, we have a solution.

One of our carriers automatically includes a chronic illness rider on their Universal Life policies for all rate classes, including highly rated.  No additional underwriting and no LTC CE credits are required when selling a product with this chronic illness rider.

This rider will help your clients cover the costs of long-term care.  What’s better, is that there is no charge up front for this valuable rider (an administrative fee will apply at the time the rider is used), unlike traditional LTC riders.

Take a look at this example of how we recently helped a producer get their client this much needed coverage:

• Female, age 57
• Non-smoker
• Applied for $500K of UL coverage with an LTC rider
• Diagnosed with osteoporosis on DEXA scan in 2006, with worsening results on a follow-up DEXA scan
• Denied for traditional LTC riders
• This carrier approved the UL coverage at Table 2, which included the chronic illness rider

To find out which carrier can make this happen for you and your clients, and learn more about the chronic illness rider, contact our Underwriting Team today.

Most of you know how to start the conversation about Long-Term Care planning with your clients, but are you making it a priority to actually have these discussions on a regular basis?

Consumers Are Acknowledging the Need

According to a recent survey conducted by one of our Strategic Carrier Providers, consumers have insightful thoughts on the importance of planning for Long-Term Care.

• 85% agree that it is irresponsible not to plan, but they can’t bring themselves to address the issue.
• 75% state they have so many other concerns, that addressing the risk for care is not a priority.
• 60% agree that purchasing Long-Term Care Insurance is the best way to handle the cost of care.

Meet Their Needs

The national average cost for care in a nursing home is about $85,000 a year.  If costs increase at an average 4.1% a year,the average cost will be $286,000 a year in 20 years.  With this level of financial risk, the value of planning is clear.  You can help your clients by:

• Quantifying the risk to your client’s assets
• Providing plan options that enable them to insure some or all of the risk
• Keeping their budget concerns top of mind

The Ball is in Your Court

Clients are open to having a discussion on Long-Term Care planning.  However, most people won’t address the issue without the intervention of a financial advisor.  It is important to educate your clients and demonstrate how LTC can be an appropriate solution to help protect their assets and their families.

Make it a priority in your practice, and show them how it fits as a priority in their overall financial plan.

Have Conversations

Understand that your clients may not bring up the need to plan for Long-Term Care on their own.  It’s up to you to help them secure their future and ensure they have the financial resources should they ever need care.

Take a proactive approach and have Long-Term Care planning discussions with your clients starting at age 50.