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During and after his tenure as President of Harvard University, Charles Eliot liked to contend that the essentials of a liberal education could be gotten by simply reading fifteen minutes a day from a selection of great books that would all fit on a five-foot shelf.

If so, you wonder why people line up each year at Harvard’s admissions office to pay around fifty grand a year to get same result inside the ivy-covered walls.

Eventually P.F. Collier and Son would publish an edition of Eliot’s collection and realize very successful sales of the set now known as the Harvard Classics.

The key is reducing a body of knowledge to its fundamentals

And Eliot’s message is transferable to other fields as well, like life insurance sales.

In an age of increasingly multi-service advisors, many financial professionals whose core competency is in another area, e.g. investments, P&C, or health insurance, would like to begin those first steps into assisting in the life insurance planning of their clients.

Hesitation to get started is usually grounded in a lack of security regarding the concept and the generic considerations that attend any case.

There are two items of good news

First, we have created an overview of all the basic information you need to get started talking competently and helpfully to clients about coverage needs. Second, it doesn’t require reading five feet of books – in fact, it is all covered in just three pages.

This resource discusses types of coverage, quick calculations to determine insurance needs, common planning mistakes when naming owners and beneficiaries, and a quick and understandable review of the primary income and transfer tax issues relating to a policy.

You can get a copy of this quick-study by contacting me or one of your life sales & marketing specialists.  You will find it valuable not only for personal review, but also for training purposes with your staff, or CPAs and attorneys who want an overview of the topic.

Also, we will assist in your training efforts by conducting conference calls using the outline as the format for the discussion.  No computers, no webinars – just a simple phone call from wherever the participant happens to be to quickly gain new confidence in presenting life insurance concepts to clients. Give us a call now for more information.

President Eliot was less successful in a different endeavor at the school: the abolition of the football program.  The Crimson eleven responded to his low opinion of the game by winning the 1910 national championship the year after his retirement, their seventh in the competitive history of the college sport.

Over 43 million households are invested in Individual Retirement Accounts (IRAs) – and chances are your clients have a share in that number.

But perhaps they’ve come to realize they don’t need their IRA assets for income.  Or maybe they’ve developed a portfolio of non-IRA assets that are sufficient to provide a comfortable lifestyle in retirement.

Due to the government’s Required Minimum Distribution (RMD) rules, the preference might be to continue deferring taxes on the IRA for as long as possible.

When the children inherit the IRA, their maximum years of deferral are based on their ages at the time they inherit the IRA.  This fixed, maximum period cannot be extended regardless of whether the children pass away before this period has expired.

The children typically name the grandchildren as their beneficiaries.  If the children pass away prior to the end of their maximum deferral period, the grandchildren inherit the balance of the funds, and the remaining balance of the deceased child’s maximum deferral period.

How Multi-Generational Beneficiaries Can Solve These Issues

Using Multi-Generational beneficiaries, your clients could make some minor changes to their current IRA beneficiary designations to enhance their legacy.

The key is understanding that IRA rules allow Designated Beneficiaries to continue deferral over a maximum deferred period that is based on their own life expectancy.

Therefore, when the grandchildren inherit the IRA, their younger ages enable them to continue the tax-deferral advantages for a longer period of time than the children could.  This compounding of tax-deferred growth can create significant increases in your client’s legacy.

Simply consider replacing the children’s IRA inheritance by purchasing a Life Insurance policy with a death benefit equivalent to the pre-taxed value of the IRA, and make the children or an ILIT the beneficiary of the policy and the grandchildren the beneficiary of the IRA.

One significant advantage of using Life Insurance is that the death benefit is received by the children free from income tax.  Thus, increasing the new inheritance, unlike an IRA inheritance that may be fully taxable to the children.

Consider This

Assume the parent’s IRA is projected to be worth $500,000 at the surviving spouse’s death.

The children would receive a $500,000 income tax free Life Insurance death benefit.  The grandchildren would receive a $500,000 IRA and each grandchild will “stretch” the IRA deferral benefits over their individual life expectancies, according to IRS rules.

The grandchildren’s life expectancy is typically 20 to 40 years longer than the children’s life expectancy.  This extension of the deferral period could be very advantageous to the overall performance of the IRA legacy.

Typically, the Life Insurance premium for clients over age 70 ½ are paid by using a portion of the RMD that your client’s are required to withdraw from the IRA.  As you can see, Life Insurance can play an important role in the overall strategy of Multi-Generational Planning of your client’s IRA.

For more information, contact the Life Sales & Marketing Team.

Consumers today have more choices than ever before when it comes to funding traditional long-term care services.

While other funding vehicles may be good options for some people, a traditional LTCi policy continues to be the best option for many of your clients.

Many current LTCi policy holders share these similarities:

Females, age 50 to 65
Household income of $50,000 to $250,000
Married, with adult children
Working in a metropolitan area with a population of at least 250,000
A homeowner with 11 or more years in the current residence
A “planner” who is interested in financial issues; owns life insurance and other conservative investment products
Family oriented
Exposed to LTC issues; knows someone (a family member or friend) who has needed LTC services
Research oriented; an online use; self-educated about LTCi

Look through your book of business – do any your clients fit the profile?

If so, contact your LTCi Sales Rep – we’ll help you design a plan that is both affordable and the best solution for each of your clients’ needs.

We often hear advisors mention they don’t offer Individual Disability Insurance policies because their client base already has protection through an employer plan.  While many advisors may choose to move on to another aspect of the client’s financial picture, it’s the experienced advisor that sees the true opportunity.

We’ve always found it easiest to present to clients who already own a DI policy.  If the client is covered by a plan at work, they already know the importance of having a plan designed to protect their paycheck.

They recognize the value of the added benefit provided by their employer, but typically aren’t aware of the short comings of a group plan such as direct-integration, taxable benefits, and lack of portability.  However, the existing employer plan serves as an excellent starting point to introduce the subject of proper income protection.

For those clients with existing coverage, commend them for having an existing plan in place.  Then offer to review the plan to determine if it’s providing the necessary coverage it’s designed to provide by asking for a declaration page of their existing policy.  With the policy declaration page and some basic client information, we can conduct a complete policy review showing the client’s current protection along with any recommended changes.

EXAMPLE:

Client:  Male, 40
Occupation: Executive
Income:  100k with 25k in bonus
Current Coverage:  60% of Salary with a 10k Cap

Current Coverage:

$5,000 per month (taxable)

Additional Coverage Available:

$3,300 per month (non-taxable)

If you want to target an easy Disability Insurance (DI) sale – the DI review is the easiest way to immediately increase your disability sales – work with your existing book of business to provide proper income protection.  To learn how to best incorporate this strategy into your sales activity, contact your DI Sales Rep today.

By the end of the story the pigs have begun to walk upright and they carry whips.  Promised improvement in conditions for other citizens have been forgotten.  And the Seven Commandments that were to serve as the foundation for the common democracy have been reduced to just one:

All animals are equal, but some animals are more equal than others.

So ends George Orwell’s sobering classic novel, Animal Farm.

One danger of advanced technology in the insurance industry has been the “commodity mentality”

Created by the ease and prevalence of spread-sheeting the premiums for any of a broad array of available term products as a starting point for a choice of carrier.  Unfortunately the numbers generated are too often the end point as well.  It becomes “all about cost” and an agent will recommend Texas Life and Limb because the coverage is a nickel cheaper a month.

But a wise advisor looking beneath the price tags will find that, similar cost notwithstanding, some term products are more equal than others.

The most important feature of any term policy is the conversion option

The privilege of exchanging the policy for the carrier’s permanent product at the original medical classification without new underwriting.  An insured may come to the end of the guaranteed level premium period only to find that he or she has a need for, at least some of, the coverage going forward.

There are three options:

1) Pay the onerous and rapidly accelerating one-year term rates, or

2) if still in good health, shop for the best price on permanent coverage, or

3) if there have been health incidents during the level premium period, exercise the right of conversion under the existing contract – and the terms and conditions of that conversion option are where the thrill of a lower cost can be quickly forgotten.

Consider:

What permanent products are available for conversion?  The most generous carriers allow for conversion to any permanent product in the portfolio at the time the option is exercised.  Other carriers restrict the choice to certain contracts now, which may or may not be available later.
What is the likelihood that available products will be competitive?  Consider term insurance with a carrier that has a reputation for and exhibits a likelihood for future generation of competitive permanent products.
How long into the life of the term product is the conversion privilege available?  Some policies allow conversion for the full level premium period.  Some only to a certain age.  Some only for a set number of years, even if less than the level premium period.
How much flexibility is there in the amount and segmentation of conversion elections?  Can only part of the coverage be converted?  Can it be converted in stages?

Nothing will de-commoditize an advisor’s approach to term more quickly than a close examination of the conditions of the policy’s conversion privilege.  For assistance in making the best term choice for your client’s situation, all factors considered, contact your Life Sales Representative.

Lest readers think that all scary characters in literature are equal, AbeBooks.com conducted a worldwide poll to determine the scariest.  The winner was Big Brother, from George Orwell’s other famous dystopic novel, 1984, edging out Hannibal Lecter from the pen of author Thomas Harris.

Even though the Life Insurance marketplace is ever changing, there are time tested ways to help you to generate premium while providing a valuable service to your clients.

It’s no secret that products change and new enhancements are introduced which can provide additional benefits to your clients.  It should come as no surprise that as your clients move through different life stages, their needs also change.

As a result, it is imperative that as their Life Insurance agent, you are periodically reviewing your client’s existing policies to ensure that they still meet their primary objective while confirming that there isn’t a more competitive alternative product available.

By staying in contact with your clients and performing annual policy reviews, you are also improving your client relationship and decreasing the chances that they will begin speaking with another advisor to confirm that their plan is performing adequately and continuing to meet their specific needs.

A recent success story

Recently, we assisted an agent in reviewing three policies that were each designed with cash value accumulation as the primary objective.

As the insured’s have grown older, they have become less concerned with accumulating cash value and more concerned with death benefit protection and transferring wealth to their beneficiaries.  By using their current cash value and exchanging into a guaranteed policy, we are able to increase their fully guaranteed death benefit by over 35% while maintaining the same premium commitment going forward.

This was not a result of their current policy underperforming or being unsatisfactory in any way.  It is merely a result of the client’s needs being different today than they were 15 years ago when they originated their plan.  More often than not, these sales are not initiated by the client – they begin with a courtesy call from their advisor recommending a review of their current insurance policies.

Get started!

We have a Policy Review Kit which can be customized to help you begin reviewing your client’s policies.

If you would like assistance reviewing one of your client’s existing policies, please contact us today and we can provide you with an itemized list of what is required to get the policy review started.

Client’s today are looking for solutions with complete flexibility that solve multiple needs, for a number of different situations.  Often times, the client is searching for a “perfect” solution that guarantees a winning scenario in all circumstances.

For those exceptionally competitive clients, who are looking for a successful outcome in all scenarios, a Linked Benefit solution is the perfect fit.

While the future can never be predicted, one thing you can guarantee your client is that one of the following three scenarios will happen every time:

They will pass away without an LTC claim and their beneficiaries will receive a tax free death benefit
They will have an extended health care event and gain access to leveraged LTC benefits
They will later decide they want to surrender the policy and the carrier will provide a full refund of premium

With a Linked Benefit solution, you can provide a solution for not just one or two scenarios, but all three.

A Linked Benefit Policy covers both Long-Term Care (LTC) coverage and life insurance, and at the same time offers a Return of Premium Rider.

Linked Benefit policies attract people who:

Are retired, or approaching retirement
Are more affluent with higher net worth
Want to protect against potential LTC expenses AND leave a legacy to their loved ones

These policies help prepare your client simultaneously for a potential long term care event, an unexpected death, or immediate access to cash.  Your clients’ needs may change with time, so the more options and flexibility, the better.

To show your clients how to position themselves in a winning hand, no matter the scenario, contact your LTC Sales Department today.

Many middle-class Americans who face cancer, heart disease or other serious illnesses also face thousands of dollars of debt.  Even with Health Insurance, the additional cost for specialist care, unique treatments, and high deductibles add up quickly upon a critical illness diagnosis.

Fundraisers on crowdfunding websites like GoFundMe have become a popular way to find financial help in times of a healthcare crisis – yet only 1 in 10 campaigns meets the financial goal.

The Need Is Real

Think of the difference $50,000 could make for a person who has just been diagnosed with a serious illness such as cancer or heart attack.  There’s never been a better time to reach out to your clients who have a family history of cancer or heart disease and offer Critical Illness (CI) Insurance.

We’ve taken steps to streamline the process with our Critical Illness Insurance carriers.  A client can get up to $75,000 benefit with no exam or interview.  Simply submit a complete online application through www.cpsinsurance.com and you will have an answer within 48 hours.

Higher deductibles and healthcare costs are adding stress to people’s lives and budgets.  Your clients will understand the importance of Critical Illness Coverage when you mention it to them.  Help them fill the financial gap at a time when they need it most.

Contact your dedicated CI Specialist.  We will guide you through the simplified process and provide you with everything you need to add this to your product offering.  Spend 30 minutes with us to become proficient at offering Critical Illness Coverage.

Source: Chicago Tribune, “Medical GoFundMe campaigns are a symptom of a sick health insurance system,” August 23, 2018.Source: Chicago Tribune, “Medical GoFundMe campaigns are a symptom of a sick health insurance system,” August 23, 2018.

There are three maxims that every trial attorney takes into the courtroom when going before a jury: If you don’t have the facts, then pound on the law; If you don’t have the law, then pound on the facts; And if you don’t have either, then pound on the table.

Among the three (the facts, the law or the table) he or she knows the most important because an aphorism taught early on in law school is that “From the facts arise the law!” Detective Joe Friday said it best when questioning a witness to a crime, “Just the facts, Ma’am.”

Facts are the foundations of an appropriately placed insurance sale as well

But the fact is, well, it just takes too much time to collect them – especially when profitability is slim anyway on, say, a term policy being sold for income replacement.  After all, how much information do you need to calculate a multiple of a client’s earned income based on age?

A case is not just a policy any more than a home is just a house, and good fact-finding reveals and develops all that there should be about a transaction involving life insurance, both for the client’s overall plan and the advisor’s practice.

To name a few:

The full facts may expose other life insurance needs, particularly on other household members.
A full factual review establishes the advisor as more than a simple “policy-pusher” allowing for discussion “beyond term” where provision might be made for protection against a long-term care event, or supplemental retirement income.
The discussion may even go to the most basic insurance need, protection against loss of income in the event of disability.
Clients can be alerted to unfilled non-insurance needs such as the execution of wills, powers-of-attorney and health proxies.
Thorough fact-gathering captures information that might be needed in the underwriting process and can now be provided without going back to the client.
A comprehensive job will engender the trust of the client which leads to referral of others to the advisor that effectively served them.
Fact-finding this year sets the table for the annual review next.

Moderate levels of fact-gathering are in order

We have designed personal and business fact-finders that are a happy medium between a few notes on a legal pad and the multi-page, overly in-depth questionnaires offered up by most carriers.

Download the Personal Fact Finder

Download the Business Fact Finder

John Adams once said to his wife, Abigail, “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.”

Getting the full picture pushes an advisor beyond pre-conceived notions and outside the habitual paths toward standard solutions that become so easily entrenched in a practice, especially for small cases.

A caregiver contract is when relatives are hired to take care of their disabled or aging family members.  It is usually drafted by an attorney and specifies the caregiver’s duties and the length of contract (usually the elder’s lifetime).  Caregiver payment can be made either in lump sums or installments.

How Does Long-Term Care Get Thrown Into The Mix?

Purchasing a Long-Term Care (LTC) policy is one way to pay the compensation promised in a caregiver agreement.

Please note:  Many LTC Insurance policies do not allow a relative to be hired directly as a caregiver, it is important that the policy have a cash benefit.

Once an individual triggers benefits, the insurer pays out the cash benefit regardless of who the caregiver is.  A full cash benefit will provide the same benefit.

It is important to discuss these planning options with current and prospective clients.  An agent who knows about LTC planning as well as insurance may be seen as more knowledgeable about the options available.

To learn more about caregiver contracts and how to incorporate them into your sales, contact your LTC Specialist today.