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With the college bowl season underway and the NFL draft prospect rankings and predictions being made, we thought it fitting to share a case study of a top NFL draft pick.

The premium on this case was roughly $35,000 plus taxes and fees.

Here’s the insurance solution that was developed:

Client: A college football player at a prestigious university was projected to be a top-10 NFL draft pick.

Situation: As a top player in his class, the college junior decided to forgo his senior year and enter the NFL draft where he was ranked as the second overall offensive lineman and was sure to be taken with one of the top-10 selections.

Assessment: Due to the physical nature of the sport, it was made apparent that if the player suffered an injury or illness resulting in a permanent total disability, then millions in guaranteed money and signing bonuses would be lost.

Solution: The Disability Insurance Team worked with the player’s insurance advisor to develop a $10 million permanent total disability policy that would cover for any injury, accident or illness occurring between the time the policy was placed until draft day. The policy would terminate upon the signing of an NFL contract.

Result: As a result of having this policy in place, the player was assured that even if he suffered an injury or illness prior to draft day, he would still be compensated based on his projected NFL value.

Specialized coverage due to the nature of the sport was needed, it’s also important to note that high-earning individuals of other occupations may sometimes have a gap in disability income protection.

As always, please feel welcome to share this case study with your centers of influence.

Contact your Disability Insurance Specialist to discuss any opportunity to provide Income Protection to a client.

For many individuals, term insurance is an affordable way to protect their income during their working years, or to protect a financial obligation, such as a loan or mortgage.

What do these insurable interests have in common?

Consider this:

As time passes, the need for the insurance decreases – as policy owners have fewer years of income to replace, or as they pay down their loan or mortgage, the amount needed to pay-off the note decreases.

In other instances, a client may need to cover multiple obligations with different time horizons – attempting to do this with one policy is not the most efficient method.

There is a way to ensure your clients maintain an adequate amount of term life insurance, with a potentially lower cumulative premium outlay – laddering.

Multiple term policies of varying durations can be structured to provide a decreasing amount of coverage as a client moves through different stages of their life.

This can result in considerable cost savings, versus purchasing only one policy of the longest duration that will satisfy the total initial insurance need.

We can show you how to effectively ladder multiple term polices, and do a comparison of the costs versus a single policy sale. Even if you have previously sold a term policy – this is a great reason to contact clients and offer to do a review.

Call us today for more information.

Increasingly, people are recognizing the need for Long-Term Care (LTC) Insurance earlier in life.

Since your clients may purchase a policy 20 to 30 years before they might need to use their benefits, it’s important to consider inflation protection when you design their Long-Term Care Insurance plan.

Inflation protection riders can help protect your clients’ assets against the rising costs of LTC.

With so many riders available, which one should your clients choose?  Which option is the best for a particular client depends on many factors, including their risk tolerance, personal preferences and budget.

3% or 5%?

When it comes to compound inflation protection options, your clients’ choice is often between the 3% or the 5% benefit increase riders.

Historically, the 5% compound inflation protection option was often considered the best choice because it maximizes the potential pool of benefits.  However, the cost of long-term care is now rising at a lower rate than in the past.

For many years, nursing home and other long-term care costs increased at around 7% per year.  Currently, the average five-year annual growth of facility care was about 4%.  The cost of home care has been increasing at an even slower rate, with average five-year annual growth of just above 1%.

Compared to the 5% compound inflation protection option, the 3% option is less expensive, and the data suggests it may provide adequate inflation protection to keep up with the rising cost of home care.

Know Your Client

Your clients have several alternatives to help protect them from the rising cost of care.  A 3% benefit increase rider may be the right option for those clients looking for dependable inflation protection at a lower cost.

Talk to your clients about their priorities, and help them choose the best inflation protection option for them.

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.

Selling an Income Protection Insurance policy can be challenging, especially when your clients become overwhelmed with the terminology and options available.

Often times your prospects don’t know the criteria for the policy that suits their needs.  It is your job to help them find the best fit while making the purchasing process as comfortable as possible.

Many producers feel it is necessary to discuss the intricate and sometimes confusing details of the Disability Insurance policy’s terms with their prospective clients before addressing the main requirements, causing them to lose the sale.

It is important to help prospects identify their most important criteria and simplify the purchasing process for them.  Remind them to look at the big picture.

How can you help simplify this process?

Start by asking some of the following questions:

How much monthly income would you need to meet your financial obligations if you got sick or hurt and could not work?
Will you need to increase the policy’s monthly benefits in the future?
What is your budget for your Income Protection Plan?
Would you work in a different occupation if you were unable to do your occupation? Or would you wait to get well enough to get back to your job? (even Part-Time)
Do you have any medical conditions that might preclude you from purchasing Disability Insurance at this time?

Remember to listen carefully as it is your job to make the decision process simple and manageable for your clients.

If you would like to learn more about Disability Income or need prospecting tips contact your Disability Income Specialist today.

Hope springs eternal in the human breast when even the Cheerios Kid can make a comeback.  With his sidekick Sue, he was an iconic mainstay in the ads for the General Mills cereal during the 50s and 60s before his cell-animated storylines were put out to pasture to make way for a wave of faster-paced, sensory-bombarding commercial forms.

Only in a more cholesterol-conscious age was he brought out of mothballs to promote the hearty and healthful impact the oat-based product could have on consumers.  But the emphasis on good eating habits this time around didn’t hold a candle to the mini-adventures capsulated in those one-minute promotions from olden times where a bowl of “Go-Power” got the Kid through when all else failed.

I recall in one the narrator informed viewers that, “When he grabbed his rifle trusty, he found it was a trifle rusty.”  They just aren’t making ‘um like that anymore.

Trifly rusty rifles got me thinking about the importance of trifly trusty trustees

In the case of U.S. v. Randy Read (memorize that and name-drop at your next dinner party) the taxpayer funded an irrevocable trust with his spouse’s appreciated stock options for the benefit of their children.  Over time the options were exercised and the stock sold and the trust accrued an income tax liability to the tune of about $125,000.  Rather than paying the tax bill the trustee distributed the trust assets to the kids according to the terms of the trust.

When the IRS finally caught up with him, which they always do, the U.S. District Court held the trustee personally liable for the tax owed because he had paid other expenses “having notice of the facts that would lead a reasonably prudent person to inquire as to the existence of the debt” owed to the United States.

As insurance advisors we, all the time, encourage clients to make plans that involve the selection of people to serve in fiduciary roles – be it the executor of a will, an attorney-in-fact under a power of attorney, a trustee of a trust, or the like (for more information, see the short article, “Documenting Your Client’s Intentions Properly” here).

At this point people usually shuffle about for some super-nice, but semi-reliable Uncle Joe in the family who is willing to fill the role as an accommodation having little understanding of the responsibilities involved.

The otherwise esoteric Read case is a rude reminder that fiduciaries do not fill honorary positions

The must be ready to make life-altering decisions, sometimes under extreme circumstances.  In addition they must conduct the financial aspects of their office in good order, and while the empowering document may indemnify them from liability involving those in their charge, it does not necessarily absolve them of responsibility to other third parties, especially the federal government.

A second admonition is to give proper care in the selection of contingent or co-fiduciaries.  In many cases, especially when planning for young children, appointed fiduciaries are usually older than those they will serve, so the likelihood that the contingent may be called upon looms large.  And understand that with co-fiduciaries, an appointee must be sure to select like-minded people to advance a planner’s purposes – and make sure there can be no tie votes!

Be sure that any legal counselor you recommend adequately tutors clients as to the importance of and qualifications for those selected to conduct their affairs when they cannot.

Back to the Cheerios Kid

The cereal was named CherriOats when introduced by General Mills in 1941.  Over the years 15 additional variations have been marketed, the latest being Ancient Grain Cheerios which includes age-old grists like spelt, quinoa and karmut wheat.  Honey Nut Cheerios is the largest selling cereal brand in the United States.  The original ole oats roll in at #4.

For a list of the top ten check here and then call us concerning questions you have on the role of fiduciaries in your clients’ Life Insurance, Annuity, Long-Term Care and Disability Income planning.

Whole Life Policies have been around for decades and are considered to be the most conservative type of Permanent Insurance that you can buy.

And since more clients are searching for low risk, conservative insurance products with stable returns, Whole Life sales have been on the rise and producers are positioning these plans as a way to deliver their clients tax-favored income.

As a producer, it is your responsibility to educate your client about how the withdrawals and policy loans can affect their policy.

Whole Life providers using direct recognition when taking policy loans

Simply put, direct recognition refers to the carrier crediting a different dividend rate to the outstanding policy loan than they do to the non-loaned portion of the policy.  This is important, especially in short pay schedules where the policy will rely on dividend performance and internal cash value to sustain the policy performance long-term.

If the dividend performance falls short of the anticipated schedule because of a considerable policy loan and the policy is not being reviewed on a regular basis, the client runs the risk of lapsing the plan and receiving a tax bill for any gains in the outstanding policy loan.

While direct recognition is not reason enough to sell away from Whole Life, it’s important to understand this aspect of the policy.  Remember that maintaining contact with your client post-sale and periodically reviewing their plan to ensure the policy is in good standing and will not lapse unexpectedly is key.

Our Sales Team can help you to better understand the different loan options available and determine whether direct recognition will be applied to the Whole Life policy in question.

If you have sold a Whole Life policy where the client will likely take income out of the plan, call us today and we can help you to better understand how the loan will affect the dividend crediting and also the long-term policy performance.

One reason why you need to bring up the topic of Long-Term Care with your clients: family.

Past history has shown us that parents who do not plan adequately for their long-term care needs ultimately end up sacrificing their income, assets and financial promises that they have made to pay for their care.

Since we are on the topic of history, it is also proven that if a parent does not have a proper plan in place, their family becomes their long-term care plan.

Parents must consider the potential physical, emotional and financial damage that is also done to the family members who are personally involved in delivering their long-term care.

There are a myriad of issues to consider when a family gets involved in their parent’s long-term care plan

Among them:

Time Management
Geography
Funding

Think about how pressed for time your children already are – balancing families, careers and child activities.

Ponder also the challenges that could ensue from a care giving perspective geographically speaking if they do not all live in the same city.  Then there are funding issues to consider as well, because someone has to pay for the care.

Further, multiple polls have taught us that most children do not want to take care of their parents, but when faced with these circumstances – they can and almost always do care for their parents… even if their relationship is not strong with them.

Long-Term Care and the challenges associated with it can often require more and more of family members’ involvement as time passes

The collateral damage that can be associated with being directly involved in a family member’s long-term care plan can often involve irreversible damage to relationships within the caregivers, and there can also be profound resentment toward the folks that the care is being delivered to.

Keep in mind also the opportunity costs that your family could be experiencing as it relates to their career, children, church or synagogue because the time that is usually allocated to these aforementioned items has now been allocated to you.

There are a variety of ways available to possibly remove this potential burden from your family.

Talk to your LTCi Sales & Marketing Associate today to learn more.

Insurance and Financial Advisors help their clients save and prepare for retirement, but have you thought about what would happen to your clients’ retirement dreams if they became too sick or hurt to work and could no longer:

Save for retirement?
Contribute to their qualified retirement plans and receive employer matches (if available)?
Contribute to Social Security?

Even a short-term disability and loss of regular salary can eliminate years of savings and jeopardize your clients’ retirement dreams.

The Solution: Offer Disability Income Retirement Security

Disability Insurance Retirement Security is an innovative program that helps clients ensure their ability to continue saving for retirement in the event of any type of long-term or total disability.

It is ideal for individuals who:

Make at least $76,000 per year
Already have Disability Insurance – Group Long-Term Disability and/or Individual Disability Insurance
Understand the importance of Retirement Planning

You don’t need to be a Disability Income expert, we’re here to help.  Contact your Disability Income Specialist with product questions, and for illustrations, case design and implementation.

Let’s talk about federal estate taxes.  Back in the old days the first spouse to die had to use the lifetime estate tax exemption at death or lose it. In the discussion that follows assume a $1,000,000 exemption where the husband dies first.

If the husband left everything to the wife protected by the unlimited marital deduction his exemption went to waste and at her death she could only protect the first $1,000,000 of all she owned including what had been left to her previously.  To avoid this the husband created a Credit Shelter Trust, or “B” trust, either during life or at death and funded it with assets equaling the exemption amount.  He could give his wife a life interest in the trust, but it would not be included in either estate.  So when she used her exemption at death a full $2,000,000 had been protected from federal taxation.

Enter the American Tax Payer Relief Act of 2012 (ATRA) which made permanent the concept of portability.  Now any portion of the exemption not used by the husband at death (referred to as the deceased spouse’s unused exemption or DSUE) may be available to the surviving spouse.

This change in the law has led many wealthy clients to believe that there is no need to do any B Trust-type planning.

In fact, there may be several reasons to keep the Credit Shelter Trust in the plans.  Consider these 5 Reasons To Keep “B” Trusts In Your Client’s Plans:

Protecting appreciation from taxation

The B Trust removes the growth of the exemption amount from the taxable estate as well. Keep in mind that the DSUE amount is locked in at the first death. It does not increase with inflation like the exemption for the surviving spouse.

More protection from heirs

A B Trust created during life can lock in the intentions of the grantor without subjecting it to future changes in the last will and testament or to contests in probate court.

Creditor protection

Assets in a lifetime B Trust are not subject to claims against the grantor or his subsequent estate.

Protection against unintended loss of the exemption

To preserve the DSUE a timely estate tax return must be filed at the first death, even if no estate tax is due. Establishment of a B Trust assures this oversight does not occur.

Untaxed life insurance leveraging

If all or part of the exemption amount is to be used for life insurance to help fund anticipated tax liability it is more productive to buy and keep the insurance outside the taxable estate.  The B Trust is a good vehicle to serve as owner of the coverage.

If you have wealthy client couples who want to discuss the merits of B Trust planning versus relying on portability, give us a call and we can alert them to the issues that they should consider and that will arise when they eventually talk to their tax and legal advisors.

In addition to its primary purpose of death benefit protection, cash value Life Insurance offers tremendous value and flexibility that can address multiple needs that change over time.

As financial professionals we need to remind ourselves about the many features and benefits offered by Life Insurance products that are supported by cash value even though the initial out of pocket cost may be higher.

Cash value Life Insurance is built so that it can last a lifetime unlike Term Insurance that is temporary in nature.

Is Term Insurance really the least expensive option if it expires before it is needed most by those left behind?

That is a critical question to ask clients and prospects.

Another important feature of Permanent Life Insurance is the ability to accumulate cash value for a variety of needs – including premium flexibility, supplemental college and retirement funding as well as liquidity events related to health or other emergencies.  All of these needs can be met with properly designed cash value Life Insurance.

And after almost a decade of talking about no-lapse UL and Term Insurance it’s refreshing to see the industry start to shift the focus back towards value.

As a result, some of our core carriers have introduced next generation Individual and Survivorship Universal Life products that provide strong cash accumulation along with solid death benefit guarantees.  Together these features provide clients with the value they desire in a world where flexibility is becoming a must.

For more information please contact your Life Sales & Marketing Associate today.