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Questions? Contact our Sales Teams at (949) 863-0700. Life Insurance - Option 1 / Annuities - Option 2 / LTC - Option 3 / DI - Option 4.

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Avoiding Collateral Damage

The term collateral damage was originally used during warfare when a military target was struck. Even when the attack was successful it often left behind peripheral harmful results – usually affecting nearby innocent civilians. The phrase is now more broadly used to describe negative unintended consequences of an attempt to do something beneficial.

Life insurance is often used as security on a loan, usually in a business situation.

Urgency of the circumstances (or poor advice) usually results in a creditor simply being added as beneficiary on the policy for the amount of the loan. The result is a prime opportunity for collateral damage. Parties to the loan or the policy seldom think to adjust the creditor’s beneficial interest as the loan is paid down or even paid off. So if death occurs the creditor is unjustly enriched and the remaining beneficiaries are short-changed. Or a creditor’s beneficial interest can be too easily changed or eliminated without his or her knowledge.
 
Here are the rules:
 
Rule #1 – Never secure a loan with a beneficiary designation. Always use a collateral assignment!
 
A collateral assignment (C/A) is a formally documented lien on the policy in favor of the creditor who stands first in line for the share of the death benefit described by the terms of the C/A. But there can be collateral damage from a collateral agreement if things are not done properly.
 
Rule #2 – Use the carrier’s C/A form.
 
Rule #3 – Get the carrier’s permission before making any modifications on the C/A form
 
Rule #4 – To avoid the appearance of practicing law, only modify the C/A at the specific direction of the client or the client’s attorney.
 
Rule #5 – Make sure the C/A is dated after a time the policy is in force.
 
Rule #6 – Make sure the completed C/A is filled with the carrier, or the carrier won’t know to protect the rights of the creditor if benefits are paid.
 
Rule #7 – MEC Alert! Make sure the client understands that if a C/A is filed on a modified endowment contract the amount secured by the C/A is reportable taxable income to the extent of gain in the contract (like a LIFO distribution).
 
For all its conceptual simplicity, the execution of a collateral assignment usually has many problems as different circumstances pop up with each case. Call with any questions or for assistance with the drafting, approval and implementation of a collateral assignment at 706-614-3796 or tom@cpsadvancedmarkets.com.
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3 Out Of 4 Clients Want Help Preparing For Retirement – Do They Know How You Can Help?

Clients often think of life insurance solely as an instrument to protect them in the event of premature death, unaware of the valuable tax benefits that are afforded through cash value life insurance. And in today’s volatile marketplace, clients that are saving to retire need all the help they can get.

You have access to many products that can provide your clients with tax favored cash accumulation and if structured properly, will also provide for non-reportable, tax-free income.

The ability to specify a premium schedule is one of the great features available in our cash value life insurance products, removing the objection that the policy costs too much money. By educating your clients about the benefits of cash value life insurance as a long-term savings vehicle, they are likely to fund the policy with as much premium as they can reasonably afford.
 
While term insurance may be efficient for replacing income, or indemnifying debts, clients are very likely to outlive their level benefit period – receiving no return on their premium contributions.
 
How You Can Help
 
Recommending a cash value insurance policy at a younger age and more favorable health will better prepare your clients to address critical financial concerns such as retirement income planning, college tuition funding for loved ones and also paying for unexpected events (medical emergencies, litigation, home renovations, etc.) in their family.
 
The longer that you can fund a policy and allow the cash value account to compound interest and grow, the larger the potential income stream will be. One of the unique features of using life insurance is the death benefit – if the insured dies prior to accessing their cash values, it will provide a tax-free return on the premiums paid to date.
 
Many of your clients want to have a conversation about their options in regards to preparing themselves for retirement, but feel overwhelmed by the thought or do not know where to start. If you haven’t shared how cash value life insurance can play an integral role in their long-term financial planning strategy, you are likely missing out on easy sales; leaving the door open for another broker to have that conversation with them instead.
 
Your Life Sales Rep can provide you with an understanding of the different products available for cash accumulation. We can provide you with customized solutions for each client. Whether they can spend $100/month, $1,000/month or $10,000/month, we can create a solution that fits their budget.
 
Contact us today to learn how you can begin to position cash value life insurance as a core product offering to all of your clients.
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Underwriting Recreational Marijuana

Did you know that Non-Smoker rate classes are available on marijuana use? In some cases, Preferred Non-Smoker rate classes may be possible.
 
Take a look at these potential rate classes for recreational marijuana use:
  • 8 or less days per month may qualify for Preferred Plus Non-Smoker
  • Up to 3 times per week may qualify for Preferred Non-Smoker
  • If no more than 1 time per day and up to 4-6 times per week may qualify for Standard Non-Smoker
Contact the Underwriting Team for best possible outcomes on marijuana use.
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Tax-Free Dollars for LTC 🩺 Tuesday, February 11

Annuities are a fantastic retirement income solution, but what happens if they’re no longer needed for income?

Tuesday, February 11th – 10.00 AM to 10.30 AM PST

REGISTER NOW

Did you know that 73% of annuities owners will not use their annuities for income, but rather plan to use those funds to pay for future extended health care needs? This equates to an enormous opportunity to help your clients turn a taxable, non-qualified annuity into larger, tax-free dollars for LTC.

LEARN HOW YOU CAN:

  • Turn a taxable, non-qualified annuity into larger, tax-free dollars for LTC
  • Leverage the liability of tax-deferred assets into a larger, tax-free pool of money for LTC
  • Use assets to provide LTC for 2 people

Questions? Contact the CPS LTC Team at (949) 863-0700 Option 3.

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LTC Insurance: Because There’s No Place Like Home

Are you aware that 70% of people who reach age 65 will need Long-Term Care at some point during their lifetime?
 
While nursing homes and assisted living are popular, there is no place like home – 80% of all LTC is provided in the home, either at the home of the person receiving care or at the home of a family member.

Considering home is where the heart is, it’s important to highlight the flexibility that home care benefits provide.

Here are a few of the benefits included in most policies:
  • Home Modification
  • Home Safety Checks
  • Durable Medical Equipment
  • Provider Care Checks
  • Caregiver Training
  • Medical Alert Systems
  • Household Duties such as Laundry, Meal Preparation, and Bill Paying
  • Managing Medications
Some home care agencies will also include the following:
  • Social activities
  • Transportation to the Doctor’s Office
  • Report of Doctors office visits to family members
Emphasize these home care benefits and you’ll appeal to your clients’ desire to maintain their independence and quality of life, while increasing your potential for a successful sale.
 
For more information about home care please contact our LTC Specialists today!
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Protecting Your Client’s Income And Their Ultimate Retirement Goals

With the economy the way it is, most would agree that saving for retirement in these trying economic times can be challenging to say the least.
According to a CNBC study, 36% of American’s making over $100,000 a year, said they aren’t contributing a dime to retirement savings such as a 401k or IRA account.

Now imagine trying to save for retirement if you are too sick or hurt to go to work and earn an income. It quickly becomes next to impossible.

We have several carriers that offer solutions to help protect your client’s ultimate retirement goals if they were to get sick or hurt and could not work. One example is called DI Retirement Security.

DI Retirement Security allows your client to continue saving for retirement even if a disabling event should unexpectedly arise, by making a retirement contribution of up to 15% of their income or a maximum of $4,550 every month for the length of any long-term or total disability event.
 
Here are some sales approach tips:
  • Sell Individual DI Insurance and DI Retirement Security together
  • Approach clients who are at their maximum issue limits for Individual DI
  • Approach clients who are contributing the maximum to their 401(k)
  • Talk with business owners about providing DI Retirement Security as an employee benefit for executives and key employees
To find out more about how you can couple Individual DI Insurance with DI Retirement Security to help your client reach their ultimate goal of retirement, please contact your dedicated DI Associate today.
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Show Me The Money!

There’s the old story about the hungry chicken and the hungry pig who agreed to both contribute to a mutual breakfast. The chicken suggested they have ham and eggs, to which the pig replied, “That’s a contribution for you, but it’s total commitment for me!”

When proposing life insurance we would manage client expectations better if we took time to explain the disproportionate obligations that exist once coverage is put in force.

It would also help them understand the purpose behind those often annoying requests and requirements made by the carrier – particularly in the area of financial underwriting.
 
Consider This:
 
Clients often think that a carrier ought to be inclined to sell them as much life insurance as they want. They assume that because the local grocer would sell them his whole stock of fresh radishes, an insurance company ought to respond in the same manner and get frustrated when it does not. The difference, again, is the disproportionate obligations and the economic exposure that remain after the transaction. Except for a change in the type of asset you and your grocer are in the same position before and after the sale.
 
When a life contract goes into force the buyer is only under a non-binding obligation for periodic premium to keep the coverage going. If paid the carrier is on the hook for a death benefit exponentially greater than the premium if the insured dies. And that exponent is even more extreme when the client takes advantage of low term rates. To use an example from experience with my own offspring: a healthy 21-year-old female can purchase $350,000 for $185 a year. The carrier is at risk for a payment that constitutes just 1/20 of 1% of their exposure.
 
We can argue that the disproportion is mitigated or eliminated when we look at the big picture. If the carrier has underwritten correctly over a large pool of policyholders it all shakes out in the wash over time; does it not?
 
The key here is “if the carrier has underwritten correctly”.
 
And part of correct underwriting is not issuing an amount of coverage that makes an insured worth more dead than he or she is when alive (or as we say in the trade, not increasing the likelihood that insureds will fall down a flight of stairs before their time). The carrier wants to know why you need the coverage and the financial circumstances that justify both the need and the amount, usually in the form of a simple, easy-to-complete financial supplement that must be signed by a qualified third-party advisor for larger cases. Resistance on this will only delay the case and maybe raise the suspicions of the underwriter. Alert your client in advance and respond quickly to request that are made.
 
We turn over financial information for everything nowadays: loan applications, refinancing a mortgage, getting a new credit, or opening a PayPal account. Don’t let your clients develop a mindset that applying for life insurance is any different.
 
We specialize in alerting you up front regarding potential underwriting requirements on your case, estimating how much coverage a carrier will allow given your client’s financial circumstances, and helping with bumps in the road if financial justification issues occur. Give Tom Virkler, JD, Director of CPS Advanced Markets a call at 706-614-3796 or email him at tom@cpsadvancedmarkets.com.
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How To Lower Your Client’s Premium – Every Time

What if you could offer your client the lowest premium on any Term or UL policy every time?
 
For years, Life Insurance carriers haven’t given their clients the option to offer the death benefit proceeds to be paid in any way but a lump sum. However, with new product advancements a few carriers now offer a flexible death benefit payment option than can provide an income stream for the beneficiaries, while significantly lowering the premium for the insured.

The Income Provider Option from a few of our selected carriers allows the policy owner to select a guaranteed annual or monthly income stream death benefit for payment to one or more beneficiaries.

How it works:
 
Not only will this Income Provider Option allow the policy owner to control how the benefits will be paid, it also decreases current cost of the insurance by providing graded premium discounts based on how long the income stream pays out. This endorsement is an extremely innovative and cost effective way to hedge against adverse underwriting or premiums above your client’s tolerance to get them the coverage they really need.
 
The Income Provider Option also presents the client with a great deal of flexibility granting them the ability to directly specify how the payments will be made to the beneficiary. Payments can be structured so that a surviving spouse receives a payment from the policy every wedding anniversary, or a grandchild receives a sizable birthday gift from a grandparent for a designated amount of years. This payment option can provide a lasting legacy and address the personal and sentimental value of the Life Insurance policy by ensuring the death benefit is paid the way the insured intended.
 
The Income Provider Option provides your client with two immediate benefits; first, it will give them peace of mind knowing their family will be cared for the way they intended, and second it will help lower current premiums, leaving them more discretionary income while they are still alive.
 
If you have a client in mind or would like to learn more about this great endorsement, please contact your dedicated Life Sales Associate.
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Using Existing Exam Requirements

“Can we still use the same exam?”
 
We often hear this question in underwriting. Perhaps a client recently placed coverage and is considering applying for more. Or maybe they did not receive the rate class they applied for and wish to apply to a different carrier.
 
Whatever the scenario, it’s always good to hear that it’s not too late to use the same exam!
 
For several carriers:
  • Ages 0-70: Paramed, blood and urine specimens and EKGs are often good for up to 12 months
  • Ages 71 and over: Paramed and blood and urine specimens are good for up to 6 months. In some cases, EKGs are good for up to 12 months

*Current medical declarations or good health statement must be within 90 days of policy issue.

Call the Underwriting Team today to find out more!
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Overcoming Retirement Challenges with FIAs

Overcoming Retirement Challenges with FIAs

Retirement planning is a different ballgame when it comes to decumulation. As clients face challenges like inflation, longevity risk, and sequence of return risk, Fixed Indexed Annuities (FIAs) offer a powerful solution. With innovative product designs — including fee-based FIAs with no surrender charges, commission-based products with unique indices, and income riders that guarantee lifetime income — the FIA landscape is more valuable than ever for both advisors and clients.

Join CPS and Corebridge for a lunch meeting at Il Fornaio in Irvine, where we’ll dive into actionable insights and planning strategies you can implement right away in your practice. Register today!

Il Fornaio | 18051 Von Karman Ave, Irvine CA 92612
Friday, January 31st – 11.45 AM to 1.15 PM

REGISTER TODAY

Special Guest Speaker: Reggie Washington, Regional Director with Corebridge Financial

Questions? Contact the CPS Annuities Team at (949) 863-0700 Option 2.

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