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Is It Time To Upgrade Your Client’s Life Policy?

“Old Insurance” Vs. “New Insurance” – Which Do Your Clients Own?
 
While the death benefit is quite often the most important feature of life insurance, there are many products available that provide additional features and benefits.
 
The term “old insurance” applies to policies that don’t have much additional value beyond the death benefit, while “new insurance” would refer to life insurance where clients do not need to die in order to receive a benefit.
 
We advocate regular reviews of your clients’ insurance policies, to ensure they have the most appropriate and effective product solutions to meet their ever-changing needs.

A policy review may uncover that the existing amount of coverage is no longer reflective of their true need and/or that there’s opportunity to enhance their coverage via the inclusion of living benefits.

Take for example the following:
 
  • Long-Term Care, Chronic Illness and Critical Illness Riders are just a few examples of “new insurance” benefits not commonly available at the turn of the century.
  • The evolution of Index UL can provide your clients with tax-favored accumulation and tax-free income – which can serve as an alternative solution to the Roth IRA if they are restricted by contribution limits or earn too much income, making them ineligible for the Roth IRA altogether.
  • For younger clients concerned about retirement income, cash value life insurance makes for a great addition to their investment portfolio by providing a diversified source of accumulation.
Most clients only know about “old insurance,” and would likely consider a replacement if they were aware of the enhanced benefits available through “new insurance” products.
 
Don’t let your clients hear this story from another agent or advisor. We can provide you with turn-key policy review materials, and will help you to create a list of key talking points you can use to initiate discussions with your clients about their existing policies.
 
Contact your Life Sales Rep today for more information.
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Are You Following Up on Your Term Sales?

Term Insurance is often sold to clients who simply want the lowest cost death benefit protection for a specified period of time. Clients and producers alike will preach the concept of buying Term and investing the savings.
 
While we’d like to think that clients and the investors hold themselves accountable for this strategy and do invest their cost savings, we know it is more likely that the clients pay for the Term coverage and then spend their savings elsewhere. The Term Insurance is then forgotten over time only to be revisited once the level Term period has expired and the client does not want to pay the escalated premium.

One way to help your clients effectively plan for their long-term needs is to discuss the Term Conversion option.

Consider this:
 
By completing a conversion application, the client can change their coverage from a Term plan to a Permanent policy without any additional underwriting. This is usually allowed up to a certain age (commonly 65, 70 or 75 depending on the provider). The cost of these conversions is based on the insured’s attained age at the time of the request so the longer your client waits to exercise their conversion option, the more expensive the premium will be.
 
This should be a topic that you address with your clients on a regular basis to ensure that you do not let the conversion privilege expire and also that you are converting at the earliest, most appropriate time which can save your clients significant premium costs. It will also ensure that your clients have the coverage in place when they need it most – when they pass away. Since the average life expectancy is in the mid-80s, more often than not, the level Term policy will expire before your client expires.
 
Ask yourself if you have a process in place to address your clients who have purchased Term Insurance. Even if converting their Term plan isn’t the most appropriate course of action at this time, the review discussion may uncover additional needs for insurance or lead to referrals.
 
We can help you determine if your client’s Term plan has a conversion option and provide you the marketing support needed to turn these cases into permanent sales.
 
If you have any clients that may be approaching their conversion deadlines or who may be appropriate prospects for a policy review, call us and we can help get the process started for you.
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One Life Insurance Plan – Numerous Benefits

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.
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How To Convert More Life Insurance Applications Into Paid Production

Surprises can be fun, but not when they’re thrown into the Life Underwriting process.
 
As producers, we all have experienced the challenge of making a recommendation, completing an application kit, and working through days, even weeks, of underwriting – only to learn that the client cannot qualify for preferred rates due to family history, or that they must pay a substandard premium because of multiple driving violations.

After all the work, how many of your applications actually end up being placed in-force?

Eliminate any unexpected surprises during underwriting.
 
We can provide you with tools that will aid in accurately assessing and qualifying your clients’ insurability.
 
Improve the percentage of applications that are converted into placed policies by performing a basic life needs analysis; asking the right field underwriting questions, and setting reasonable expectations with your client.
 
Qualify your impaired risk clients more accurately with one page fact finders we call Quick Quotes – with over 30 customized fact finders available online, there is a questionnaire available for almost any client profile.
 
Completed forms are analyzed by our dedicated Underwriting Department.
 
When appropriate, a member of the Underwriting Team will speak with you personally about your clients and provide directed questions about their health and medical history – the goal is to obtain tentative carrier offers before you make a carrier recommendation or take an application.
 
Completing a life insurance needs analysis and gaining an understanding of your clients desired premium outlay allows us to work backwards – maximize the insurance policy benefits while not going a penny over the client’s intended budget, even if they are adversely approved in underwriting.
 
Don’t assume all of your clients are healthy and will qualify at preferred best rates.
 
The reality is that less than 10% of all applicants qualify for the top tier rate class and the majority of clients are approved at standard rates. Take advantage of our services and expertise to avoid any underwriting surprises.
 
Contact us today to learn more about the resources available, and how you can improve your life application placement ratio.
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4 Ways Clients Can Cash Out On Their Life Insurance

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 15th, 20th and 25th 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
 
  1. 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.
  2. 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.
  3. 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.
  4. 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.
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Who Are Your Best Business Owner Prospects?

Companies that inquire about business evaluations are usually looking to learn how much their company is worth – and find business solutions through life insurance. These solutions range from exit planning, business protection, transferring wealth to the next generation, and even retirement planning.

Recently, statistics have been released to help better identify the types of companies that typically inquire about business evaluations.

The resulting top five industries are:
  • Professional, scientific, and technical services
  • Manufacturing
  • Construction
  • Wholesale trade
  • Retail trade
The statistics also revealed that these companies are mainly S&C corporations, with about 13% being private partnerships – and an overwhelming majority have about 1-99 employees with over 25 years in their respective fields. Half have an annual sales volume of $1-$3 million; 18% generate $3.1-$10 million, where 12% are reaching $10.1-$50 million in sales. Less than 3% do more than $50.1 million in sales.
 
When owners use the business evaluation process, results can lead to significant opportunity.
 
Related planning in the form of a Buy-Sell case results in an average case size of $11,301. Average case size for Key Person policies are $8,986. Executive Bonus cases average $28,756.
 
Some other interesting statistics advisors should be aware of are the percentages of businesses that successfully pass operations on from one generation to the next: 70% of first-generation operations do not successfully transition to the next generation. 90% of the second-generation do not make it to the third generation, and 96% of the third-generation do not survive to the fourth generation.
 
The purchase of life insurance policies on the owners’ lives can ensure there is enough money to pass along to the next generation, to successfully run and operate the business going forward. Or, if an owner has a child who has no intention of running the business, life insurance is a great solution to equalize this child’s inheritance, and help other family members who may be looking to take on the family business avoid any potential tension.
 
Please reach out to your Life Sales Marketing Manager to learn more about these statistics, and how life insurance is a critical part of the business planning process.
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How To Turn Single Term Insurance Sales Into Three Commission Checks

Term Insurance is designed to provide coverage for only a specific duration of time (10, 15, 20, 30 years). However, almost every term policy sold through us includes a provision allowing clients to convert their term policy into a permanent insurance policy – without requiring any new medical underwriting.
 
One of our brokers shared how they use this provision to create additional sales while also providing clients with a solution that they can rely on for the rest of their lives. During the initial sales discussions, they promote this conversion privilege, working with the client to determine how much coverage they would need and how quickly they could afford to exercise this option.
 
Since the pricing for the permanent insurance is based on the client’s attained age at the time of conversion, the sooner that the client converts their coverage, the less expensive it will be.

The client does not need to convert their entire term policy at once and can make use of multiple partial conversions to help keep premium costs low while providing added flexibility.

For example, if the client decides to purchase a 10 term policy for a $1M face amount, they could potentially convert $500K next year, $250K more in 5 years, and then make a decision whether they want to convert and maintain the remaining $250K towards the end of the level term period.
 
Many of your clients do not know that their term coverage includes this feature.
 
Far too often, the discussion of how and when to exercise a term conversion option is a reactive one, taking place when the level term coverage is about to end or shortly after the client has experienced a change in health for the worse.
 
Don’t set your term sales on auto-pilot.
 
Talk to your clients about why it makes sense to take advantage of the conversion provision. Explain how they can keep their initial term policy rating for the rest of their life without having to re-qualify in the future. It’s another great reason to stay in contact with your client and could even create new sales and/or referral opportunities with their family and friends.
 
Oh, and did we mention that you collect a new commission for each conversion sale you make? Your Life Sales Rep is here to help – contact us today.
news_6.6.22

5 Reasons To Use Permanent Life Insurance

Does permanent life insurance have a place in your clients’ overall financial portfolios?
 
Consider the following benefits offered by many of the permanent life insurance products available on the market today:
 
  • Tax-free death benefit, cash growth, income, and long-term care benefits
  • Market like returns with no downside market risk and flexible funding
  • No required minimum distributions or penalties for pre 59 1/2 withdrawals
  • No phase-outs for high income earners
  • Potential to earn premium discounts and rewards through healthy lifestyle activities
To learn more about how clients can take advantage of all the benefits of permanent life insurance, please contact your Life Sales Rep today.
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Policy Review Options

Policy review can be a great tool to get your foot in the door with a new or existing client.

You will often find that the current policy is grossly underperforming due to the decrease in interest rates and that the policy is in danger of lapsing without increased premium payments.

Upon review, if your client is having trouble keeping up with increased premium payments because of underperformance or keeping up with existing premiums because of fixed income limitations, talk to them about our variety of Term/UL Hybrid products.
 
Before the cash values are exhausted to help pay premiums for an already unaffordable policy, show your clients how to utilize a 1035 exchange into one of these Term/UL hybrid products to lower current premiums or purchase a paid up policy.
 
How does it work?
 
With carriers beginning to introduce Term/UL Hybrid products, it can give your client an option to have a policy that combines flexible premium structure of a UL with the affordability of Term Insurance.
 
Most of these products accept a variety of different premium payment patterns including a single payment from a 1035 exchange unlike a traditional Term plan. They are purchased in guarantee periods of 10, 15, 20, 30 years but include a secondary guarantee that will run to age 121. This secondary guarantee can be accessed by paying an increased premium if the client wishes to extend their coverage without undergoing medical or financial underwriting.
 
As more of our major carriers begin to replace their traditional Term products with these Term/UL hybrids, it opens the opportunity for significant 1035 exchanges to be made from an underperforming policy into these products in order to purchase a paid up plan or ascertain a greater death benefit.
 
If you have a client in mind that would benefit from one these hybrid products please or contact your Life Sales Desk to learn more!
news_6.13.22

Life Insurance Premium Financing: 3 Risks To Consider

Premium financing has many variables to consider when analyzing it as a viable option for clients – but so does planning in general. Oftentimes, premium financing is seen as having more inherent risk due to the fact that advisors do not fully understand the moving parts.

Let’s start with the fundamentals, is there a life insurance need?

When analyzing a premium financing option for clients, it is easy to get lost among the variables in play. These include 1) collateral risk, 2) policy performance risk, and 3) interest rate risk.
 
Collateral Risk
 
Collateral risk is the difference between the outstanding loan balance and cash surrender value of the policy. Additional collateral does not always need to be cash or cash equivalents. When structured properly, clients can pledge dormant assets such as residential and commercial real estate and equipment. The fact that liquid assets may not be needed for premium financing collateral allows for further leveraging opportunities for the client versus paying the premiums out of pocket.
 
Policy Performance Risk
 
Policy performance risk is present in any policy sale, but when premium financing in involved poor performance can increase the collateral risk in the under-performance may not permit the freeing up of loan collateral anticipated at the time of the sale and, possibly, even result in the need for more collateral.
 
Interest Rate Risk
 
Interest rate risk is all about the possible increases in the variable rates charged on the loans made for premium dollars. Rates overall are rising which affects the rates charged on premium finance loans. When illustrating premium financing scenarios expectations of the client must be managed by realistically demonstrating the impact on the plan if rates rise.
 
And in no event, should the feasibility of a plan depend on mere speculative arbitrage between policy crediting rates and borrowing rates.
 
A plan should be based on a more comprehensive strategy that include the cost of purchasing the insurance with cash, the opportunity gained by the flexibility of interest payments in the arrangement and the rate of return on the capital retained that wasn’t used for premium payments. Interest rate risk can be mitigated by structuring a favorable credit facility and administering it every year.
 
We have a full array of products, financing, plan designs, implementation and administration support.
 
Please call your Life Sales Associate concerning your high-net-worth clients who may want to finance their insurance plan to allow for ongoing use of their other liquid or hard assets.
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