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How Policy Reviews Uncover Hidden Opportunities

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!
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Get To Know Your Clients Better – Use Our Sales & Marketing Resources

Every client is different. Every client’s needs, goals, family situation, budget, risk tolerance, health, and protection concerns are unique. What motivates your clients? And why does it matter?
 
Two big reasons why you want to learn what truly matters to your clients are: 1) You can better design solutions to meet their needs, and 2) You can use this information to motivate your clients to implement your recommendations.

When you know which questions to ask, and learn detail of what your clients would like to accomplish, you start to get a clear picture of what matters most.

You must be willing to ask the discovery questions and be patient with the clients’ responses.
 
A few of the classic, high-level questions are:
  • What do you want your retirement to look like?
  • What kind of legacy do you want to leave?
  • How do you plan on taking care of your children if something happens to you?
Or, you can try a question or two that might normally be outside your comfort zone, such as:
  • What keeps you up at night?
  • What are you most passionate about?
  • What is important to you about life?
You might be surprised what you learn by asking questions you’ve never asked before.
 
Contact your Life Sales Representative today to learn more about the tools and resources we have available for you.
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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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The New Insurance Policy – Do Your Clients Have It?

Today’s life insurance products are very different from past product offerings. We need to educate and share details of how today’s options can help solve the real life problems modern families face.
 
Are we asking the proper questions? Are we creating enough of a sense of urgency to move clients to take action?

50% of American households acknowledge they don’t have enough life insurance – LIMRA

How do we turn a non-buyer of insurance products into a client who sees value in the products we offer?
 
It has become increasingly difficult for a client to identify the proper products, let alone the correct amounts of insurance coverage they should own. In most cases, the consumer is intimidated with the process of buying insurance, or at least that is what past research indicates.
 
We need to make the process appealing and as ‘client-centric’ as possible. If they are buying insurance, let’s do what it takes to make sure they buy it from you.

21% of consumers had no idea what type of coverage they had bought – LIMRA Over 60% of life insurance shoppers are proactive; most often they want to either review coverage or are impacted by a specific life experience which triggered the need in their mind – LIMRA

Many families are looking to protect assets, accumulate cash savings for retirement and prepare for the possibility that they may require professional care at older ages. We offer a product which can address all of these concerns – a single product that can meet all of these needs in one transaction!
 
How do we find clients?
  • Do you know someone who needs retirement planning?
  • Do you know someone who has taken care of a loved one?
  • Do you know someone who wants to leave a legacy behind?
Do you have anyone who fits one or more of the three descriptions above?
 
We want to help you deliver for your clients. Access to accumulated cash value; money for long-term care services and/or tax favored money for heirs – let’s take a close look at how insurance can secure your clients’ financial futures. Contact your Life Sales Rep today.
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The Life Insurance Triple Play

When you mention life insurance to your clients, chances are the first thing they think about is protecting their families in case they should die prematurely. Yet the reality is that they can face just as much risk by living too long.

What if they outlive their retirement savings? Or become unable to take care of themselves in their old age?

Life insurance with a long-term care (LTC) rider can help provide benefits for your clients whether they live or die.
 
The first benefit provided by life insurance is the death benefit: a source of immediate liquidity payable at death that can help provide income replacement, fund estate settlement costs and repay existing debts.
 
But the right kind of life insurance, properly structured, also generates a significant cash value. The potential cash value can be accessed at retirement via policy loans and withdrawals to supplement your client’s retirement income.
 
Finally, if the policy is purchased with an LTC rider, it can also provide funds to cover long-term care benefits, such as nursing home costs and/or skilled in-home nursing.
 
With such a policy, your clients have now covered three major risks: dying too soon, living too long and living with an impairment.
 
Contact your Life Sales & Marketing Associate today for more information.
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Life Insurance For The Small Business Market Restrictive 162 Executive Bonus Plans

The traditional 162 Executive Bonus Plan is one of the simplest and most popular executive benefits offered in the small business market. The bonus is tax deductible and has few regulations and reporting requirements. This makes the Executive Bonus Plan extremely attractive to many business owners.

The bonus needs to be considered reasonable compensation in order for it to be deductible, but other than that, the business owner has complete flexibility.

Who is covered and the level of participation is completely discretionary, plus the commitment to the contribution can also be flexible.
 
Even with all of the positive attributes of Executive Bonus Plans, some employers continue to have concerns. Many employers are concerned about not having control of the asset (the policy), which is owned by the employee. The employer may feel that unlike other executive benefit plans, there is nothing to tie the employee to the company, no “golden handcuffs.”
 
Though employees have an incentive to stay with the company in order to continue receiving premium bonuses, some employers may feel that the bonuses paid are “money out the door.” Further, they may fear that the employee may handle ownership of the policy irresponsibly.
 
A potential solution for the employer who has these concerns is the restricted executive bonus plan.
 
The Restricted Executive Bonus arrangement is designed to give the employer some degree of control over the employee’s access to the policy during employment.
 
The restrictive bonus may be approached in many ways; however the most popular method is through a restrictive endorsement to the policy. Using the restrictive endorsement, the employee agrees to sign an endorsement form, which becomes part of the policy. The endorsement states that the employee will not exercise certain ownership rights in the policy; usually for a period of years or until the employee reaches a certain age.
 
It is extremely important that the endorsement signed by the employee not grant any ownership rights to the employer. The only way the premium/bonus can be deductible to the employer is if there are no ownership rights with the employer. If the business had any ownership rights, the business’ deduction of the premiums would be jeopardized.
 
The restrictive bonus should be used sparingly.
 
And only in cases where the employer has expressed significant concern over the lack of control perceived under a standard executive bonus arrangement. In addition, the employee participant may feel as though the benefit is less compelling since the bonus is already taxable (causing an out of pocket expense in a single bonus situation) and the benefits are not immediately accessible.
 
In some cases, a restricted plan may even have the opposite effect from the intended goal of tying the employee closer to the company. It is more practical to use the double bonus, or gross up bonus, when the restrictive endorsement is used. In this situation, the cost is zero and the plan should continue to be compelling to the employee.
 
The bottom line is that executive bonus is a great way for employers to reward and retain key employees. The restrictive bonus can be used sparingly when the objection of “money going out the door” arises. Either way, executive bonus is a great sales concept for the small business market and can generate significant commissionable sales to the producer.
 
Contact your Life Sales Rep for more information.
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Indexed Universal Life: A New Savings Plan!

The yields in today’s marketplace on traditional short-term and long-term savings instruments are at an all time low.

Individuals are looking for efficient strategies to grow their money that they have worked hard to accumulate, but fear high risk in the markets.

There is a way to accomplish long-term growth and minimize the exposure to the increased volatility of the markets – Indexed Universal Life Insurance products.
 
How does this work with a real prospect in mind?
 
Indexed Universal Life has downside protection against poor market performance.
 
For example, if the S&P goes down 20% the policy will protect against loses with a 0.00% floor. The value in the policy will not be reduced by the loss in the index. If the market goes up 20% then the client will realize a gain up to the interest rate cap inside the policy, which can be as high as 13 %.
 
The Indexed Universal Life products also allow the individual to participate in an index of their choice within the carriers offering, which is usually the S&P 500. The client may also have options to participate in the Hang Seng and the EURO STOXX 50.
 
If you have prospects that are creating a college savings account, retaining a key employee or trying to compensate high level executives, Indexed Universal Life is a way to help them secure and plan for their futures.
 
For more information on Indexed Universal Life products please contact your Life Sales Marketing Manager today!
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Calculating Retirement Needs – We Can Help You Do The Math

Retirement planning has become the first priority for many individuals. Social Security and other retirement plans may not be sufficient for the clients’ needs. Though a client may be funding a 401(k) and IRA, they still might worry that they do not have enough savings opportunities, or that they may have a potential retirement shortfall.

One of the most overlooked savings tools for retirement is life insurance.

The cash value of a life insurance policy grows on a tax-deferred basis and may provide your client with a source of additional retirement income.
 
Address potential planning opportunities in your clients’ retirement plans.
 
We can generate a detailed report unique to each client on the potential income gap between their dream income, and what they are actually going to receive in retirement.
 
A member of our team would use this information to conduct a thorough retirement check-up, and help you show your clients how life insurance can positively affect retirement years.
 
Please contact us today – we look forward to the opportunity to help you complete a retirement check-up for each of your clients.
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Life Settlements: Unlock the Value of Life Insurance

A life settlement can be a valuable option for individuals who no longer need or want their life insurance policy. 

This financial strategy involves selling your life insurance policy to a third party for a lump sum cash payment that is higher than the policy’s cash surrender value but less than the death benefit.

If you have clients over the age of 70 with policies greater than $250,000, here are some important reasons why they might want to consider a life settlement.
  1. Financial Flexibility:  The cash received from a life settlement can provide immediate funds for urgent needs such as medical expenses, debt repayment, or retirement planning, offering a boost to financial stability.
  2. Policy Maintenance Costs:  Life insurance policies often require ongoing premium payments.  If maintaining these payments becomes a financial burden, a life settlement allows you to relieve this obligation while gaining financial benefit.
  3. Changing Needs:  As life circumstances evolve, the original purpose of the policy might no longer be relevant.  A life settlement can free up capital that can be used more effectively according to current needs and goals.
  4. Investment Opportunity:  The proceeds from a life settlement can be reinvested in higher-yielding assets or opportunities, potentially enhancing overall financial growth.

A life settlement can provide a meaningful alternative for those looking to optimize their financial resources in the face of changing circumstances.  Call your Life Sales Specialist for more information.  

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Final Expense Coverage – Insurance That Every Client Needs

As insurance advisors, we are often looking to sell our client’s products that will satisfy an immediate need or help them to reach a long-term planning objective.
 
As a result, the discussion concerning the need for Final Expense Insurance frequently does not take place until the clients later years when the premiums can be significantly more expensive.

If one of your clients dies without having funds earmarked for final expenses their surviving family and friends can be put in a very difficult position that causes them to make lifestyle sacrifices to provide for a proper burial.

Losing a loved one is already a difficult thing to manage.
 
You can help to alleviate some of the stress by making sure that they will not need to worry about generating the necessary funds for the funeral. While these may not be big ticket sales, collectively, they can create a great supplemental sale that compliments your existing offerings.
 
Even if you are an investment advisor who doesn’t typically write Life Insurance, if you are looking to preserve assets under management from one generation to the next, what better way to begin a professional relationship with a surviving family member than by handing them a check for the benefit proceeds.
 
More insurance carriers are introducing small face amount, final expense products that do not require a medical exam and can be issued with only a phone interview or by answering basic medical questions on an application. The process can be completed in a matter of days.
 
We can provide you with marketing materials and client approach letters to help make this simple sale part of your core product offerings.
 
For your younger clients who already have kids, they may not view Final Expense coverage as an immediate need. An alternative solution would be to add a child rider to a Term policy to provide affordable coverage on the parent and also any and all of their children.
 
Please contact us today if you would like to learn more about the final expense planning and the solutions available in your state(s) of operation.

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