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How Policy Loans Affect Your Whole Life Dividends

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.
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Why The Connelly v. IRS Supreme Court Decision Matters For Business Owners

The U.S. Supreme Court’s decision in Connelly v. IRS sent a loud wake-up call to business owners using life insurance to fund buy-sell agreements. The Court ruled that the value of life insurance proceeds owned by a corporation must be included when calculating the fair market value of the company for estate tax purposes—regardless of whether those proceeds are earmarked to buy out a deceased shareholder’s interest.

Here’s why this matters:
  • Higher Estate Taxes: Corporate-owned life insurance inflates the company’s value, which can increase estate taxes for heirs.
  • Funding Gaps: The buyout money might not stretch as far as owners expected once the IRS takes a bigger bite.
  • Planning Urgency: Owners must review agreements and consider alternatives, like cross-purchase plans or LLCs, that keep insurance proceeds outside the taxable estate.

For life insurance agents, this is a golden opportunity to start conversations with business owner clients. If their buy-sell agreement is funded with corporate-owned life insurance, they may face a surprise tax bill. Helping them restructure now can save their heirs millions—and position you as a trusted problem-solver.

The Bottom Line: The Connelly decision changes the game—waiting could be costly. Don’t let your clients get blindsided by an unexpected tax hit. Call now for more information.

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Why Life Settlements Should Be Part Of Your Client Conversations

Too many seniors let life insurance policies lapse or surrender them for pennies on the dollar.

As an advisor, you can help them uncover a better option: a life settlement.

A life settlement allows a client to sell an unwanted or unaffordable life insurance policy to an institutional buyer for more than the cash surrender value. The buyer takes over premiums and receives the death benefit when the insured passes away. Your client receives a lump sum — often 4 to 6 times more than the surrender value — and gets immediate relief from premium payments.

Here’s an example:
  • Policy: $500,000 Universal Life
  • Insured: 76-year-old female
  • Annual Premium: $12,000
  • Cash Surrender Value: $25,000
  • Settlement Value: $125K
  • Agent Referral Fee: $12,500

This example puts $125,000 in the client’s pocket — plus she stops paying $12,000 per year in premiums. That’s real money that can be used for retirement, medical costs, or gifts to family. Life settlements are not just a “last resort.” They are a planning tool that can add significant value, particularly for clients who:

  • No longer need the coverage
  • Struggle to afford premiums
  • Want to free up funds for other goals

Don’t let your clients leave money on the table. Explore a life settlement first. Call us today to help clients unlock hidden cash and boost your revenue.

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Make the Most of a Charitable Gift Today Using Life Insurance

Making gifts to institutions, like universities, hospitals, faith-based organizations, or non-profits, is a great way to utilize accumulated wealth and enhance your client’s legacy.

Giving directly can significantly reduce the amount of assets ultimately passed to family members and other loved ones.

Discount the cost of the gift through a Life Insurance policy.
 
If your client donates directly to an institution, it would reduce their net worth by the amount gifted. Instead, consider donating the premium amount needed to fund a Life Insurance Policy to the institution. The institution then uses the donations to purchase the Life Policy on your client.
 
This would reduce your client’s current net worth by just the premium amount and may qualify them for a current income tax deduction. This strategy is a smart way to leverage assets for charitable giving.
 
It’s important to consider that the charitable organization must be willing to use the donated premium to purchase, own, and be the beneficiary of the Life Insurance Policy.
 
Federal Income tax deductions apply only to gifts to a charity or charitable organization, require itemizing, and may be subject to limits and phase outs. The design of the Life Insurance plan should be considered on a short pay basis and each premium must be paid in full because any variation in donation amount will affect the death benefit and could potentially cause the policy to lapse.
 
Clients that have a high net worth and have a personal need to aid a charity hope to take advantage of the tax benefits of such a donation, so they must consider the various options. Help them understand the benefits of a charitable gift using Life Insurance today.
 
Please contact your Life Sales Marketing Manager for more information on this sales idea or any other Life Sales information.
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Beyond Coverage: Life Insurance That Builds Wealth

Life Insurance isn’t just about providing a death benefit—it’s a dynamic financial tool that evolves with your clients’ needs. As financial professionals, it’s easy to get caught up in the simplicity of Term Insurance or the appeal of low initial costs. But it’s time to revisit the powerful benefits of cash value Life Insurance.

Unlike Term Insurance, which is temporary by design, cash value Life Insurance is built to last a lifetime.

That longevity alone raises a critical question: Is Term really the most affordable option if it expires before it’s needed most?

Permanent Life Insurance offers more than just coverage—it provides flexibility and financial resilience.

With the ability to accumulate cash value, clients can tap into their policy for:

  • Premium flexibility
  • Supplemental college or retirement funding
  • Emergency liquidity for health or unexpected events

These features make cash value Life Insurance a versatile solution for changing life circumstances.

After nearly a decade of industry focus on no-lapse UL and Term products, it’s refreshing to see a shift back toward value-driven solutions. Leading carriers are now introducing next-generation Individual and Survivorship Universal Life products that combine strong cash accumulation with solid death benefit guarantees.

In today’s world, flexibility isn’t a luxury—it’s a necessity. And cash value Life Insurance delivers just that.

For more details, reach out to your Life Sales & Marketing Associate today.

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6 Core Needs Of Business Clients – And How We Can Help

Are you talking to your clients about Business Insurance? If not, you may feel that it would take years to become an expert.

We can help you provide free business evaluation services to your clients today!

We will help to address your business clients’ six core needs:
  1. Retirement Income
  2. Exit Planning
  3. Income Protection
  4. Business Protection
  5. Wealth Transfer
  6. Survivor Income
A sales associate will work with you to provide business case expertise and top-notch service before, during and after the sale! We will help you navigate through the planning process.
 
The process includes, but is not limited to:
  • Learn the Business Planning Services Approach
  • Learn whom to approach
  • Learn to build marketing campaigns
  • Help clients find the value of their business
  • Help clients review their buy-sell agreements
  • Help clients understand the reports
  • Help clients create an action plan
Working the process thoroughly will help your clients gain perspective on the value of their business, and identify any planning opportunities in their current buy-sell arrangements. Contact us today to learn more about this comprehensive service.
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The Shocking Truth About The Average American Household

Losing a loved one can be devastating to a family, both emotionally and financially. While it is almost impossible to prepare for the emotional challenge of death, it is much easier to prepare for the financial challenge when adequate life insurance coverage is in place.

More than half of Americans believed that they would feel the financial impact from the loss of the primary wage earner within six months.

This doesn’t just speak to households where there is no existing life insurance coverage in place.
 
Consider:
 
Over one quarter of consumers who already own life insurance feel that they do not have an adequate amount of coverage.
 
As life insurance agents, staying in regular contact with existing clients helps to ensure that the amount of coverage in place is commensurate with changes in their lifestyles.
 
Many life events such as marriage, divorce, the birth of a child, changes in employment or the purchase of property will trigger a change in the insured’s need for life insurance coverage. When your clients are going through these experiences, their life insurance coverage is often not at the front of their mind.
 
We have tools available for your immediate use to simplify the regular review of your clients’ existing coverage, including customized kits for both you and your clients!
 
Call your Life Sales Rep today to learn more about the resources available.
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Help Protect Your Client’s Income With Linked Benefit Life Insurance

Do you have a client who would like to purchase a Disability Income policy but face the difficulty of qualifying due to the nature of their profession? Perhaps their reported income is low and the amount of benefit available is insufficient.
 
A DI alternative through a Linked Benefit Life Insurance policy.
 
Today, many carriers are offering linked benefit products which allow your clients to access a percentage of their policy’s death benefit in order to cover their Long-Term Care (LTC) expenses.
 
Typically, in order to qualify for this acceleration of benefit, the client will need to have lost the ability to perform two of the six Activities of Daily Living (ADL’s) which include eating, bathing, dressing, toileting, transferring and maintaining continence. Odds are that if you could satisfy the parameters to go on disability claim then you could also satisfy these parameters to exercise your LTC benefit.
 
The benefit is not based on earnings and there is no income verification needed.
 
This product qualifies your client only on their health, not on their occupation. As a result, you can offer a linked benefit plan to any of your clients who could qualify for a typical Life Insurance policy. There are numerous products that offer this LTC rider.
 
Whether your client is interested in a guaranteed death benefit, building cash value or a combination of both, there is a product available that can provide a monthly benefit in the event that your client is unable to perform two ADL’s and cannot earn their income.
 
Call your dedicated Life Marketing Specialist if you have a client to consider or if you would like to learn more about how linked benefit life products work.
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Non-Reportable, Tax-Free Income During Retirement By Using Index UL

There aren’t many investment vehicles available that offer the tax advantages of properly structured, permanent life insurance. Unfortunately, many clients are not aware of those benefits when purchasing term insurance, and they may not know about alternative product solutions.

Within your existing book of clients, do you have any individuals who are hitting the contribution limits in their qualified plans?

If so, Index Universal Life (UL) may be a great concept to introduce to them in your next meeting, as it can provide a number of benefits that are comparable to a qualified plan.
 
The following series of questions can be used to frame the benefits of Index UL, without specifically introducing the concept of life insurance:
  • Do you believe that taxes will be static, or fluctuate over your lifetime?
  • Are you contributing to any qualified retirement plans? If so, are you funding to the maximum limits of those plans?
  • Would you be willing to trade the benefits of interest crediting in order to remove the risk of losing accumulated values, due to downturns in the market?
  • Do you mind paying taxes on income that you receive from your non-qualified assets?
Many of your clients will meet the contribution limits in their qualified plans; believe taxes are only going to increase; will not like exposure to loss of accumulated values due to downturns in the market, and will not like paying taxes on their distributions.
 
All you need to do next is ask them is how much they would like to contribute monthly for a vehicle that has:
  • No contribution limits
  • No downside market risk
  • Compound interest crediting in the 10-12% range annually, without the possibility of losing their accounts’ value due to negative returns in the market
  • Non-reportable, tax-free distributions of their accounts’ accumulated value
Once your clients provide you with a premium commitment, we will help you to assess their insurability, and prepare proposals that solve for a minimum death benefit and provide the most efficient cash value accumulation.
 
Ideally, Index UL policies should be funded for 10-15 years prior to taking policy distributions, but they can be customized to meet many different specifications depending on your clients’ age and preferred premium schedule.
 
This strategy is not limited to clients who are maximizing their qualified plan contributions.
 
Index UL can be an efficient solution for younger clients (ages 30-50) who are looking to further fund their retirement, prepare for a child or grandchild’s school tuition costs, or contribute discretionary income into a product with the tax favored features mentioned above.
 
We will help you identify clients within your existing database who would be good prospects for this strategy, and will create customized solutions to meet their needs. To learn more about the Index UL products that are now available, and to explore how they can drive new sales opportunities – call your Life Sales Rep today.
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Comparing Oranges to Oranges? Almost!

There are reports of a man in Carlisle, Kentucky, who has a grapefruit that he says looks exactly like an orange, except that it is bigger and yellow. His attempt at comparison is understandable given that (if juice sales are an indicator) oranges are 40 times more popular than grapefruit. And it’s hard to settle for a look-alike – that is, unless it does the job.

Business owners who have reached the contribution limits on their company-sponsored qualified plans often seek additional tax-advantaged retirement options through their business. There are none. Benefit costs in pass-through entities will show up on their Schedule K and money retained in a C-Corp for such things is taxed in the corporate bracket.

The biggest asset your clients may have available for their retirement planning could be their insurability!

Consider a planning “grapefruit” that looks remarkably like an orange and may taste as good or better.

Most clients are already familiar with the Roth IRA concept. Ask them to consider the possibility of using after-tax dollars to purchase an over-funded UL life insurance policy, maximizing premiums without creating a MEC. Compare this strategy to a Roth account:

Call the Life Team today for a ledger illustrating an overfunded UL product with an attractive withdrawal strategy that demonstrates a non-qualified retirement supplement has the juice.

For What It’s Worth: Orange is one of approximately 80 English words for which there is not a true rhyming word. And ripe oranges on the tree are not always that color. In some warmer climates they can be green.

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