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CPS Midwest Life LIFE

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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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Understanding Indexed UL – Positioning Your Client For Distributions

With several of our core carriers offering their own flavor of Indexed UL today, positioning your clients in the best possible light for retirement income can be a confusing and lengthy process.

It’s a full time job knowing all the moving parts for each Indexed UL product.

Understanding how the products work and how to sell them most effectively can be a confusing and lengthy process. We have spent many hours working with clients to help them better understand the product’s crediting and accumulation strategies.
 
However, the second part of educating a client regarding Indexed UL is, understanding the moving parts during the distribution from an IUL policy.
 
What is the best way to distribute the funds from the policy?
 
Most Indexed UL policies allow for either fixed or variable loans. The fixed loans have a stated interest rate locked in from the policy issue date on the outstanding loan amount so there is no question about the cost of the loan.
 
After a number of years, (typically 15) the IUL product will often provide for a “Wash Loan” or “Zero Cost Loan” where the amount being charged on the loan is the same as the interest being credited to the cash value.
 
The more commonly illustrated policy loan distribution is the “Indexed Loan” or “Preferred Loan”.
 
Using a positive arbitrage (the illustrated interest crediting rate for cash value is higher than the interest rate being charged on outstanding policy loans) allows an illustration to reflect a gain on the outstanding loan rather than a charge. Because this can make an illustration more attractive due to the higher cash value accumulations during the distribution phase, it is what many producers prefer to show to their clients.
 
It is imperative that producers understand how these loans features work and communicate to their clients that they also have the potential for a negative arbitrage which can create considerable interest due on outstanding policy loans.
 
Depending on the client’s risk tolerance and whether they plan on paying outstanding policy loan interest as it accrues or not, either policy loan option can be appropriate.
 
Be careful!
 
If you do not have a full understanding of how the clients approach their policy loans and simply elect the variable loans due for the potential of a positive arbitrage, you may be putting the client in a difficult position later if the loan interest charged exceeds the interest crediting rate for cash value and the amount available for distribution decreases well below your clients anticipated income amount.
 
Producers selling IUL products and highlighting the ability to generate an income stream from the policy should have a thorough understanding of the loan provisions and be able to help their clients to better understand which feature is most appropriate.
 
Take the time to refer to the product guide you are illustrating to see what the variable loan interest rates are tied to. What are the Cap rates for Variable loans? What is the Fixed Loan rate and is it Participating? This can be valuable information to share with your client when illustrating Indexed UL products with Distributions.
 
For more information, contact your Life Insurance Specialist 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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Rethinking The Term Insurance Strategy Can Save Clients More On Premiums

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?

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.
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Help Your Client Retire On-Time Using Indexed UL

Many Americans have the goal of retiring at age 65. It’s assumed that at that age, one will have worked long enough to have sufficient assets which can provide income over the rest of your life.

If your client’s primary source of funds for retirement income is a 401(k) plan, they could be facing a harsh reality when it comes time to retire.

401(k) plans are generally exposed to market volatility and are taxable as ordinary income upon distribution. If a client’s investments are down in the years just prior to retirement, they may find themselves needing to work longer to fund their retirement while hoping that their investment allocations turnaround and provide a positive return.
 
If a 401(k) plan is only one component of your client’s diversified retirement plan, then this may not be as big of a concern. But if they are banking on that 401(k) to take care of them and their family after their working career, they may want to consider using an Indexed Universal Life policy to protect against downturns in the market.
 
Above The Match
 
For those who have a company match, it makes sense to contribute to the max that a company is willing to match. Any funds that would normally contribute to a 401(k) above the match can be directed into an Indexed UL policy. This will allow clients to protect themselves against negative returns since the product has a floor rate which ensures that they will never lose a single penny of their accumulated value.
 
With caps on the interest credited around 12% they still have substantial potential to grow their retirement fund and provide a tax free income for life. This strategy also protects loved ones in the event of a premature death. If your client were to pass away before retirement, their beneficiary would receive a tax-free lump sum death benefit from the Life Insurance policy.
 
If you have clients who are contributing to their 401(k) plan without a company match or if they are contributing funds above and beyond their company match, this concept could help them protect their accumulated account values and retire on-time.
 
Call your dedicated Life Marketing Specialist to find out how much income you can help generate for your client‘s retirement while protecting their accumulated funds from market downturns.
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3 Concepts That Will Place More Life Cases

Life insurance is more than just a death benefit – there are numerous living benefits attached to life insurance which are available before the funeral procession ensues.

During retirement, consumer attention often shifts from income replacement and mortgage protection to concerns about outliving retirement income and health care costs.

Three common pre-retirement uses of life insurance are:
 
  1. College Expenses
  2. Supplemental Retirement Income
  3. Long-Term Care Expenses
A properly designed Indexed Universal Life (IUL) can help you win more cases by providing customers with options they can use while living.
 
Simply put – IUL’s can provide clients with access, growth and protection at any age.
  • ACCESS: Liquidity window for access to tax free cash withdrawals.
  • GROWTH: Non reportable tax-free retirement savings linked to well known indices like the S&P 500. Clients can’t lose money when the market goes down.
  • PROTECTION: Flexible death benefit provisions that policy owners can utilize for income, health care costs and ongoing care through the chronic illness rider.
Contact your Life Sales Rep today to learn how to position these game changing features of life insurance in your customer presentations.
 
We welcome the opportunity to guide you through the options of new life insurance policies and help you place more of your cases.
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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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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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Cash Value Life Insurance Comes Into Its Own

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.
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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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