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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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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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How To Convert On 75% Of Your Sales Opportunities

Providing a needs-based analysis to customers helps them understand how life insurance can work for them and their families.

Three-quarters of shoppers who received a needs analysis bought life insurance.

When a needs analysis was not completed, less than half of the prospects purchased life insurance. A needs analysis will help identify the true amount of coverage necessary. It will ensure all of the client’s concerns and objectives are addressed and remove any uncertainty concerning whether they may be over-insured or under-insured.
 
It also provides you with greater insight as to the specific financial challenges that your clients are facing and open the door for you to recommend solutions for life insurance and other product lines that can help them protect their financial futures.
 
The Cross-Selling Opportunity
 
If you are not a Life Insurance Specialist, these fact finders can help you to cross-sell life insurance to your existing clients and businesses. You have a dedicated team here to help you through each step of the sales process.
 
If your core business practice is life insurance and you do not currently implement any fact finders or a needs analysis in your sales process, ask yourself if you are converting on 75% of your client opportunities?
 
We have a number of marketing pieces to help identify the proper amount of personal insurance coverage in a traditional family structure, domestic partnership, special needs planning situation and even in the business insurance marketplace.
 
Contact us today to learn more!
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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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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:
  • Retirement Income
  • Exit Planning
  • Income Protection
  • Business Protection
  • Wealth Transfer
  • 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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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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A Valuable Tool For Supplementing Retirement Income

Clients and prospects increasingly understand the need to supplement their retirement through their own savings efforts – as Social Security and company sponsored pension plans may not provide sufficient income for their retirement goals.

Qualified plans such as 401(k)s are an excellent way to save for retirement, but they are limited and are only available if provided by an employer.

Traditional IRAs and Roth IRAs also offer additional saving opportunities, but individuals must meet specific income and contribution limits in order to use these qualified accounts. As a result, clients and prospects need help finding additional solutions that will help them fill the retirement income gap.
 
Your clients recognize that they need to save as much money as possible, as soon as possible, in order to secure their financial futures. Fortunately, you are well equipped to help clients address their retirement income needs by relying on the knowledge and expertise available to you.
 
Life Insurance, properly structured, can be a valuable tool for clients to supplement their retirement planning efforts.
 
During their working years, death benefits provide cash when it is needed most – but these funds can be used to decrease debts and replace income so that loved ones can maintain their standard of living.
 
At retirement, your clients can access policy cash values via tax favored withdrawals and loans. In addition to these benefits, clients can also choose to add a long-term care rider that will provide valuable benefits should they have a qualifying long-term care expense.
 
For more information about how you can help your clients address one of their biggest financial challenges, while securing valuable protection against an untimely death or devastating long-term care event, please contact your Life Sales Rep.

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