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CPS RELIABLE LIFE

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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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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.
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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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Social Security Maximization Using Life Insurance

Are you working with wealthy clients that are at or near retirement age? If so, some of these clients may be collecting Social Security income benefits that they don’t need.

Life Insurance can be used as a powerful tool to leverage Social Security payments for future generations.

Here is a case study that shows exactly how this concept works using Life Insurance:
 
  • A male age 69 and his 65 year old spouse were taking a total of $24,000 annually from Social Security that they didn’t need for income purposes. Based on their current tax bracket they were netting approximately $14,000 per year.
  • After meeting with their insurance broker they decided to gift $14,000 per year into an Irrevocable Life Insurance Trust to fund a Survivorship Universal Life Insurance policy.
  • This allowed them to purchase a 973K Life Insurance policy that would pay out to the trust, helping them create a lasting legacy for their children and grandchildren for years to come.

For this couple the decision was rather simple. Do nothing with the unneeded Social Security income or leverage that benefit to fund a legacy trust for the benefit of their heirs for years to come.

For more information about how your clients can use Life Insurance to maximize unneeded Social Security benefits call your Life Sales & Marketing Associate.
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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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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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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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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!
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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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