Menu

CPS RELIABLE LIFE

Shutterstock_1436292155

Turn Life Insurance Into Cash For Seniors

Many seniors are unaware that their life insurance policy may hold significant financial value beyond its original purpose.

A life settlement gives policy holders the ability to sell an unwanted or unneeded life insurance policy to a third party for a cash payment.

Life settlements can provide critical financial flexibility.

Whether covering rising healthcare costs, supplementing retirement income, funding long-term care, or simply improving quality of life, the proceeds from a life settlement can be used however the policyholder chooses. This option can be particularly attractive if premiums have become unaffordable or the initial need for coverage no longer exists.

The ideal candidates for life settlements are typically seniors age 70 and older who own convertible term life or universal life policies that are no longer needed or have become too costly to maintain. These individuals can often realize substantial value from policies that might otherwise be lapsed or surrendered.

For many, a life settlement can provide cash at a time when it is needed most.  Call now if you have seniors with life insurance that need access to additional cash during retirement.   

Shutterstock_1222717252

Living Benefit Riders: Unlocking Financial Flexibility

Living benefit riders allow policyholders to access part of their death benefit while alive, offering financial assistance for health-related expenses, loss of independence, or other urgent needs. For the purposes of this article, we will focus specifically on riders that require additional premium to be added to the base life insurance policy.

How Living Benefit Riders Work

Living benefit riders, also known as accelerated benefit riders, enhance the functionality of life insurance policies by offering financial support for health-related emergencies or long-term care needs. Here’s how they operate:

  1. Financial Assistance: These riders allow policyholders to access their death benefit early, providing funds for medical bills, disability-related expenses, or essential services that would otherwise strain their finances.
  2. Flexibility to Navigate Life’s Uncertainties: Living benefit riders embed financial flexibility directly within a life insurance policy, helping to consolidate coverage into a single, more streamlined plan. While this integration can simplify financial planning and reduce the need for multiple policies, maintaining separate policies may still provide advantages — such as ensuring adequate coverage across different life stages or offering tailored benefits for specific needs.
  3. Preservation of Overall Coverage: Living benefits can be used to cover expenses related to chronic illness or long-term care, potentially exhausting the entire death benefit if needed. However, if any portion remains unused, it will be passed on to the policyholder’s beneficiaries.
Types of Living Benefit Riders
  • Long-Term Care (LTC) Rider: Offers access to funds when you’re unable to perform two or more activities of daily living (ADLs) or experience cognitive impairment, helping cover long-term care expenses such as nursing home costs, in-home support, or assisted living arrangements.
  • Chronic Illness Rider: Provides access to funds if you are diagnosed with a chronic illness that limits your ability to perform essential daily activities, such as bathing or dressing.
  • Critical Illness Rider: Offers financial support in the event of life-altering illnesses like cancer, stroke, or heart attack.
Considerations

Living benefit riders have a lot to offer, but there are a few things to keep in mind:

  • Impact on Death Benefit: When living benefits are accessed, they are typically paid out as an advance against the policy’s death benefit. This means that the total amount available to beneficiaries upon the policyholder’s death may be significantly reduced or entire depleted.
  • Eligibility Criteria: These riders require separate underwriting and aren’t automatically included, so clients must qualify to add them. Accessing benefits also depends on meeting specific conditions outlined in the policy.
Who Should Consider Living Benefit Riders?

Living benefit riders are particularly beneficial for individuals looking to add flexibility to their life insurance policies, especially those concerned about future health challenges or care needs. They are well suited for:

  • People with a family history of cancer, heart attack, stroke, chronic illness, etc. – The American Cancer Society (ACS) estimated that roughly 1.9 million new cases of cancer were diagnosed in the US in 2021.
  • Those who need life insurance primarily but also want to plan for potential long-term care needs – Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services.
Final Thoughts

Living benefit riders empower policyholders by offering accessible financial resources to navigate life’s uncertainties. Whether addressing critical illnesses, chronic conditions, or long-term care needs, these riders ensure that policyholders can manage hardships without compromising financial stability.

To learn more about these riders or find out if your client qualifies, reach out to your Life Sales Representative.

Shutterstock_341965124

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.
Shutterstock_2258463497

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.
Shutterstock_2520112353

An Affordable Alternative To Estate Planning For Hesitant Clients

In today’s economy, some of your wealthier clients may be hesitant to purchase Survivorship Life Insurance coverage due to uncertainty, either in the market, estate taxes or their family’s circumstances. There is another way to cover their insurance need without the finality of a Survivorship plan or the cost.

We have contracts with carriers who offer the ability to convert Individual Term Insurance policies into a Survivorship plan during the designated conversion period.

Your clients receive immediate insurance protection while locking in their underwriting class. This approach requires less of a commitment coming out of your client’s checkbook while satisfying the total insurance need.
 
The policies can be owned individually or by an Irrevocable Life Insurance Trust (ILIT) and down the road they will have the ability to convert into a SUL plan at attained age if the uncertainty regarding estate taxes and the current market condition erodes.
 
Items to keep in mind when considering using an ILIT to purchase Term coverage.
 
First, if you use a trust, the individual who is not covered by the Term policy will need to provide evidence of insurability when the policy is converted to a SUL plan. Second, you could have the trust purchase half of the total insurance need on each spouse.
 
Using this method, the individuals will be able to acquire the total insurance need without showing proof of insurability at the time of the policy change.
 
If you have clients who are hesitant to address their estate planning needs and are taking a “wait and see” approach, you may want to introduce this strategy.
 
Our Life Sales & Marketing Associates can show you which carriers Term policies can participate in this concept and prepare quotes showing the most affordable options.
Shutterstock_1865938936

Ensure Fair Inheritances With Life Insurance

We committed to highlighting important needs that producers can address with insurance based solutions.
 
The following example is one of many Keep It Simple concepts that one of our strategic carriers has developed to help producers recognize opportunities and meet client needs utilizing Life Insurance.
 
Common Inheritance Challenges
 
Parents with multiple children understand how important it is to treat their family fairly. Yet being fair can be a challenge when clients own, and intend on passing down, a family business.

It can be difficult to determine what to do with the business when some children may have played a more active role in the business than others.

Why should your clients be forced to liquidate the assets they have worked so hard to build in order to pass wealth “fairly” to all heirs?
 
Fortunately, Life Insurance can be a practical solution in these situations. It provides liquidity at your client’s death which can be used to make sure all of the children receive a fair inheritance.
 
By helping your clients keep the peace within their families, you will earn their trust — and possibly even other sales opportunities down the line as a result.
 
For more information about how to use Life Insurance as a key part of an estate equalization strategy, please contact the Sales Team today.
Shutterstock_2567026791

Business Continuation Planning

Small business owners often wear many hats – they are HR, IT, Senior Management, and Operations all-in-one. Being a small business owner can be tiring and time consuming.
 
Appeal to this market by presenting them with a simple plan – so they can have peace of mind knowing their family and business will be in good hands when they move on.
 
Help business owners prepare for the future by using a Buy-Sell Agreement.

71% of small business owners surveyed said they have thought about who would run their business in their absence, but only 35% of all surveyed had a business continuation plan.¹

Many business owners don’t have formal plans to transfer their business to a successor in the event of retirement, disability or death. A business may fail due to confusion and lack of a clear plan after such an event.
 
As a life insurance professional, you can help business owners create a continuation plan using life insurance policies.
 
How you can help Business Owners with Life Insurance:
  • Establishes a guaranteed buyer at the time of the triggering event
  • Sets a price for the business when the business owner is less vulnerable and ensures the business will be sold at a fair market value
  • The surviving business owner(s) won’t have to run their business with the deceased person’s family members (if they choose not to)
  • Provides liquidity, when the family needs it most, to fund the sale of the business to surviving partner(s)
We will help you prepare business valuations, design the proper life insurance proposals – give you the tools to become a business insurance expert.
 
Contact your Life Sales Representative today and maintain a competitive edge in the business insurance marketplace.
 
1. Lifehealthpro.com, New Tax Laws Open the Door for Business Insurance Discussion, April 2011. Survey was based on 874 small businesses with 100 employees or less.
Shutterstock_400293994

Are You Missing Sales Opportunities With Your Existing Clients?

Your client’s needs are changing each year and the task of making sure that they are adequately insured rests with you, the producer.

There are a number of events that can trigger a need for additional Life Insurance such as the purchase of a home, the birth of a family member, a marriage or divorce and even a promotion at the office.

When these events occur, most people are not thinking about how much additional Life Insurance they might need. It’s more likely that they are considering how these events are going to affect their day to day life. That is why it’s essential that you have a system or method of performing a policy review on each one of your clients.
 
Consider This
 
When reviewing policies, you may come across clients who have purchased new insurance in recent years but have found that they would like to increase their coverage. We have a carrier that allows your clients to add a new policy at the same underwriting class as their recently placed policy.
 
The amount available in the policy is determined by the number of years since the coverage was placed and the approved underwriting rating on the policy. We can help you determine if the client’s existing plan would make them eligible to enroll in this program.
 
The need for additional coverage is only one component of a policy review. We can also review an existing plan to make sure it is still the most cost effective plan for the client. Perhaps the client’s existing policy has substantial cash value and the client is only concerned with death benefit protection.
 
Through policy review, we may be able to 1035 exchange the cash value into a new policy, pay the same premium and provide a higher guaranteed death benefit for your client. Our Policy Review Kit contains sample approach letters and facts to help you get the process started.
 
Call us today for a copy of the Policy Review Kit or any other policy review related support.
Shutterstock_2491619035

The Income Provider Option

Does your client worry about how a large lump sum death benefit will be spent once they have passed?

Life Insurance can pay out an enormous amount of money in a lump sum deposit to the beneficiary, giving them more money at one time than they have ever had.

This raises the question of how will that money be spent? Will it be spent the way your client intended? Are their children responsible enough to be in control such a large amount of money?
 
How does it work?
 
With an Income Provider Option from our selected carriers, the policy owner may select a guaranteed annual or monthly income stream death benefit for payment to one or more beneficiaries.
 
This endorsement is included with the policy and can provide your client the peace of mind knowing that the death benefit will be used as intended. Not only will this income provider option allow the policy owner to control how the benefits will be paid, it also decreases the current cost of the insurance. The carrier will provide graded premium discounts based on how long the income stream lasts.
 
The Partial Lump Sum Option
 
With this option, only half the death benefit is paid up front and the remaining is distributed in an income stream. This lump sum can help the surviving spouse with burial and probate costs along with any other immediate expenses that may be incurred with sudden death. The income stream can be adjusted any time while the policy is in force, but once the insured passes, the income stream will begin paying out as selected.
 
If you have a client in mind or would like to learn more about this great endorsement, please contact your dedicated Life Associate.
Shutterstock_123775789

Understanding Loan Options within IUL Policies

Indexed Universal Life (IUL) is a popular product choice for cash value accumulation because of its potential for higher interest crediting rates based on the performance of a selected index over a given period of time.
 
A big selling point for the IUL product line is the assurance that the client will never lose a single cent of their accumulated cash value due to poor market performance. Unlike Variable UL policies which are subject to market performance and allow for both gains and losses on your account value, IUL uses a floor rate to protect your cash value from losses when your index account allocations have negative returns.
 
This makes for a great story during the accumulation phase. But what about the distribution phase? What is the best way to distribute the funds from the policy?

Understanding the different options available is the key to making the best decision for your client. Most IUL policies allow for either fixed or variable loans.

The fixed loans have a stated interest rate on the outstanding loan amount so there is no question about the cost of the loan. After a certain number of years, the IUL product will often provide for a wash loan or preferred loan where the amount being charged on the loan is the same as the interest being credited to the cash value (thereby resulting in zero net cost on the loaned funds.)
 
The more commonly illustrated policy loan distribution is the Variable 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’s what many producers prefer to show to their clients.
 
It is imperative that producers understand how these loan 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 your client’s risk tolerance and whether or not they plan on paying outstanding policy loan interest as it accrues, either policy loan option can be appropriate. If you do not have an understanding of how your clients would like to approach their policy loans and simply elect the variable loans due to the potential for positive arbitrage, you may be setting yourself up for a difficult conversation 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.
 
Agents who are 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 in their best interest.
 
Our Life Sales Team is here to help you navigate the various options and make the most suitable recommendations for your clients. Contact us today.

Load More

Back To Top

Excellence, Passion, Integrity, Collaboration and Creativity – our core values since 1974

The EPICC Center is the online source for financial professionals, designed to provide them with the essential elements they need to run their practice and increase their bottom line including breaking news, carrier / product information, market trends, sales ideas, marketing tools & resources and more.

Subscribe to our newsletter

* indicates required

Copyright © CPS Insurance Services, Inc. All Rights Reserved EPICC | Designed by Apis Productions