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A Sweeter Deal – Impaired Fasting Glucose

In the years leading up to the development of Type 2 diabetes, most individuals go through an asymptomatic condition called pre-diabetes. During this time, fasting blood sugar levels may be slightly elevated and there may be other signs of disruptions in normal metabolism, such as high triglycerides, low “good” (HDL) cholesterol levels and excess fat around the abdomen.
 
Approximately 1 out 3 American adults have pre-diabetes. When caught at an early stage, it is possible to head off development of Type 2 diabetes with diet changes and weight loss.

One of our A+ carriers can underwrite favorably on pre-diabetes cases that show a stable, well controlled condition.

Take a look at this case study:
Male, 55 years old
Non-Smoker
Seeking Personal Coverage
 
  • History of hypertension that has been well-controlled with medication and exercise.
  • Two years ago, a routine annual check-up revealed a blood sugar reading that was higher than normal.
  • Follow up glucose levels remained elevated (in the 100-103 range), but never high enough to suggest outright diabetes. He was then diagnosed with Impaired Fasting Glucose.
  • His doctor suggested exercise and a change in diet to include reduced carbohydrate intake.
  • Has done well with his new diet and exercise regimen; ongoing lab testing has shown no progression in his condition.
This client had the beginning of pre-diabetes caught early by routine testing. Because he responded well to dietary changes and exercise, this condition has not progressed and he is at lower risk of developing diabetes in the next several years — if he maintains his new, healthy habits.
 
Potential Underwriting Outcome: Super Standard Non-Tobacco, with potential improvement to Preferred using this carrier’s Healthy Lifestyle Crediting Program.
 
Call your Life Underwriting Team to discuss your client’s medical history today and let’s work on your next success story!
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Simple Conversations That Will Close Your Sale

When planning for retirement, most people take stock of their expenses to ensure they have enough income to live comfortably. But many fail to consider the significant price of long-term care services.

The average cost of nursing home care is approaching $107,000 a year.

Making it easy to see how a long-term care situation could quickly deplete the retirement nest egg that your clients have worked hard to build.
 
Explain how Long-Term Care Insurance (LTCI) will help protect their retirement funds and close the sale with these simple conversation pointers:
 
Conversation Starter 1:
 
“Let’s talk about how your plan to live a long life could impact your spouse and your children.”
 
As people get older, they generally need more help. If your clients are like a lot of people, they mistakenly believe their long-term care needs are already taken care of.
 
Ask them if they have thought about:
 
  • Who will take care of you?
  • Will that person be able to be a full-time caregiver?
  • Where will you live?
  • Which one of your children might you be able to live with?
Conversation Starter 2:
 
“Did you know that major medical insurance doesn’t cover long-term care services? Medicare coverage is limited to helping people get back on their feet after an illness or injury. And relying on Medicare may mean spending down assets to qualify.”
 
Ask your clients how they would pay for the care they need if these options were taken off the table.
 
Have them consider:
 
  • Could you afford to pay the extra costs per year out of your retirement savings?
  • Would you have access to the funds you need? Or would you have to sell assets, cash in stocks, or dip into 401(k) or other savings accounts?
  • Which assets would you use to pay for your care?
An LTCI policy ensures that the funds your clients need are available to pay the bills for long-term care expenses – protecting their retirement assets and making their retirement dreams a reality.
 
Design a plan that is both affordable and the best solution for your clients’ needs – contact your LTCI Sales Rep for guidance.
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Disability Buy-Sell Planning with a New Twist

We’ve seen how some traditional funding ideas for Buy-Sell Agreements have not met a client’s need as effectively as they should. Below is a unique way to look at Disability Buy-Sell Funding that may put your client in the best possible position.

Case Design:
  • 40-year-old Attorney, 25% Partner in a law firm worth $4 million
  • Current Annual Income $200,000
‘Traditional’ Funding Buy/Sell Agreement:
  • $1 million Term Life Insurance Policy in the event of premature death
  • $1 million Disability Buyout (DBO) Policy with 365-day Elimination Period (EP) & Lump Sum Benefit = $3,780 Annual Premium
‘Unique’ Funding Buy/Sell Agreement:
  • $1 million Disability Buyout (DBO) policy with a 730-day EP & Lump Sum Benefit = $2,880 Annual Premium
  • $900 annual Savings from ‘Traditional’
NOW ADD
  • $11,230 Monthly Benefit Individual DI policy with 90-day EP and 2-year benefit
  • $752 Annual Premium
  • $148 Total Annual Savings from ‘Traditional’

If the partner gets sick or hurt and cannot work, the Individual Disability Insurance (DI) policy will pay 67.3% of his income (tax free) for up to 2 years.

If the partner recovers from his illness or injury before the 2-year benefit runs out, he will not need to sell his shares of the practice, and he can return to work. Once he gets back to work full-time for 6 months, his Individual DI policy with 2-year benefit is reset and has a full 2-year benefit again.

The new plan design gives the partner more time to recover from the illness or injury – without having to worry about the company Buy-Sell Agreement forcing the firm to buy him out when he has recovery in sight.

If he does not recover after 2 years, the Individual DI policy benefit stops and the DBO policy will pay the partnership $1 million, tax-free, to help buy out his share of the business at current market value.

Contact your DI Specialist for more information about this strategy.

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Is Insurance In A Qualified Plan Beneficial?

Whenever life insurance is proposed the first two client-questions that inevitably follow are: first, how much will it cost and then, are the premiums deductible (especially if the client is a business-person). Let’s deal with the second.
 
In a business situation life insurance premiums are never deductible. Even in an executive bonus arrangement the employer can write off amounts paid only because, in fact, the amounts are W-2 compensation, not because they are eventually spent on life insurance.

In the personal context there hovers about the discussion of tax-deductible costs for coverage the possibility of holding life insurance in a qualified plan.

It sounds good at first blush. Contribute to the plan and use the untaxed dollars to buy a policy. But take a closer look.
 
Permanent insurance outside a plan can be broken down into three parts.
 
On the bottom is basis, the after-tax dollars used to pay premiums (it can be a little more complicated than that, but let’s keep in simple). Above that is the potentially taxable, but currently tax-deferred gain in the policy, i.e. the reserves in excess of the basis. On top is the risk portion, the amount of death benefit over the policy values.
 
Two tax advantages to keep in mind with non-plan coverage are:
  • So long as the policy stays in force prior to death, the gain in the policy can be protected from taxation
  • In the event of death the whole kit and caboodle (basis, gain and risk) is paid to the beneficiary income tax-free
Now compare to the taxation of a policy in a qualified plan.
 
Untaxed dollars inside the plan are used to buy the life insurance. So far so good. But next the plan administrator must report each year as taxable income to the insured plan participant the “economic benefit” realized by the coverage. This is often calculated using the carrier’s one-year term rates acceptable to the IRS.
 
The result is an amount usually lower than the actual premiums paid. On balance the participant comes out ahead, but not with as much sizzle as they may have anticipated.
 
What will follow from there is one of two unavoidable tax disadvantages that are avoided with insurance outside the plan.
 
If the participant retires or otherwise separates from service most plans do not allow the policy to remain in the plan. If the policy is distributed its FMV (usually the account value) must be recognized to the extent of the FMV exceeds the accumulated economic benefits recognized over the years of participation, i.e. the gain is taxed, a result that would not have happened with coverage outside the plan. The participant can buy the policy out of the plan, but the result is the same. The heretofore untaxed gain in the contract is not purchased with after-tax dollars.
 
If the participant dies while the policy is in the plan the beneficiary receives the death benefit tax-free only to the extent that it exceeds the policy value minus the accumulated economic benefits. Again, the gain in the policy is taxed, unlike when a death benefit is received for coverage outside the plan.
 
There will always be taxation of the policy gain. In addition, if the insured anticipates death tax liability, either federal or state or both, the proceeds from a plan-owned policy cannot be kept out of the taxable estate. Both are things to consider before hastily buying coverage inside a qualified plan with the hope of, at least, part of its cost being paid for with untaxed dollars.
 
Call with any question concerning coverage inside or outside a plan.
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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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No Adverse Underwriting For Family History Of Cancer

Family history of cancer can have an adverse impact on underwriting decisions despite a client’s own personal history of excellent health.

While most carriers limit eligible rate classes for this particular family history, there are still a couple of A+ carriers that do not underwrite family cancer histories at all.

This means a client with a family history of cancer can still qualify for all of the Preferred Rate Classes, including Best Class.
 
In addition, there are other carriers who disregard family history of opposite-gender cancers, such as, a male applicant whose mother died from uterine cancer or a female applicant whose father died from prostate cancer.
 
Let our Underwriting Team help you get the best offers for your clients with family history of cancer! Call us today.
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5 Steps To Building Your LTCi Business Plan

Developing a plan for an entire year can be a daunting task. With so many days ahead of you, it’s easy to get sidetracked and let a few months of inactivity slip and sabotage your success. It’s time to take a more disciplined approach.
 
Stay Motivated All Year
 
Be sure to write down your business plan and place it where you’ll see it each day. Also set up a repeating calendar entry each week to review the plan and the work you’ve done to achieve it.

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” ― Abraham Lincoln

Start small and focus on building a plan with measurable and achievable goals.
 
Set Goals
  • Be Realistic – It may sound great if your goal is to increase your Long-Term Care (LTC) Insurance business, but you might be setting yourself up for failure. Instead commit to making LTC Insurance more fully integrated into your business.
  • Make Them Measurable – Numbers don’t lie, so use them to make yourself accountable. Pinpoint a certain number of applications you’d like to write, client meetings you’d like to host, or referrals you’d like to gain.
Create A Plan
  • Develop A Strategy – Now that your goals are in place, how will you reach them? Create actionable items to focus on throughout the year. Maybe it’s simply making LTC Insurance a part of every financial planning discussion you have or it’s committing to hosting quarterly education seminars in your community.
  • Target Completion Dates – Having monthly or quarterly milestones are a great way to track success, and provides you with ample time to plan ahead.
Take Action
  • Get Motivated – Your business plan may seem foolproof, but won’t work if you don’t put it into action. Begin each day with a task to help you meet a specific goal. You’ll build momentum to keep you focused and productive.
  • Commit To Your Plan – You’ve positioned yourself for success and have taken the time to establish specific goals, strategies, and deadlines. Stick to your plan and give it a chance to work
Track Results
  • Self-Evaluate – Are you ahead of your goals or are you falling behind? Regularly reviewing your progress will provide you with direction on how to focus going forward.
  • Make Adjustments – You may find that one approach works, and another does not. Being flexible will allow you to change strategies to achieve overall success.
We’re here to help – reach out to your Long-Term Care Associate for assistance with your planning.
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Increase Your Sales With This Fast Track Sales Tip

It’s common for advisors to jump to the solution before making sure their clients comprehend what is at stake should they get sick or hurt and not be able to work and provide an income.

The first step, and the most important, is conveying the necessity for income protection to your clients.

Start by finding out what’s paramount to them. The things your clients value the most require the most protection: Family, Home, Financial Plans, Secure Futures – help clients identify what they can lose should something happen to their ability to earn an income, and acknowledge that it’s a problem needing attention.
 
Financial Security: If the paychecks stop, how will they pay their monthly bills?
 
Few middle income families have enough savings to make ends meet if they should lose their income for more than a few weeks. When the paychecks cease, monthly bills will begin to deplete savings – setting back plans or priorities, perhaps even for years. For these clients, the definition of income protection is about knowing they can meet their financial obligations and protect their future plans.
 
Supporting the Family: What changes will they face?
 
On top of losing a paycheck, a disabling illness or injury can mean changes for the whole family. Plans are put on hold, routines are changed, family members must pitch in more – and the calendar fills with doctor’s appointments, which leads to more medical bills, and the urgent question becomes, “When will things get back to normal?” It’s important for them to know there’s a way they can still support their families and keep life as normal as possible if they become unable to work.
 
Focus on Recovery: How will they recover if the stress of finances is haunting them?
 
The last thing someone needs when they’ve experienced a disabling illness or injury is the stress of worrying about bills and other financial obligations while they recover. It’s difficult enough to be facing an uncertain future without the constant worry of financial set-backs – it’s important to know they’ll have a plan in place and monthly Disability Insurance benefits which will help keep things on track, so they can focus on getting well.
 
Contact your Disability Income Sales Rep for guidance – we’ll help you identify the best solution for each of your clients’ needs.
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Uncovering Sales Opportunities And Limiting Liability Exposures Through Trust Owned Policy Reviews

While many advisors implement conservative, guaranteed solutions in trust owned policy arrangements, this is not a universal practice.
 
In a low interest rate environment, many policies that are held in trust may be under-performing and do not have the underlying guarantees to ensure that the policy does not lapse prematurely and that the primary objectives for the insurance planning are obtained.
 
Consider This Scenario
 
In a recent conversation with a carrier representative, they shared an instance in which the trust beneficiaries brought a law suit upon the writing agent, the broker general agent and also the carrier for failing to implement a sound insurance strategy and perform periodic reviews to avoid a premature lapse.
 
Fortunately, there had been a policy review conducted within the last 36 months in which the under-performance was identified and an alternative solution was recommended.
 
The insured (parents of the trust beneficiaries) elected not to pursue this recommendation and failed to inform their children that the review had taken place. The courts held that this effort was enough to avoid adverse litigation and the case was dismissed.
 
Penetrate A New Market
 
This story can be a great conversation starter with any CPA’s, Estate Planning Attorney’s or Trust Companies. You may even know a friend or family member who is serving as a trustee who could be exposed to this potential liability.
 
By offering a complimentary policy review of any trust held policies, you can strengthen your relationships with these professionals – which can lead to future referral opportunities.
 
There may even be a more cost effective policy solution available even if the current plan is not under-performing.
 
We can help streamline the policy review process and for more complex trust planning designs; we can leverage our Director of Advanced Markets, Tom Virkler, JD.
 
Given that most policies held in trust are larger face amounts on older individuals, doing one of these reviews each month could result in a sizable increase in your income.
 
For assistance with a policy review, please contact your Life Sales Rep.
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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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