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Income Protection – Statistics That Hit Home

With the access you have to your clients’ financial plans, comes the responsibility to protect their most valuable asset – the ability to earn a living.

Insurance is available for everything from a car to a cell phone, and it’s vital to remind your clients that those things don’t exist without the funds to facilitate them – which is exactly why income protection is so important.

The following statistics highlight the importance of having that discussion:
  • An estimated 48.9 million people, or 19.4% of the non-institutionalized US civilians, have a disability.
  • An estimated 24.1 million people have a severe disability.
  • An estimated 34.2 million people, or 17.5%, have a functional limitation
Social Security is not a reasonable resource on its own – the average SSDI benefit payment is a mere $1,256 for males and $993 for females per month.
 
Employer sponsored DI plans only pay 60% of a client’s income – plus, the benefits are taxable with a cap on the maximum benefit. And, less than 5% of disabilities occur as a result from an accident on the job – where worker’s comp would be applicable.
 
It’s a matter that every advisor should take to heart, especially when most of you know your clients on a personal level.
 
We have the tools for advisors to start the conversation about Income Protection. Contact your DI Associate today.
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Clean Up Your Beneficiary Mess

In the past the word culture referred to a society’s accumulated knowledge and its time-tested and proven body of values and principles which each generation must pass on to the next if the ongoing continuity and success of the community was to be assured. But much like paper currency, words lose their value over time.

Terms today like youth culture, bantered about endlessly, reflect a contemporary understanding of culture as nothing more than an inventory of current tastes, preferences and distractions, usually defined and pursued by those who aren’t paying the bills.

And if you think that values and principles are hard to pass down, try getting a death benefit to the next generation, especially if the next generation are still minors.
 
The Beneficiary Designation
 
The biggest opportunity for disaster on an insurance application comes when the advisor must complete the beneficiary designation. The most important aspect of the transaction is assuring that the death benefit will go where it is intended, and the space provided to that end is totally inadequate for the purpose. The “little beneficiary box” serves both to intimidate clients into thinking their directions must be short and sweet and to encourage lazy advisors not to take the time to put full and complete instructions on a separate sheet of paper – especially when children are involved.
 
There should never be a contingency that will result in an under-aged beneficiary. Minors (the age of majority differs from state to state) are legally incompetent to accept death proceeds. Guardians to handle their affairs must be appointed in legal proceedings that are time-consuming and expensive.
 
The best solution is to name as beneficiary a trust that will hold and use the funds for the minor children until the trustee is instructed to distribute them by the terms of the document. The difficulty is convincing an insured to get a trust written even when the size of the death benefit makes a compelling argument for the trouble and expense.
 
The good news is that there is an uncomplicated solution.
 
All states have a Uniform Transfers to Minors Act (UTMA) on the books. The law enables you to title property (or craft a beneficiary designation) in the name of a custodian for the benefit of a minor child.
 
The comparative disadvantages versus a trust are 1) the custodian must carry out duties to the child as spelled out in the law, which may not be exactly or as flexible as what the insured would prefer, and 2) distribution of the funds must occur at an age given in the law (21 in most states) which may be younger than the insured would like.
 
Not perfect, but as my Mother used to say, “A speckled axe is better than none.” Call it a poor-person’s trust created for you by the state.
 
But the UTMA designations can be tricky. State may differ in what they require (the word “uniform” notwithstanding) and carriers may differ in what wording they prefer. A full and separate designation must be spelled out for each minor child and successor custodians should be named – and, yes, it will require a separate sheet of paper. But we will help you draft the designation. Then you can devote your time to seeing that the client passes on his or her culture to the minor children involved.
 
Call for help on any ownership or beneficiary designation, but especially one creating a custodianship under your state Uniform Transfers to Minors Act. Try me at 706-614-3796 or tom@cpsadvancedmarkets.com.
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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.
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Underwriting Diabetes

Let’s talk about Diabetes. This is a chronic condition associated with high levels of glucose (sugar) in the blood. Insulin hormone produced in the pancreas helps to turn glucose from the food we eat into energy.
When the body doesn’t produce enough insulin or doesn’t effectively use the insulin produced, it increases the amount of sugar in the blood and can lead to diabetes.
 
Types of diabetes:
  • Type 2: Occurs when the body is resistant to insulin and cannot effectively use the insulin it produces. This is the most common form of diabetes.
  • Type 1: Occurs when the body produces little to no insulin. This is an autoimmune type of diabetes and generally diagnosed early in life. Latent diabetes in adults is a slow-progressing form of autoimmune diabetes.
  • Pre-Diabetes: Also referred to as impaired fasting glucose and impaired glucose tolerance, this occurs when glucose levels are higher than normal but still below the level for a diabetes diagnosis.
  • Gestational Diabetes: Occurs during pregnancy and generally resolves after delivery. Women with gestational diabetes have an increased chance of developing Type 2 diabetes later in life.
A1c blood testing (average blood sugar) is key in determining severity when diagnosed as well as ongoing level of diabetic control.
 
Complications from diabetes can include neuropathy (nerve damage), kidney disease, retinopathy (vision problems caused by damage to the retina), stroke and cardiovascular disease.
 
Now let’s talk about some potential underwriting outcomes for Life coverage.
  • Type 2 diabetes may qualify at a Standard rate class with good diabetic control and no complications.
  • Type 1 diabetes could be as good as Table 2 for over age 50 in a best case scenario. Higher table ratings would apply for ages 50 and under depending on diabetic control and any complications.
  • Pre-diabetes and gestational diabetes may qualify at Standard Plus.
Contact our Underwriting Team for help in pre-screening your client living with diabetes.
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Why You Need To Talk About LTCI

Most people envision themselves living a long life, investing and planning throughout their working years to create a financially secure future where they can enjoy spending time doing their favorite things.
 
As part of your client’s financial planning process, it’s important to understand the potential impact that needing long-term care may have on their assets, their family, and their future.

The reality is, as people start to live longer, the greater the likelihood is that your clients will require long-term care.

The costs associated with long-term care are significant.
 
While it can take decades to accumulate the assets they’ll need to retire comfortably, just a few years of paying for long-term care may threaten a lifetime of savings.
 
If you’ve ever been in a care-giving situation, you understand the physical and emotional toll it can take. While providing care to loved ones is an act of compassion, placing these burdens on spouses, children and other family members can create a significant emotional and physical strain, and is something that many people would like to avoid.
 
Don’t wait to address your client’s long-term care needs.
 
Incorporating Long-Term Care Insurance into financial plans today can help protect assets, reduce the burden of care that would otherwise fall on family members, and enable clients to receive care in the setting they most prefer, including their home.
 
Perhaps the greatest benefit: Long-Term Care Insurance allows loved ones to care about, rather than care for, each other.
 
We’re here to help you design a plan that is both affordable and the best solution for your clients’ needs – contact your LTCi Sales Reps for guidance.
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Avoiding “Sticker Shock” With Disability Income Sales

Ever presented Disability Income Insurance to a client, and found that with one look at the price-tag they are reluctant to purchase?

While it is true that a DI plan could be costly for some – it certainly doesn’t have to be.

Avoid the “sticker shock” with your clients.
 
The general rule for the amount a client should spend on their Income Protection plan is 3% or less of their annual income.
 
If the premium is higher than the 3% amount, the client is more likely to experience “sticker shock” – and, even if you are able to place the policy, the likelihood of it lapsing is much higher. The client will then have no protection and you will not have a renewal commission.
 
How to keep premiums under 3% of a client’s income.
 
1) By adjusting both the Benefit Amount and Elimination Period (EP), you are able to make the policy more cost effective.
  • Adjust the benefit amount to cover just the basic monthly expenses such as rent/mortgage, utilities, groceries, etc.
  • Approximately 75% of fully underwritten policies have a 90-day EP – if your client has enough savings, offer a 180-day EP.
2) Creating a mixture of Base Benefit and Social Insurance Supplement (SIS) coverage, is another solution to keep a client’s premiums low.
  • The idea here is to get the most coverage for the lowest premium. Since the SIS coverage can be offset by Social Security, State DI or Workers Compensation, the premium is less expensive than that of the Base Benefit.
  • A good mixture of SIS and Base coverage can generally keep the premium within a client’s budget, yet provide them with the coverage to ensure their financial stability in the event they are unable to work.
A Fun Fact to share with your “sticker shocked” clients.
 
Over 80% of disability income claims are settled within 5 years because the client recovered and returned to work, or they passed away. In lieu of a less than 20% chance your claim will go past 5 years, a 5-year benefit can be very affordable.*
 
Not every client needs all the available costly riders the carrier offers – choose only the riders that will actually benefit a client.
 
And if in doubt of which rider(s) would be the most suitable – contact your DI Specialists to discuss the best options. We are here to help!
 
*Council for Disability Awareness
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How To Successfully Use RMDs In Life Sales Copy

Many argue that the best Super Bowl halftime show took place in Jacksonville, FL, some years ago. In a forum known for mediocre performances that fail to meet the hype and fulfill the expectations, the lights and fireworks opened on a band named Wings, led by one of the last vestiges of an earlier rock group whose work and music had taken a place as the centerpiece in the canon of popular music in the English-speaking world.
 
Paul McCartney chose to lead off with one of his creations from the Beatles’ music catalogue. He and 80,000 spectators sang the song Baby You Can Drive My Car with its tale of a taken young man lured into a position as chauffeur for his rising-star love-interest only to have her confess at song’s end, “I got no car/ and it’s breakin’ my heart,/ but I’ve got a driver/ and that’s a start!”
 
And so it often is with insurance sales to be funded with a proposed insured’s unneeded RMDs coming out of their qualified plans. It makes sense. Use the money you must take, but don’t need, and leverage an eventual death benefit to heirs with insurance coverage. But if you and this concept are driving a successful sale then make sure you have an insurance company that wants to be a “car-rier”.
 
The pill in the jam is financial justification. The insured is 70-1/2 and, seldom, has any earned income. Consequently, coverage can’t be justified for income replacement purposes. And more often than not the proposed insured doesn’t have federal or state death tax concerns.

In these situations it is important to know the carriers who are sympathetic to and will underwrite reasonable amounts of coverage if other facts about the case are in order.

Consider This:
 
First, what percentage of the insured’s annual income is being used for premiums? The acceptable amount could be larger in cases where it is adequately demonstrated that living expenses will be met with what remains.
 
Second, the amount of death benefit will usually be limited by a formula that ties the face amount to certain financial criteria. A common example would be: Permissible coverage = 50% of the net worth attributable to investment assets + FMV of residence – coverage in force.
 
Because insurance is often purchased in situations where no death tax is anticipated, clients overlook the advantages of purchasing the policy in a trust. A living trust will keep the proceeds away from the exposure and expense of the probate court while allowing for their distribution according to a testamentary pattern not practical through a simple beneficiary designation. An irrevocable trust will protect the proceeds from creditors as well.
 
Fifty-one years ago last April the Beatles had the top five single recordings on Billboard’s Hot 100 Chart. No group or singer has every come close to such domination. Billboard Magazine reported that during the first four months of 1964 the Fab Four accounted for 60% of all single records sold in the United States.
 
For similar success in your line of work – call or write to discuss those carriers who are comfortable with the “RMD-to-Life Premium” concept and ask for a marketing piece that will help generate interest and sales – either at 706-614-3796 or tom@cpsadvancedmarkets.com.
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Succession Planning For Your Business Owner Clients – We Can Help

Business owners are faced with many challenges when doing the planning related to a successful exit. Typically, business owners focus on day-to-day operations far more than on retirement, or on keeping the business going in the event of death. Business owners need your help!

You can rely on our expert guidance – we’ll help you target potential opportunities and navigate through the entire planning process.

We offer the following exit planning tools – at no cost:
  • Access to a Succession Consultation Group
  • Materials that will help motivate and engage your clients
  • Professional review of a completed business succession fact finder
  • A report summarizing the findings
  • Participation on conference calls with you and your clients
  • Analysis including applicable ideas, agreements and concepts
  • Undeniable value to your client
Target Market:
  • Owner aged 45-60
  • Substantial owner net worth
  • Owner wants to exit business in 2 to 10 years, or transfer the business at death
  • History of stable earnings over a period of years
  • Annual revenue of $2 to $50 million
  • Sustainable and transferable cash flow
  • 5 to 100 employees
We deliver the most relevant tools for you to use – please contact us today for assistance with growing your share of sales in the business insurance marketplace.
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Aggressive Rates For High Blood Pressure

Don’t let one impairment, like elevated blood pressure force your client into a Standard Non-tobacco class.

Here’s an example for the record:
  • 60-year- old female non-smoker
  • Has no history of high blood pressure
  • Her current BP is 150/92 (normal should be 140/90 and under)
  • Applied for $1 million of Permanent Life Insurance
Offer: Standard Plus!
 
If you aren’t quoting Standard Plus for your healthy standard cases, your clients could be paying more than they need to.
 
Our Underwriting Team is here to help with all of your impaired risk cases. Please contact us today for more information about this carrier and how we can help boost your sales.
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Put The Power Of Storytelling To Work For You

You already know that quoting statistics doesn’t sell Long-Term Care Insurance. That’s because most people don’t see themselves needing LTC services, and using statistics to try to tell them otherwise will do little to convince them.

Barraging prospective clients with product benefits and features doesn’t work either. If they don’t believe they need LTC Insurance, touting all the bells and whistles of the product isn’t enough to make the sale.

So how do you get people to sit up and take notice? Tell them a compelling, engaging story about the positive impact an LTC policy had on someone’s life.
 
Find a good story.
 
Chances are you already have a story that will work for you. Draw on your own experiences. If you’ve ever had to care for a parent or grandparent, you know how difficult it can be.
 
Or you can use other people’s stories. A story doesn’t have to be your own. It can be just as powerful to share the experiences of family members, friends or clients.
 
Make it memorable.
 
When telling your story, paint a word picture. Don’t just describe what happened. Instead, talk about how it made you or the people involved feel.
 
Also, you need to make sure your story is relevant. A prospective client with no children probably won’t relate to a story about how difficult an LTC situation is on the kids.
 
Finally, don’t scare people. Make sure your story has a happy ending that comes about because of LTC.
 
Get your clients to share their stories.
 
According to a survey of LTC policyholders, 78% said they had a family member or friend who needed LTC services.
 
So your story may prompt prospective clients to recall stories of their own. Ask questions that invite them to talk about these experiences. Who knows, this might be how you get your next good story.
 
Here are five questions that will help you prompt clients to share their stories:
  • Do you know someone who needed Long-Term Care services?
  • Who provided their care? (Generally, a spouse or child is the primary caregiver.)
  • What effect did this have on the caregiver? On the family?
  • How did they pay for the care they needed?
  • What effect did this have on their finances? On their retirement plans? On the inheritance they hoped to leave for their kids?
For more sales ideas, contact your LTC Specialist today.

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