The conventional wisdom among investment advisors is that if clients have planned appropriately, they will not need life insurance in retirement. It is commonly thought that upon reaching retirement, they will be free of debt, have plenty of assets on hand to replace lost income and leave to heirs as a legacy. This sounds like a reasonable assumption on paper, but not all assets are equal when it comes to transfer planning. To account for this, investment advisors with clients that have sufficient investment assets for retirement might still want to consider life insurance as an asset in a retirement portfolio. Read full PDF
Early in our insurance careers, many of us learned that life insurance enjoys many tax-favored benefits. Specifically, we learned that unlike annuities, withdrawals from a life insurance policy are not taxable to the extent they do not exceed the cost basis of the policy. Furthermore, loans of any amount permitted by the insurance carrier can be taken income tax-free. Read full PDF
Diversified Brokerage Services, Inc. (DBS) is pleased to announce the addition of Steve Grant as its newest Field Relationship Manager for the Northeast Territory. Steve brings an important mix of experience in both the life insurance and long-term care insurance market, having worked previously for such life insurance carriers as John Hancock and Lincoln Financial. His passion is assisting financial professionals in the important discussions of both life insurance and LTC planning, making him a perfect fit for this role in working with financial professionals. Read More
While so many aspects of people’s financial lives have been shaken, life insurance continues to do exactly what it was designed to . . . serve as the foundation of a family’s financial security. While the value of many other financial assets have slipped, the death benefit of term life policies has remained the same, and the cash value of many permanent policies has continued to grow. Read Full PDF
Over the past few months, there has been a renewed interest in estate planning topics. The increased interest is likely due to the combination of the daily coverage of deaths due to COVID-19, historic high federal exemption amount, and low-interest rates. Recently, some of my calls involved the application of U.S. estate tax laws to clients who are not citizens of the United States, but either reside or own property in the U.S. Individuals who reside in the U.S., but are not citizens, could face significant estate and gift tax problems. Read Full PDF
September is Life Insurance Awareness Month (LIAM), a nationwide effort put on each year by LifeHappens, a nonprofit organization dedicated to raising awareness about life insurance to help more families get the protection they need. You can celebrate with us — and boost your sales numbers in the process. Here are 5 great ways
Take Advantage of LifeHappens Marketing Tools
Don’t reinvent the wheel. Utilize the LIAM marketing tools already out there. Life Happens, offers many marketing materials you can utilize during September. For instance, they have customizable educational flyers, brochures, and graphics. They also offer videos, needs calculators, resources featuring real-life stories and their 2020 celebrity spokesperson Brooke Shields, and social media posts and images you can share.
Contact Clients for a Free Policy Review
Use the buzz about Life Insurance in September to offer free life insurance policy evaluations. Offer to walk through an individual’s current life insurance needs and compare your findings with the coverage they have in place. Setting up a policy review will help you determine if your clients’ current coverage still makes sense for them. If it doesn’t, you can ensure you’re the one to offer them help. DBS makes it easy with our “Quick look” tool that allows you to get a snapshot of each client situation by submitting basic information about the clients and their existing coverage. Then, you know whether it makes sense to consider a full-blown policy review. DBS can help with that too and provides a full analysis. Contact your DBS Case Design Analyst for more information!
Use Technology To Your Advantage
The DBS mobile app allows you to run a real-time quote for your clients so they can see exactly how inexpensive it can be to protect their family. As you’re discussing their situation, you can make changes on the fly to get them exactly the right amount of coverage. DBS has all the esolutions available at your fingertips including eDelivery, Accelerated Underwriting, FASTerm, and iGo e-app to make the process quick and easy. In fact, many of our carriers offer a completely digital end-to-end experience!
Use Social Media to promote life insurance
Use your social media business profiles to promote the value of life insurance to your clients. You can incorporate quotes from 2020 celebrity spokesperson Brooke Shields, facts about life insurance, statistics, and more. Many carriers have FREE social media graphics, along with ready-to-go post language, and be sure to check out the DBS LIAM page with helpful resources as well!
Educate, Educate, Educate
The numbers and statistics make a compelling argument for the value of life insurance, so the more you can reach out to your clients to educate them, the more they’ll be inclined to make a purchase. Using life insurance-related statistics will drive your point home and such information will help get your audience thinking about their own personal needs. LIMRA and Life Happens’ annual Insurance Barometer Study tracks the perceptions, attitudes, and behaviors of U.S. consumers and can be a wealth of information for you to use to better understand your clients. Consider the following statistics that illustrate a very compelling line of reasoning:
- 70 percent of people say they need life insurance, but only 59 percent actually own it.
- 22 percent of people with individual life insurance policies and 39 percent of people who don’t have life insurance believe they don’t have enough coverage.
- Close to 40 percent of people wish their spouse or partner would buy more life insurance.
- 69 percent of people would feel the financial impact from losing their primary wage earner in two years or less.
- 24 percent of people who don’t have life insurance have insurance for their mobile devices.
Do you have clients whose assets have lost value as a result of the recent turmoil in the markets? Are some of these clients concerned that the losses will be detrimental to their wealth transfer plans? Are you aware that NOW you can help restore your clients’ wealth transfer plans by using life insurance death benefits to help stabilize estate values?
Your relationship with your clients is more than “just business.” Clients look to you to provide guidance on financial matters, including the amount and type of life insurance that is appropriate for their unique situation. This week, we’re sharing some key strategies and ways you can build relationships with clients. Plus, we recommend some product ideas that work – all laid out in a handy grid and based on specific age ranges!
If you ask any estate planning advisor to tell you the best time for estate planning, they would likely tell you it is when the amount exempted from estate/ gift tax (exemption amount) is high and asset values and interest rates are low. That is the situation we find ourselves in today.
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Situation: A producer contacted DBS’ in-house advanced case design resource to discuss an insurance structure for retirement age clients with $15 million net worth. The producer noted that the net worth was less than the current joint exemption ($23.16 million), but more than the prior exemption which is set to return in 2026. Also, the client’s net worth might decrease as they begin to use their assets to provide a comfortable retirement. Consequently, they were concerned about giving up control.
Problem: The clients were interested in purchasing a $5 million dollar second-to-die policy for the benefit of their heirs and the competition was suggesting the use of an ILIT. The producer wanted ideas that would help him capture the case.
Solution: The DBS advanced case design resource described two insurance approaches. The first technique mentioned was a Survivorship Standby Trust as a method of owning a second-to-die policy. With this approach, the insured most likely to die first is the applicant, owner, and premium payer. The contingent owner and primary beneficiary is the “Standby Trust.” The DBS associate described the Standby Trust as another name for an unfunded ILIT (insurance trust) or credit shelter trust established under the terms of the client-insured- policyholder’s estate document. Since one insured retains ownership of the policy, the clients retain control during the lifetime of the joint insureds, yet the proceeds are outside of the estate at the death of the surviving spouse.
For the second technique, the DBS associate described how the clients could take advantage of the current low Applicable Federal Rates (AFR) to lend money to a trust using the Private Finance Strategy. With the Private Financing Strategy, the clients would enter into a loan with the trustee. Like the above technique with this structure, the policy cash value is equal to the cumulative premium. This is retained by the client; however, the proceeds above this value are outside of the estate.
Both strategies could be modified in the future if the clients become more comfortable giving up control of the policy.
Result: DBS was able to offer the total solution, which included competitive product and technical consulting resources.