Life Insurance

Ask Grandma and Grandpa

Presented by Brian Leising

When you meet with a person who is a grandparent, what photos do you see on their walls? The photos of their children are long gone and the walls are now adorned by their adorable grandchildren. Just try to ask a question about their grandchildren and see if you can get a word in edgewise for the next hour. They love to talk about their grandchildren and would do just about anything for them. If your clients (the parents) are short on cash, ask them about their parents.

Some retirees have more money than they will spend in their lifetime. They may even have funds already earmarked for future generations. This provides you with a great opportunity, you just need to ask. Here are a few specific items you should bring up:

Do the grandparents have IRA’s or qualified plans with benefits larger than they will need for retirement income?

Are they taking required minimum distributions only to re-invest them and pay more taxes on that income?

Do they have CD’s, mutual funds or annuities earmarked for their heirs?

By taking this money and placing it into a life insurance policy, they could shelter the money so the income is not included on their tax return. If structured properly, it could also provide tax free loans that may be used for any purpose, including college tuition. The policy also produces a legacy at death.

In other cases, you may find the grandparents are able to fund a policy on the lives of the parents. The death benefit, if needed, would provide funding for the children and the cash value could be tapped for any purpose, including college tuition.


Annuity Income Riders

Presented by Jim Guynan Recently I heard that almost 60% of index annuities sold today have an income rider attached to them. Also, that the average time before the income is activated from the rider is only 1.8 years. What does this tell us about fixed index purchases and income riders? Simply, that more than half of the owners of fixed annuities are thinking about the future use of these assets as possible income sources and they are utilizing it in a new way. Before income riders became available there were really only two ways to access an annuity; a 10% penalty free withdrawal per contract year or to annuitize the annuity contract. Now there is a third option which is activating an income rider payout that will provide an income for the rest of the owner’s life. The advantage of this is that the owner does not give up control of the underlying fixed annuity in order to do so. What is interesting to me is that the average time to activate is so short. Many of the illustrations I run for agents show longer deferral times before income is needed. One explanation could be that only those people who need income now are buying the annuities. As time moves on, I believe that more younger people will become educated on the advantages of the riders and take advantage of the longer deferral.


Presented by Matt Nutzman How much would you have to earn each year from a taxable investment in order to equal earnings on a tax-deferred investment? Annual Tax-Deferred Yield Federal Income Tax Bracket: 10% 15% 25% 28% 33% 35% Annual Taxable Equivalent Yield 3% 3.33% 3.53% 4.00% 4.17% 4.48% 4.62% 3.5% 3.89% 4.12% 4.67% 4.86% 5.22% 5.38% 4% 4.44% 4.71% 5.33% 5.56% 5.97% 6.15% 4.5% 5.00% 5.29% 6.00% 6.25% 6.72% 6.92% 5% 5.56% 5.88% 6.67% 6.94% 7.46% 7.69% 5.5% 6.11% 6.47% 7.33% 7.64% 8.21% 8.46% 6% 6.67% 7.06% 8.00% 8.33% 8.96% 9.23% 6.5% 7.22% 7.65% 8.67% 9.03% 9.70% 10.00% 7% 7.78% 8.24% 9.33% 9.72% 10.45% 10.77% 7.5% 8.33% 8.82% 10.00% 10.42% 11.19% 11.54% 8% 8.89% 9.41% 10.67% 11.11% 11.94% 12.31% 8.5% 9.44% 10.00% 11.33% 11.81% 12.69% 13.08% 9% 10.00% 10.59% 12.00% 12.50% 13.43% 13.85% 9.5% 10.56% 11.18% 12.67% 13.19% 14.18% 14.62% 10% 11.11% 11.76% 13.33% 13.89% 14.93% 15.38% This chart illustrates the potential benefits of a tax-deferred investment vs. a taxable investment. For example, if an investor in the 25% federal income tax bracket purchases a tax-deferred investment with a 5% annual yield, that investor’s taxable equivalent yield is 6.67%. This means the investor would need to earn at least 6.67% on a taxable investment in order to match the 5% tax-deferred annual yield. This chart is for illustrative purposes only and is not indicative of any particular investment or performance. In addition, it does not reflect any federal income tax that may be due when an investor receives distributions from a tax-deferred investment. Please contact my office if you’d like more information on taxable vs. tax-deferred investments.

Are you “in the business” or do you just…

Presented by David Corwin Here are some indicators to tell you where you are. • Do you have a business plan? Crafting a meaningful business plan takes a lot of thought and time. Set out a strategy for your business and in particular, your marketing strategy. Set targets and objectives, including sales and financial goals so that you can monitor business performance. • Are you actively looking for new prospects (referrals and warm market) or just replacing the business you wrote in the past? It really should be a 60/40 split. Sixty percent of your marketing efforts should be spent on referrals and warm marketing. Forty percent should be reviewing clients that you’ve written before, both fostering the relationship built, as well as, looking for new business. • Are you running enough appointments throughout every week to get the result you want? The old numbers game. It only makes sense that if you have enough lines in the water the more fish you will catch. The more successful agents run between 10-15 appointments per week. If you’re running less than that…run more. It’s as simple as that. • On your appointments do you implement a fact finder to obtain material facts that allow for cross-selling opportunities? If you don’t, well then, you’re probably an order taker and if you don’t have what they want you’ll go back to your office without the business. Last I checked, an insurance license allows you to sell Life, Annuities, Health, Long Term Care and Disability insurance. If you don’t use one, then you just have an insurance license. • Are you furthering your education through industry leading programs like CLU, ChFC or CFP? Furthering your education, you become better informed to assist with the variety of unique requirements that individuals, professionals and business owners may have with respect to their estate planning, wealth transfer, income replacement and risk management needs. Holders of these designations increase their sales by up to 51%.

Time to have a conversation with your client

Presented by John Schraut When was the last time you asked (or ever asked) your client, “If you were to unexpectedly die, become seriously ill or disabled, would you and your family suffer financially?” They would probably answer “YES”. What have you done as their agent to protect them from that concern? You have the tools available, but you need to have that conversation with your clients.