Life Insurance

Six Questions for Six Life Insurance Sales to Seniors…

Presented by Brian Leising Do you have senior clients?  Did they purchase only one product from you?  Was it a Medicare supplement, annuity, long term care or final expense policy?  If you were able to uncover the need for one insurance product, could you uncover another?  What if you had six simple questions to ask your clients that would uncover additional sales? “When did you last review your life insurance policies?”  You should ask this question of everyone, whether you think they have a life insurance policy or not.  Many people have never reviewed their old life insurance policies.  They may be paying too much or not enough.  Their coverage could be too low or missing key features.  I often see older universal life policies that have not been funded properly to keep them in force for the client’s full life expectancy.  I have also seen cash rich whole life policies that do not offer enough leverage for the client’s dollars.  Newer universal life plans with a no-lapse guarantee can help in both cases.  Find an annual review fact finder you like and start filling it out at every appointment.  You will help your clients and uncover more new business than you have in the past. In part three, I will review an added feature that can give your clients more than just death benefit protection.
Annuities

Leaving Behind a Non-Qualified Annuity

Presented by David Corwin. It is widely known that a beneficiary of qualified dollars has the ability to receive payments from the IRA based upon their age (using the Required Minimum Distribution table), which is a much more tax efficient way of receiving the money.  The beneficiary has to make a withdrawal by December 31st of the year after the owner’s death, and of course, the entire withdrawal is counted as taxable income; however, if the entire lump sum isn’t required, it’s much more tax-efficient than taking it as a lump sum and by withdrawing only a portion, the rest of the asset can still grow. What isn’t as well-known is that non-qualified stretch contracts need to be part of the discussion with the beneficiary when the owner leaves a non-qualified annuity behind.   Let me give an example:  your client started his contract with $100,000 as basis and 25 years later his contract is now worth $250,000 when he passes away.  Without your help, in most of these situations, what will happen is the beneficiary will take a lump sum and not know what is waiting for them; the dreaded 1099 form.  The $150,000 gain will be added to their income, and  where they may have found themselves in the 28% tax bracket in prior years, they may now be in the 33% bracket and pay $49,500 in taxes.  Sound fun?  The way to solve that problem would be to structure a non-qualified stretch contract.  The $250k will go into the contract and the client will be forced by the IRS to make a withdrawal by end of the next year.  If we assume the client/beneficiary is a 40 year-old, then according to the RMD tables his/her factor would be 43.6.  The withdrawal required would be $5,733 ($250,000 / 43.6).  Since we are still dealing with a nonqualified contract and withdrawals are treated last in first out, he would report the whole $5,733, thus keeping him in the 28% tax bracket AND allowing the remainder of the money to continue to grow.  Problem solved.