Presented by Brian Leising
This is the short-form life insurance needs analysis system I use with life insurance prospects and clients. The ten minute conversation achieves the same answers as an inch-thick comprehensive analysis, without the fancy full-color report. Here’s how it works:
Ask your client to take a piece of paper and draw a vertical line down the middle. The heading on the left should be FIXED EXPENSES. The heading on the right should be ONGOING INCOME NEEDS. Start on the left. Everybody needs funds to cover their final expenses (casket, burial, cremation). Ask you client if they have any idea what that costs. Maybe they had a loved one pass away recently and know current expenses in your area. If not, I suggest $10,000-$20,000. Next, ask them to list all debts they would like to pay off upon death. The largest will be their mortgage if they own their home. Automobiles and credit cards should make up the remainder of the debts. If the client has children, ask how they plan to fund college tuition. If that is in their plans now, you can include an amount to cover that need in this column. You could use other resources (outside the scope of this article) to determine what future tuition may cost. You may want to revisit that portion at another time if time is a concern.
Add up the numbers on the left column. Ask your client if all those things were paid off, would they be able to maintain their standard of living on the remaining spouse’s income? If they hesitate or are unsure, suggest that when one spouse passes away, the remaining spouse and children will need roughly 70% of the former combined income to maintain their standard of living. Usually they will need some additional income.
We will take a look at those ongoing income needs in the right column next week.
Presented by Richard Mangiameli
Fixed Index Annuities are celebrating their 20th anniversary. The first index annuity came out in 1995, and by 1997 there were over three dozen life insurance companies that created their own variation. Over this time frame, more than $400 Billion has been used to purchase this powerful planning product.
Even today you will hear clients asking about the Hybrid Fixed Annuity. When we hear “Hybrid” we associate that with a lot of different products – we mostly hear it in the automobile industry. But today in the insurance and financial planning industry, many agents are being asked by their prospective clients about the “Hybrid” annuity, and that prospect or client is asking about the Fixed Index Annuity. What they hear and read is about “hybrid index strategies/indices” and the “hybrid income riders”.
It’s time to brush up on your knowledge of Fixed Index Annuities – the Hybrid Fixed Index Annuity!
For more information, give Richard Mangiameli, LUTCF, FSS of Financial Brokerage a call at 800-397-9999.
Listen in to this podcast to learn about how the fixed annuity conversation can be tailored to focus on income. We will be sharing a conversation that has worked for many financial professionals. This podcast is the first in a two-part series.
Focus On Income – Part One
Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank of the FDIC. Guaranteed lifetime income available through annuitization of the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Please note that in order to provide a recommendation to a client about the liquidation of a securities product, including those within an IRA, 401(k) or other retirement plan, to purchase a fixed or variable annuity or for other similar purposes, you must hold the proper securities registration and be currently affiliated with a broker/dealer or registered investment adviser. If you are unsure whether or not the information you are providing to a client represents general guidance or a specific recommendation to liquidate a security, please contact the individual state securities department in the state(s) in which you conduct business.
Annuities are designed to meet long-term needs for retirement income. They provide guarantees against the loss of principal and credited interest, and the reassurance of a death benefit for beneficiaries. Please note that in order to provide a recommendation to a client about the transfer of funds from an investment product to a fixed insurance or annuity, you must hold the proper securities registration and be currently affiliated with a broker/dealer. If you are unsure whether or not the information you are providing to a client represents general guidance or a specific recommendation to liquidate a security, please contact the individual state securities department in the states in which you conduct business.
This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Encourage your clients to consult their tax advisor or attorney.
Life Insurance