Laddering Life Insurance
Presented by Brian LeisingLaddering is a way to save your clients money on life insurance and give them exactly the amount of coverage they need at the exact time they need it. Instead of one policy covering multiple needs, your clients will have a separate policy for each need. How does this work? Let me show you an example:
Sample client, married, two children, one mortgage
Let’s say you conducted a needs analysis for a male age 35 and determined he needs $1,000,000 of life insurance for 30 years. Assuming the best health class, the price would be $814 per year. Does your client really need the entire $1,000,000 for all 30 years? What if he has a ten year old child he expects to be independent at age 20? $250,000 may only be needed for the next 10 years. Let’s assume he also has a 5 year old and needs another $250,000 until that child’s age 20 (15 years). He purchased a home with a 30 year mortgage 10 years ago and owes another $250,000 for the next 20 years. Finally, he plans to retire at age 65 and his wife needs the remaining $250,000 for income replacement for 30 years.
How to save $10,000
When you add up the premiums for $250,000 each of 10, 15, 20 and 30 year term the price is only $673.60 per year. That’s a 17% savings for the client. But wait, there’s more! In year 11 when the 10 year term expires, his price drops to just $559.50. In year 16 it drops to $430.50 and in year 21 it drops again to $269.00. That’s a total premium savings of $10,004 over 30 years, a 41% savings over that same time span!
Women Need Insurance Too
Presented by Gary Peterson If you are looking for prospects, look no further than your own client base. A recent study found that about half of adult women do not have any life insurance. And the women who do have insurance only have $128,000 on average. No matter if you are offering life, health or personal lines, you can offer a solution to protecting your clients’ families in the event of an untimely death to the wife and/or mother. Start asking women the question “What would happen to your family if you were to die?”MYTH: “I won’t need life insurance when I retire.”
Presented by Brian LeisingFour responses you can use with your clients.
4- Really? So, that means you love the government more than you love your family?
Did you know your money can go three places when you die? Your family, charity, or the government. Even if you will all your assets to your family, the government may still inherit part of it. All money in IRAs, 401(k)s or other Qualified Plans, plus growth in non-Qualified annuities is taxable to the person receiving it. The government is going to get their share, but will your family get theirs? Life insurance death benefits pass tax-free to beneficiaries. Why not purchase a life insurance policy to cover the taxes your family will pay the government upon your death? Better yet, you could omit the government completely with proper planning. You could name a charity as beneficiary of your Qualified money (charities pay no income tax) and replace the value of the asset with a life insurance policy. Your loved ones win, your favorite charity wins and the government gets nothing. As George Thorogood says, “Who do you love?”
MYTH: “I won’t need life insurance when I retire.”
Presented by Brian LeisingFour responses you can use with your clients.
3- Really? So, that means you will be a statistical anomaly and won’t need extended care services?
According to AALTCI, over 70% of Americans over age 65 today will need some form of extended care services before they die. Most life insurance companies now offer policies that perform two functions, they pay a death benefit when you die and a living benefit when you require long term care services. Retirement plans diminish quickly when long term care expenses are withdrawn in addition to regular living expenses. Since hybrid plans are so readily available, why pay for separate policies when you could have two plans in one?
See response #4 next week.