Annuities
Annuities
Annuities
Life Insurance
Universal Life Beats Term!
Presented by Brian Leising For those who attended the Financial Brokerage 2015 Sales Summit (and those who couldn’t make it), two of the most popular sales ideas proved that Universal Life Insurance could cost your clients less money than Term Life Insurance! Here are two scenarios from Prudential and Protective Life: Prudential UL Beats Term– This works for clients who have ample cash flow. The example is attached. A male age 63 could purchase a 20 year term for $9715/year, paying a total of $194,300 over 20 years. You could save him $33,132 by selling an 8-pay UL for $20,146/year (total outlay $161,168). If the annual premium is too high, you could drop it down to a 12-pay for $14,410. This saves the client $21,380 for a total outlay of $172,920. In all scenarios, the client has $1,000,000 of death benefit for 20 years. With the UL, he saves money and has the option to continue coverage by resuming premium payments. He would be too old to convert to a permanent plan at age 83. By the way, the commissionable target premium on the UL is $19,910 versus the $9715 for the 20 year term. Do you want to overpay for term with no options or save money and maintain your options with a UL? Protective Renting (term) vs. Owning (UL) – Owning usually costs less than renting over time and life insurance is no exception. Our example was a 45 year old male preferred non-smoker purchasing a $250,000 lump-sum death benefit with an Income Provider Rider paying an additional $60,000/year for 10 years. If he purchases a 20 year term at age 45 and a 30 year guarantee UL at age 65 his total outlay will be $404,494 by age 95. If he instead purchased a UL with an age 95 guarantee, he would only pay $221,400.50 over the same time period. That’s a 54% savings!!! What could your clients do with an extra $183,093.50? Pru UL beats term Protective UL beats term| Term | Universal Life | |
| Age 45 annual premium | $938.21 | $4428.01 |
| Age 65 annual premium | $12,857.60 | $4428.01 |
| Age 95 total paid | $404,494 | $221,400.50 |
Long Term Care and Disability Insurance
November is Long Term Care Awareness Month
Presented by Tim Dreher The month of November is Long Term Care Awareness month and as we move into the holiday season, now may be an opportune time to begin that LTC conversation that you’ve been putting off with your clients! This is a time of the year when many families gather together to celebrate the season so what better time to encourage your clients and their families (especially your client’s children) to have “the talk”. Industry studies have shown that only about 10% of consumers have had a conversation with their parents or in-laws regarding long term care. Tell them not to wait until it’s too late just because it is a somewhat uncomfortable conversation to have. Most parents don’t like the idea of needing help from their children when they have spent their entire adult lives raising and taking care of their kids. That possible role reversal can be very difficult for a parent to accept. Although the conversation may be difficult, it could also be one of the most important conversations spouses could have with each other, children could have with their parents, and you as their advisor could have with them. That’s where you, as the agent and advisor, come in. Remind them that they need to talk about not only how and where they would like to receive care, but also, and just as important, who is going to provide that care, and most importantly, how will it be paid for. By doing so, they are preserving the legacy they have worked so hard to protect. Having a plan in place should a long term care event occur goes a long way to alleviate much of the worry that can come with an uncertain future. There is a great amount of misinformation and misunderstanding regarding available long term care services and it’s your job to be there for them as a source of correct information and advice. The time to discuss, prepare and plan with your clients is now, not waiting until a long term care event arises and a family is forced to make many decisions that could be very costly. Take this holiday season to have the “talk” with your clients so they in turn can have an informed discussion with their family. Both you and your client will be glad the conversation happened.
Long Term Care and Disability Insurance
A Debate Between Traditional Long Term Care Insurance and…
Presented by Leonard Berthelsen There seems to be quite a debate being waged between traditional LTC products and the hybrids of life and annuity products. The positive of this is the attention long term care is receiving. I read comments like “I’ll lose it if I don’t use it”. Yes, there is statistical chance that a client would pass away and not use the product’s benefits with the traditional LTC products. However, I don’t believe there actually is a large statistical chance especially with long life expectancy and the utilization of home and community care services in a traditional LTC product. Also, these plans now allow the untrained friends and family care providers to be paid for these services from the policy by many of the carriers. When all is considered, access to long term care services will probably increase. Yes, asset based LTC products offer a” lock in” when purchased and there would be no future rate increases with that product. For some consumers, this is desirable. For many other potential clients, the single premium deposit or purchase is just not in the retirement plan. Moving a large block of money to have dedicated to LTC coverage certainly is not for everyone. In certain situations, does the client understand that the first money to get used in a hybrid annuity long term care claim is their own deposit? Traditional LTC products and carriers have a much better understanding of claims, costs, and morbidity than they did five years ago and certainly better than 25 years ago. Only time will tell if the carriers have it right. When financial planners and advisors design plans for their clients using traditional LTC products, there are certainly options in those plans that reduce the risk of future rate adjustments. I have even seen comments that there is a concern that when benefits are drawn from a LTC plan, those benefits would be taxed. Since 1996 when tax qualified LTC plans became part of the LTC insurance landscape, these benefits have been paid tax free. In the 1995 legislation that gave us tax-free LTC benefits, it also made all plans sold prior to 1996 grandfathered and treated as if they were tax qualified. This issue has become somewhat of a lightning rod for justifying one design plan over the other. I’m not an advocate for one over the other, they both have their place. Advisors should recognize that clients have different needs, just as we have different products for those needs. One is not at the expense of the other. Both designs can co-exist and both plans can flourish.
Life Insurance