The London Bach Choir has been around since 1876 when it debuted with a performance of Bach’s B Minor Mass. For the next ninety or so years their gig didn’t get much attention except among those with a musical preference for things like, well… the B Minor Mass.
But all that changed in 1969. Their exposure and listener-ship ballooned when popular singer-songwriter Michael Philip Jagger solicited their participation in a recording with his rock group, The Rolling Stones. The result was a tune that has since become a staple in The Stones’ performance repertoire and in the world of popular music.
Few today are unfamiliar with its iconic lyrics:
You can’t always get what you want.
But if you try sometime,
You just might find,
You get what you need.
And so it is when older clients reach age 70-1/2 and want to use the required minimum distributions (RMDs) from qualified plans as a source of premium to buy insurance coverage, sometimes in response to carrier marketing programs encouraging the practice.
As an advisor, you should be aware of and alert your clients to several issues in this marketplace if you are to effectively manage expectations as well as make an achievable sale.
Middle-market prospects often don’t have financial justification for coverage
In these days of sizeable lifetime exemptions most don’t face any anticipated estate tax and most don’t have an income replacement need because they have little or no earned income in their retirement years.
Carrier enthusiasm is curbed when traditional financial needs don’t exist
And this despite marketing campaigns to the contrary. An underwriter on a case is like the conductor on a train. Nothing moves down the track till he or she gives the word. And sales pieces are not always run by a carrier’s “conductor” prior to distribution.
The percent-of-net-worth solution
Many carriers are sympathetic to issuing insurance in an estate for liquidity, inheritance equalization, or the promotion of the ease of asset distribution. Consequently some will allow, even in the absence of traditional justification, an amount of coverage determined as a percent of the total estate, the number varying among receptive carriers. Existing coverage is taken into account.
So don’t just throw an app up against the wall
You must know the sympathetic carriers and be able to state a purpose for coverage other than “to increase the legacy.” Those words were used in the title only to get your attention. If you use them on an app they will surely get the attention of an underwriter, but not with beneficial results. Give us your client’s situation and let us informally financially shop your case. When submitted the stated purpose will be “see attached cover letter” which we will write for you based on prior conversations with the underwriter.
It is worth the time. The coverage is on an older client utilizing a permanent product, a sale that will result justifiable compensation for your extra effort.
Both The Rolling Stones and the Bach Choir are still with us. Jumpin’ Jack isn’t as Flashy as he once was. But the Choir rolls on even expanding its footprint in the world of popular entertainment, participating in the soundtrack of movies like Robin Hood, The Chronicles of Narnia, Shrek the Third and Jack the Giant Slayer.