Client’s Family History Have You Down? We Have a Solution!

If you feel challenged with significant adverse family history compromising your client’s ability to achieve Preferred rates, we have a solution.

Our Underwriting Team is here to help with all your impaired risk cases.

Here are some examples:

Example #1

  • 67- year- old male
  • 5’10”, 190 lbs.
  • BP averages 140/84, total cholesterol 218, & Chol/HDL ratio 4.6
  • Father died at age 45 due to a heart attack and mother died at age 60 due to advanced breast cancer
  • No other adverse medical history in his APS records

Underwriting Decision:  Preferred Best!

Key Factor:  Family history is NOT considered when the proposed insured is older than 65.  Therefore, the fact that our individual had two parents dying of heart disease/cancer at age 60 and younger had no bearing on the final decision.

Example #2

  • 42- year- old female
  • 5’3”, 154 lbs.
  • BP averages 130/80, total cholesterol 220, & Chol/HDL ratio 4.2
  • Both hypertension and cholesterol are currently being treated with medications
  • Father passed away at age 59 due to prostate cancer
  • No other adverse medical history in her APS records

Underwriting Decision:  Preferred Best!

Key Factor:  Gender specific cancers are not considered on proposed insured’s of the opposite sex.  Since our female applicant’s adverse family history was due to a male disease, it also had no bearing on the final decision.

Please contact us today for more information about this carrier and how we can help boost your sales.

Policy Conversions & Ownership Transfers: All Things In Good Order

It was an eye-opener the first time I walked into the office of a civil engineer back in the 1970s and saw, spread across an entire wall, the flowchart mapping out the relationship and time sequence of all that was involved in getting an eight-story building there in the Burg from ground-breaking to grand-opening.

The complexity of the diagram was a mind boggle of boxes at several levels top to bottom, each containing a task that demanded completion before progression on the line to the next box was possible.

As we sit comfortably in the air-conditioned result of a similar building plan, the ease with which we can turn a tap or flip a switch seldom causes us to pause and think of all that got us there.

The order of things is essential.  The correct order is critical.  Fortunately the order and timing of insurance conversions and ownership transfers is less complicated.

A common planning scenario involves a personally-owned term policy where conversion is considered because of a decline in the health.  The goal is to transfer the policy to an irrevocable trust either to protect the death benefit from estate taxes, creditors or spendthrift heirs – or any combination of the three!

The issue at hand is whether to convert before or after the transfer of the policy to the trust

The answer will probably turn on the “best” fair market value for the contract.

Most advisors will probably choose to determine that the FMV of the term policy is its interpolated terminal reserve.  Level term products do have a reserve to offset the “underpayment” of premium in the later years when the insured is older, but the premiums remain the same.  On the other hand most advisors will determine that the FMV of the new permanent policy (in its first contract year) as premiums paid.  Usually the advisor will opt for the lower of the two.

If the policy is to be gifted to the trust the lower FMV could keep the gift within sum of the available annual exclusions (usually $14,000 per trust beneficiary) to avoid the need to file a gift tax return.

If the policy is to be sold to a grantor trust (to avoid the three-year look-back), the lower FMV will require that less cash be gifted to the trust to be used by the trustee to purchase the policy from the insured/grantor.

Call us when client planning involves the combined issues of policy conversion and ownership transfer.  We will assist in getting the information for determining the FMV of both policies and will assist legal and tax counsel with the information they need to properly order the transactions.

Back to the 70s – before the eight-story was completed I had gotten to know many of the workers at the job-site.  They complained that working construction was too much like Christmas Day.  They did all the work only to have some guy in a suit get all the credit.

Non-Reportable, Tax-Free Income During Retirement By Using Index UL

There aren’t many investment vehicles available that offer the tax advantages of properly structured, permanent life insurance.  Unfortunately, many clients are not aware of those benefits when purchasing term insurance, and they may not know about alternative product solutions.

Within your existing book of clients, do you have any individuals who are hitting the contribution limits in their qualified plans?

If so, Index Universal Life (UL) may be a great concept to introduce to them in your next meeting, as it can provide a number of benefits that are comparable to a qualified plan.

The following series of questions can be used to frame the benefits of Index UL, without specifically introducing the concept of life insurance
  • Do you believe that taxes will be static, or fluctuate over your lifetime?
  • Are you contributing to any qualified retirement plans? If so, are you funding to the maximum limits of those plans?
  • Would you be willing to trade the benefits of interest crediting in order to remove the risk of losing accumulated values, due to downturns in the market?
  • Do you mind paying taxes on income that you receive from your non-qualified assets?

Many of your clients will meet the contribution limits in their qualified plans; believe taxes are only going to increase; will not like exposure to loss of accumulated values due to downturns in the market, and will not like paying taxes on their distributions.

All you need to do next is ask them is how much they would like to contribute monthly for a vehicle that has
  • No contribution limits
  • No downside market risk
  • Compound interest crediting in the 10-12% range annually, without the possibility of losing their accounts’ value due to negative returns in the market
  • Non-reportable, tax-free distributions of their accounts’ accumulated value

Once your clients provide you with a premium commitment, we will help you to assess their insurability, and prepare proposals that solve for a minimum death benefit and provide the most efficient cash value accumulation.

Ideally, Index UL policies should be funded for 10-15 years prior to taking policy distributions, but they can be customized to meet many different specifications depending on your clients’ age and preferred premium schedule.

This strategy is not limited to clients who are maximizing their qualified plan contributions

Index UL can be an efficient solution for younger clients (ages 30-50) who are looking to further fund their retirement, prepare for a child or grandchild’s school tuition costs, or contribute discretionary income into a product with the tax favored features mentioned above.

We will help you identify clients within your existing database who would be good prospects for this strategy, and will create customized solutions to meet their needs.  To learn more about the Index UL products that are now available, and to explore how they can drive new sales opportunities – call your Life Sales Rep today.

Cross Selling Long-Term Care Insurance

There are numerous people you know that need Long-Term Care (LTC) Insurance, many of them include your current clients.  Perhaps you have already sold them a Life Insurance Policy, yet how do you get them interested in LTC?

Cross Selling can be difficult, yet when you present your client with information about LTC, they should understand the benefit of protecting themselves when they may need it.

Begin by talking about the consequences of living a long life will have on their family – and offer to put together a plan to protect them from the biggest risk they face after retirement – one that must be protected with Long-Term Care Insurance.

Once the conversation is going, a few good questions to ask include:
  • What percentage of your retirement assets have you set aside to pay for Long-Term Care services?
  • Are you concerned about the impact a chronic illness would have on your retirement savings?
  • If it were necessary to increase your spending by $3,000 or $4,000 a month to pay for LTC services, would that concern you?

To learn more about incorporating Long-Term Care into your product portfolio, or if you need more prospecting tips, contact your LTC Specialist today!

Insurability – The Most Important Retirement Asset?

Few American publishers have had or will ever approach the influence of Henry Luce in his heyday.

Through the middle half of the 20th century, Luce founded and successfully grew a family of magazines whose content was a major factor in shaping the thought and activity of American society.

He named them after the three things he thought most important; Life, Time and Fortune.

We have only to look to our retirement planning to appreciate the accuracy his conclusion.

Consider This:

The purpose of a program of systematic savings during our employment years is to accumulate the Fortune necessary to provide for the Life to which we have grown accustomed hoping we have enough Time to achieve that goal.

Traditional qualified retirement plans can prove insufficient toward that end for wealthier clients.  Limits on contributions as well as an inadequate period for saving, especially in the event of premature death, can leave a retiree short of funds necessary to maintain his or her lifestyle.  Other initiatives must be taken.

A time-tested vehicle to provide supplemental retirement income is an over-funded universal life insurance policy.

Not only does the contract allow for additional income with many advantages similar to qualified arrangements, but the death benefit feature offers a “self-completion” aspect for the fund in the event of premature death.

Contact us today for a complete discussion of this planning concept.