Ohio National and Constellation

[Tothetop]

Especially ones who run big organizations pushing WL as a miracle investment for retirees.

This right here. I remember when I first started selling insurance and an older agent almost chewed my ass off for referring to whole life as an "investment."

"Life insurance is NOT an investment!" That's what he said. Never made that mistake since and I believe it even scared me away from selling WL as a "bank on yourself or save for retirement" type product.

I've only sold it for protection and when its deemed the best fit.

 

[scagnt83]

Let's get this straight:

The carrier and the C-suite has known all along what we do in The Breakaway League. It passes underwriting. It passes suitability. There's also a form called "Life Insurance Form of Understanding".

Don't try to pretend that we're doing this stuff "under the table" garbage.

Everything we do is above board, compliance, and in full disclosure. When a group is responsible for about 10% of a company's total business... it gets noticed.

Don't speculate about what you don't know about.

Nobody is speculating.

Think I dont know about that form?

It is an IRA funding PLI disclosure form that most WL and IUL carriers have.

Granted, I dont have ONs version in front of me. But I do have a few from other major mutuals.

What they do not ask is:
- how long the IRA has existed
- what % of assets the IRA is for the client
- if it exists solely for the funding of the PLI

But a lawyer will ask all of that. A regulator will ask that during an investigation.

David, Im not saying you took anyone's 401k and moved it into an IRA. But that is what the specific reference was I responded to. But the statement is true even for most IRA assets that are in equities.

When you take a 401k, and move it into an IRA Annuity, you are changing the "Source of Premiums" on the application.

On the Life Insurance Application, under "Source of Premiums", you are now marking "Annuity Payments".

If you had used the 401k to fund it (or IRA in equities), you would have instead had to mark "Personal Liquid Assets" on the application.

That answer, in conjunction with the large premium and IRA disclosure, would likely trigger additional questions about percentages of assets being used. Because "liquid asset to premium ratio" is something UW uses to judge suitability when someone has a high premium to income ratio.

What the carrier is likely not being told, is a large portion of the clients LIQUID assets are being used to fund the WL policy.

Not only that, but they are being locked up in another product with surrender charges, just to fund the WL policy that does not break even until year 7 at best.

Do you have any idea how many bulletins carriers put out about using 401k funds or contributions to fund IUL policies? Think its any different with WL?

-------

Getting back to that disclosure form, near the end, there is a line saying this:

Applicant/Owner understands and agrees that neither the COMPANY nor any of its agents, representatives, or employees have provided any legal or tax opinion or advice with respect to purchasing the policy(s) and paying some or all of the premiums with funds distributed from an IRA, and the Applicant/Owner is relying solely on the advice and recommendations of independent legal and tax advisors regarding legal and tax matters relating to the purchase of the policy(s);

Im no attorney, but Im pretty sure that says as the PLI Agent, you have not provided any legal advice, tax advice, or advice in general, related to using the IRA to fund the PLI. ("legal or tax opinion or advice"). And the agent signs that form attesting to all that in addition to the client.

Considering the whole sales pitch is taking taxable IRA assets and making them tax free using PLI. It sure sounds like tax advice to me. ESPECIALLY if those funds started out in a 401k. It also sounds like "advice" in general.

Perhaps ON does not have a line similar to that. Im sure someone contracted with them can provide the forum with a copy of their current form. If they do not have a stipulation similar to other carries, then from a carrier suitability standpoint, the advice aspect would be fine.

----

But my comments were about lawsuits. Or regulatory investigations. They could care less about carrier suitability guidelines. They care about general suitability to the legal standard. Carriers break the rules and bend the rules all the time. ON would not be the first to look the other way at shady operations... even help them along until its time to hang them... (NYL used to host and even help fund BYOB seminars... even hosted Nelson Nash himself and paid for his travel... until one day they suddenly sent the agents organizing it a cease and desist)

 

[DHK]

I don't remember the notification appointing any of you as my compliance officers...

And, quite frankly, you don't know my case or the details... and I'm not sharing.

So all of your insinuations are moot.

I know what I'm doing. You don't know what I'm doing... and I'm a far better expert on what I'm doing than you are about what I'm doing.


Hell, you don't even understand the math behind what I'm doing... and you're making compliance aspersions??? *smdh*

 

[Tahoe Ray]

I don't remember the notification appointing any of you as my compliance officers...

And, quite frankly, you don't know my case or the details... and I'm not sharing.

So all of your insinuations are moot.

I know what I'm doing. You don't know what I'm doing... and I'm a far better expert on what I'm doing than you are about what I'm doing.

Everything is just fine.

Do whatever you want.

I think that Tyler is just trying to point out that if people on this forum don't understand it, it would likely be more challenging for a consumer, arbitrator, or jury to understand it.

Again, not hating on what you do. I don't agree with the strategy but that doesn't matter. Philosophies are the bedrock of our business and clients are free to choose those with who they align and connect with the most.

I'm sure that you'll end up somewhere (or maybe stay...) and continue your process of helping clients understand your philosophy/mission.

I hope that it all works out well for you.

 

[scagnt83]

I don't remember the notification appointing any of you as my compliance officers...

And, quite frankly, you don't know my case or the details... and I'm not sharing.

So all of your insinuations are moot.

I know what I'm doing. You don't know what I'm doing... and I'm a far better expert on what I'm doing than you are about what I'm doing.


Hell, you don't even understand the math behind what I'm doing... and you're making compliance aspersions??? *smdh*

You responded to my comments about suitability. If you dont want people to respond back, then dont respond in the first place.

I am not trying to bash you. Or pile on. I did not even mention you in the comment that you responded to. It was a general comment in response to Allen.

But you are giving details, and dont want to be challenged on those details when they do not add up.

I dont see anyone challenging your actual mathematical calculations as you keep claiming. I never said your math was wrong. I said the assumptions you use in your math are wrong. And more than just the asset fee.

I never said you are taking qualified funds and funding PLI... YOU SAID THAT.

We are simply responding with facts and logic to the statements you have made about your sales process and the process of TBL.

 

[scagnt83]

David. I realize I came on strong about the whole thing. But I just highly disagree with the sales process you lay out.

If everything goes perfect, it works. If not... like whats likely happened with ON... it can be devastating to the clients financial well being.

I do hope it works out for you personally.

I do believe you have good intentions and that you sincerely believe you are doing right by your clients.

However, I do not believe a jury or a regulator would see it that way if the issue was pushed by a client to that point. And I do not think ON is going to have your back in that situation.

 

[DHK]

You can ask Van Mueller if what he's doing is a problem or if it's "Tax Advice": I even saved you the trouble of taking notes.




3:35:35 - UNDERSTANDING AND STRUCTURING WEALTH TRANSFERS: Questions; Life Insurance; last half hour is this idea; Annuities, Questions, More Questions; Idea is on the white CD (2014) on the order sheets; the February issue of Newsletter (2017), wrote out this sales idea in writing with all of the questions. 8 pages of stuff;

I have a lot of middle class people that live in 900-2,000 sq foot houses that are fully paid for; $30,000 SSI; $250,000 in IRA and they have to take a $10,000/year RMD. 27.4 / 275,000 = $10,000/year. $300,000 in an IRA; take out $10k. They're angry that they have to take out the $10k. They're saving out of their SSI. The only people that have any money are grandma and grandpa.

Is there somebody at the IRS that you're so madly in love with..., etc. In your office with statements: "Excuse me, is there any chance I could see your after-tax statement?" Not all the money in their IRA is theirs. Do they realize that? Do they really have $300k? If you ask the right way - "find the money". WHO in America do people hate worse? Taxes or Insurance Agents?

Under the law in 2017, the standard deduction for a couple over 65 is $15,200; www.irs.gov Forms & publications; IRS 1040 instructions. Print them out - 105 pages. It should be required law that insurance agents read the 1040 instructions every year; read page 30, 40, 41, 102, and page 103. Chart of how much of your social security becomes taxable. What is the personal exemption; 41 - standard deduction for couple over 65. 102 - revenue from sources and outlays; 103 - income tax brackets. 10/15/25/28/33/35/39.6; Are they going to believe me or the Internal Revenue Service?

3:44:30 - Underwriters go nuts on some of these cases! Call the client to explain it. Declare it and pay no taxes, I can expand this money; if I'm insurable, please issue the policy. $13,400/year while they make $30,000/year of Social Security;

3:46:00 - "Van, are we going to do the same thing again this year as we did last year?" Teach them one time, they buy into the system, and they do it forever! They don't know or understand the progressive nature of the tax system! You can move enormous amounts of taxable money and do it tax-free (or for a bargain). Instead of worrying about the family, let's be selfish - tell me the exact date you're gonna die. "I don't know." Let me ask you something: What would be the safest way to make sure that your money lasts forever? Wouldn't it be to get rid of all the taxes on your money? So, if we were able to do that for you, wouldn't that be a good idea if you don't have to take any risks at all?

BIG SALES - $13,400 is a LITTLE sale. The next bracket is 10% bracket. the next $18,650; 10% is $1,865 tax dollars. $42,000 and divide it into $1,865 = 4.5%; $32,000 a year for 20 years; (65-85) that's $645,000 and only pay $30,000 in tax, would you do it? Or would you prefer to wait until you die and have the government take $300,000 of your $600,000? Now they give $32,000 a year; Annuity, MEC, or $32,000 a year in a life insurance policy. Over 10 years, $32,000 each year, you'll have $320,000 and got rid of all the taxes. This pocket is income tax free! And the IRS, nursing homes, wall street, government, hospitals could never get their hands on this pocket again; Magic door that every time you wanted access to this pocket, you didn't pay taxes on it... would you do it?

3:52:00 - Analytical question; most customers would never ask that; make sure your plan does everything behind the scenes. ILIT or whatever. Keeping it conceptual on how to help people keep in control of their money.

3:53:45 - Biggest sale of all; $85,000/year life policy & $4 million DB managed by Van; 15% bracket; next $57,000 of income taxes at 15% = $8,200; Van Mueller rule of 99/15: If you add up all these columns, $23,400 + $73,900 = 15% bracket = $99,300 or less = 15% bracket. $50,000/year of income, couldn't I get another $40k, pay another 15% and get rid of taxes on $1.968 million and only cost you $200k of taxes? Do it with Life insurance, annuities, MEC, etc.

 

[scagnt83]

You can ask Van Mueller if what he's doing is a problem or if it's "Tax Advice":

The IRA disclosure form said any advice. Not just tax advice.

And yes, recommending that a client take qualified funds, and move them into a FIA to fund a WL, specifically to avoid taxes, is most certainly tax advice.

I dont care who is saying it or how much they produce or how many speaking engagements they have.

 

[Tahoe Ray]

I dont care who is saying it or how much they produce or how many speaking engagements they have.

Like I said in my earlier post, this is a philosophy-based business. The numbers are academic but either side can refute the other.

I do not believe in what these guys preach. Nor do I believe that they are helping clients grow the most wealth that they can. I do know that they all make bank, but that doesn't validate their opinions in any way.

This forum is valuable for civil discourse. I don't want to attack David or anyone else for their process (unless you're a newby schilling garbage) but I do believe that dumping qualified funds into a fixed indexed annuity to fund life insurance is not efficient...especially at the ages where the 401k is large enough to make the scenario meaningful.

Difference of opinion. I may be wrong when the client starts pulling income, or I may be right. It's my philosophy and just because someone does a lot of business or makes a lot of money based on their philosophy doesn't make them right or an expert.

 

[scagnt83]

but I do believe that dumping qualified funds into a fixed indexed annuity to fund life insurance is not efficient...especially at the ages where the 401k is large enough to make the scenario meaningful.

Not only is it not efficient, but it takes liquid assets and locks them up in 2 different illiquid products, neither with strong guarantees.

So if the scenario goes bad (like no more dividends) then the client is double screwed.... when the agent got triple the comp....