Selling Life Insurance...

[James]

I fail to see how a WL CV becomes a 'retirement' vehicle. Whatever you borrow out of it simply reduces the DB, plus you have to pay interest on it.

Don't you think an annuity is a better vehicle for retirement than WL? I'm not saying one should dump their WL but some people at age 70 will be insurance 'rich' and cash poor... being worth more dead than alive (which is sort of a sad commentary on how they managed their money, but the truth is the truth.)

I'm not trying to be flip here. Just trying to learn what James is trying to teach us.

Al

I'm not much of a teacher, just ranting about how I view selling life. As far as WL not being a retirement plan, totally agree! Yet, I thought I was quite specific about my views of retirement? Now what I stated was a few years in the very latter part of life if other retirement money is failing, which looking at most retirement plans and their obvious outcome, this is very likely. That is only if the person set up a lucrative retirement fund, which is also unlikely!

Now with WL you have a built in emergency fund that we all like to call the Cash Value which can if not needed for business, depending upon funding of the policy a few years of partial retirement or vacations.

No way did I mean to apply that WL is a Retirement fund, yet it is very possible that most will go thru their Real Retirement fund (whatever that may be) way before they die, at least on average that is very likely. Now if one is in their 40's starting their WL or UL policy and was loyal to it, after 40 years likely the CV has likely grown quite significantly. Are Annuities better if specifically brought for retirement? Yea, I'm sure they are and I'm not oppose to them at all, just wasn't talking about them or funding retirement specifically now was I? You getting ahead of the class Al, I know you're not happy with me but please don't be a Bad Noodle Al, try and be more attentive okay.

Ps; plus I haven't gotten into the whole "Life Value" discussion yet either!

 

[padthaiforlunch]

Ps; plus I haven't gotten into the whole "Life Value" discussion yet either!

Can't wait...


I take it the DB premiums are treated as compensation for the owner? And funding the WL/UL also serves as a way around needing to fund retirement plans for employees....I've read in another thread that UL is really term, but it seens that this would be a good place for an EIUL, yes?

 

[James]

Can't wait...


I take it the DB premiums are treated as compensation for the owner? And funding the WL/UL also serves as a way around needing to fund retirement plans for employees....I've read in another thread that UL is really term, but it seens that this would be a good place for an EIUL, yes?

I'm a believer that the Equity Index is never going to achieve higher Interest Crediting than a Fix Product over time. I would pick a UL if Loans are going to be an aggressive feature use of the product. Here is a good site for the nuts and bolts and relative information. Peter Katt: Fee-only Life Insurance Advisor

The UL does seem to have become a staple in the world of business, esp. with Key Man Coverage. Now Keyman is a dual use strategy, which is a powerful selling point. First you cover the business, as in having a tidy sum to find and hire a new key employee. Now if the employee survives and retires as agreed upon such as twenty or thirty years down the line he the employee takes over the policy, now taxation is a concern but still it is powerful on the sales table. I wouldn't suggest that the CV of the Insurance Product as a way to fund retirement, but would use the phrase, "Loyalty Bonus" or "Executive Bonus" that doesn't fall under Non Discrimination laws.

Some now are attempting to use Term with ROP in replacement of the UL or WL in Keyman insurance. It is a cheaper alternative, I don't think it is as good but I would use it if cost was going to narrow down other possibilities.

 

[Sir Ringo]

I fail to see how a WL CV becomes a 'retirement' vehicle. Whatever you borrow out of it simply reduces the DB, plus you have to pay interest on it.

Don't you think an annuity is a better vehicle for retirement than WL? I'm not saying one should dump their WL but some people at age 70 will be insurance 'rich' and cash poor... being worth more dead than alive (which is sort of a sad commentary on how they managed their money, but the truth is the truth.)

I'm not trying to be flip here. Just trying to learn what James is trying to teach us.

Al

al3, I had the good fortune of entering into the industry under someone who is very creative at marketing and helping one to understanding these products and how they work for the benefit of the client. I am still rather new in the industry as well (2.5) but I learned quite a bit under this guy on how the eiul's products worked, and , CV is a big part of it no doubt.

We ran our own illustrations which as we all know, are mere guidelines on how these products work, which do work well. It is one product where I can demonstrate how it can be a VERY NICE supplement to retirement, not to replace it, and your DB does not diminish.

Though there are tons of guys on this board who know way more than I do but I had the benefit to study these products under someone who is very good at getting his point of view across. So finding a mentor is a key step in succeeding. I am no longer captive with him, but I am still contracted to write through his mo, however, I have since focused mainly on health insurance which he doesn't do any business in that field.

We also had two awards conferences each year to end a two-day training for the entire group, mostly in our area, but have had these conference in Biloxi, one month prior to katrina, natchez, jackson, Lafayette, nashville, and hot springs and though I was captive, he also works with independent agents a well. It's a great two days of hearing from some of the top salesmen in this group who share their experiences with everyone.

Was also treated to The Sales Expo in Atlanta last year, where, I have since forgotten the name of the rep, w/state farm whose presentation was about generating a cash income from WL insurance. It was a pretty good presentation and one that I don't believe a majority of agents even consider other than the cv being just a side benefit. As good as his illustrations were, they still did not compare to the ones we have presented in-office. If you have a chance to attend one (sales expo), do so.

These products IMHO, definitely show how one can be alive and still enjoy the tax-free dollars down the road.

 

[James]

Good Post, Sir Ringo, most miss the Option of changing the DB, as in Option A, B and C.

We ran our own illustrations which as we all know, are mere guidelines on how these products work, which do work well. It is one product where I can demonstrate how it can be a VERY NICE supplement to retirement, not to replace it, and your DB does not diminish.

 

[James]

So one wants to go and sell too businesses, like Continuation Planning but what do we to as Independent Agents for our Plan of Continuation of existing clients if something happens to us??? Obviously this is a sore point for me and most other Independent Agents I know, sure some have children going into the business or partners that can carry on the service we sell.

Obviously this is my achillies heel right now and some of the captive agents have "stolen" damn thieves, accounts I thought I had wrapped up! Now say what you want about the Big Houses with their staff of Captive Agents and the cost of their products. They can assure their customers continuation of any plan and service they sell, which to some is well worth the higher price. I'm thinking this is a lot more important to a lot more people than the general mindset of most Independent Agents would like to believe.

 

[padthaiforlunch]

To touch on the term-perm combo again (bear with me, I'm new), please walk me through an example.

Target client is a plumber. He nets $200k/yr. (based upon someone I know) and is a one-man shop. Current biz. structure is sole-p. Has two children 7 & 9 and babies momma living with him (she's good for $40k/yr). He is thinking about expanding and bringing on some help.


Currently my plan is to try and get as close to $45k as I can into an annuity-sep. I'm sure he could also use a DI policy.

How am I presenting life to this guy?

Inintial thought is 1mm 10-year term and UL for X???

 

[James]

To touch on the term-perm combo again (bear with me, I'm new), please walk me through an example.

Target client is a plumber. He nets $200k/yr. (based upon someone I know) and is a one-man shop. Current biz. structure is sole-p. Has two children 7 & 9 and babies momma living with him (she's good for $40k/yr). He is thinking about expanding and bringing on some help.


Currently my plan is to try and get as close to $45k as I can into an annuity-sep. I'm sure he could also use a DI policy.

How am I presenting life to this guy?

Inintial thought is 1mm 10-year term and UL for X???

I would think, that he would need or want more than 1 mill in term, he could easily qualify for 4 mill. Yes, I would push DI with the term product, in fact I would likely use DI if he had life insurance already in place. You are not giving much information here, you need to sit down with him and try to understand if he a strong advocate of insurance or not. If he is a big Dave Ramnsey or Suze Orman follower, there simply not much you can do outside of term, I'm not even sure if either of these boozoo's think that DI is a good choice?

The perm. insurance should be there, if not for final expense, he likely cover that out of pocket just as cheap though, well at least at this level of income. Yet though, look into his credit lines for the business. If he is going to expand, this will also! This is basically nothing more than debt he'll always have, well as long as he is in business. If he is doing a hefty amount of business as you suggest he is likely running a credit line greater than his yearly income (I'm guessing here), go with a UL or WL to protect that. You have to explain why the term or "Income Replacement" for his kids and wife (?) or live in should not be the vehicle to pay off business debt. This is where a good UL or WL is strong, cover the risk and in the end if it isn't needed use the CV built up for a nice little boost to his retirement funds, or it can aid in a self funded part of his LTCi needs later in life.

Yet before I did that I would suggest that he seeks out a Estate Planner to come up with a Trust to protect his children in case the Insurance is actually used (god forbid). Now that is just another one of those services you should be able to do. Go visit some well known Financial Attorney's or Estate Planners in your area and ask permission to refer people to them.

Remember, the first policy is the hardest, the second is easier by the time you are on the third policy you are a faithful and trustworthy insurance advisor.

1. Term Life, (sell term than convert) sell UL or WL if the client is in need and you can actually get the sale!
2. DI
3. WL or UL
4. LTCi
5. Annuities
6. All listed above but for employees.

Yet though, if you can have him do a Insurance Review, you have to find out what he wants protected for life vs short term or income replacement. Yet since their is a business in play here, I would think 250 grand WL or UL would be the starting point. If you want to pitch WL and Term combo, I'm guessing that 250-500 grand WL with at least 2 mill (if not 3 or 4) in term is the least I would shoot for. Now this is not taking into account that other insurance is not in play? Yet though, I would try to get him to talk and see how he feels, IMHO DI is just as important if not much more than WL is too any well balance insurance plan.

 

[Sir Ringo]

Back at you james.

Lunch, one thing to keep in mind, and that is risk management is the foundation of any financial plan, it should be the first step in planning ones future because if it's not, well, things get ugly. You need to get a needs analysis from this guy, once you have that info, you will know a lot more about how to help him.

I am not saying that you have the same problem I once had when I first started, but getting real nosey was an achilles heel for me but now I don't have a problem with it anymore.

 

[padthaiforlunch]

I would think, that he would need or want more than 1 mill in term, he could easily qualify for 4 mill. Yes, I would push DI with the term product, in fact I would likely use DI if he had life insurance already in place. You are not giving much information here, you need to sit down with him and try to understand if he a strong advocate of insurance or not. If he is a big Dave Ramnsey or Suze Orman follower, there simply not much you can do outside of term, I'm not even sure if either of these boozoo's think that DI is a good choice?

The perm. insurance should be there, if not for final expense, he likely cover that out of pocket just as cheap though, well at least at this level of income. Yet though, look into his credit lines for the business. If he is going to expand, this will also! This is basically nothing more than debt he'll always have, well as long as he is in business. If he is doing a hefty amount of business as you suggest he is likely running a credit line greater than his yearly income (I'm guessing here), go with a UL or WL to protect that. You have to explain why the term or "Income Replacement" for his kids and wife (?) or live in should not be the vehicle to pay off business debt. This is where a good UL or WL is strong, cover the risk and in the end if it isn't needed use the CV built up for a nice little boost to his retirement funds, or it can aid in a self funded part of his LTCi needs later in life.

Yet before I did that I would suggest that he seeks out a Estate Planner to come up with a Trust to protect his children in case the Insurance is actually used (god forbid). Now that is just another one of those services you should be able to do. Go visit some well known Financial Attorney's or Estate Planners in your area and ask permission to refer people to them.

Remember, the first policy is the hardest, the second is easier by the time you are on the third policy you are a faithful and trustworthy insurance advisor.

1. Term Life, (sell term than convert) sell UL or WL if the client is in need and you can actually get the sale!
2. DI
3. WL or UL
4. LTCi
5. Annuities
6. All listed above but for employees.

Yet though, if you can have him do a Insurance Review, you have to find out what he wants protected for life vs short term or income replacement. Yet since their is a business in play here, I would think 250 grand WL or UL would be the starting point. If you want to pitch WL and Term combo, I'm guessing that 250-500 grand WL with at least 2 mill (if not 3 or 4) in term is the least I would shoot for. Now this is not taking into account that other insurance is not in play? Yet though, I would try to get him to talk and see how he feels, IMHO DI is just as important if not much more than WL is too any well balance insurance plan.

Wow, good stuff!!!

Of course, being as slow as I am, I need some of the details painted in. Such as:

You have to explain why the term or "Income Replacement" for his kids and wife (?) or live in should not be the vehicle to pay off business debt.

And, how do I calc how much DI to recommend?

Thanks for your patience and kindness in dealing with these questions.